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TRANSFORMATION SERVICE AGREEMENT <br />This Transformation Service Agreement ("Agreement") is made and entered into this 120' <br />day of May, 2009, by the LCRA Transmission Services Corporation ("LCRA TSC"), a nonprofit <br />affiliated company of the Lower Colorado River Authority ("LCRA"), a conservation and <br />reclamation district of the State of Texas, and San Marcos Electric Utility ("City") each <br />hereinafter sometimes referred to individually as "Party" or both referred to collectively as the <br />"Parties". In consideration of the mutual covenants set forth herein, the Parties agree as follows: <br />1. Establishment of Transformation Service - LCRA TSC will provide the <br />transformation of electric power and energy from one of LCRA TSC's standard transmission <br />voltages (greater than 60,000 volts) to a standard voltage less than 60,000 volts at locations <br />("Transformation Service Point of Interconnection") specified in the Transformation Service <br />Point of Interconnection List ("List") attached to this Agreement as Exhibit 1 and described in <br />the applicable Facility Schedules attached to the Interconnection Agreement between the LCRA <br />TSC and City approved by the San Marcos City Council on March 31, 2009, (the <br />"Interconnection Agreement") for each of the locations specified in the List. Parties agree that <br />the name and location of facilities in the List will be identical to the corresponding name and <br />location in the applicable Facility Schedules attached to the Interconnection Agreement. <br />2. Terms and Termination - This Agreement becomes effective on May 12, 2009, <br />and continues in effect until Agreement is terminated by mutual agreement of the Parties. <br />3. Interconnection Agreement Requirement - Parties may not execute this <br />Agreement without prior or simultaneous execution of an Interconnection Agreement that <br />includes locations specified in the attached List. The Parties shall comply with all terms and <br />conditions of the Interconnection Agreement executed between the Parties. Each Party agrees <br />that any change to the List attached to this Agreement will require a corresponding change to the <br />applicable Facility Schedule attached to the Interconnection Agreement executed by the Parties. <br />4. Service Charge - Transformation Service is provided, and the charge for this <br />service is determined, in accordance with LCRA TSC's Wholesale Transformation Tariff or its <br />successor, as it may from time-to-time be fixed and approved by the Public Utility Commission <br />of Texas (PUCT). <br />5. Other Terms and Conditions - NONE <br />- Remainder of page has intentionally been left blank. - <br />Transformation Agreement: LCRA TSC - San Marcos Electric Utility Pagel of 3