Puget Sound Energy, Inc.

Original Volume No. 1

Effective Date: 11/01/1998, Docket: CP98-250-002, Status: Effective

Original Sheet No. 49 Original Sheet No. 49 : Effective

6.10 Personnel

The Project Operator will employ and have supervision over the

persons (including consultants and professional service or other

organizations) required by the Project Operator to perform its

duties and responsibilities under this Agreement. Subject to

subsequent reimbursement from the Owners, the Project Operator

will pay all expenses in connection with the operation and

maintenance of the Storage Project, including compensation,

salaries, wages, expenses, social security taxes, worker's

compensation insurance, retirement and insurance benefits, general

and administrative costs, and other such expenses. The Project

Operator shall have full and exclusive authority to hire,

transfer, suspend, lay off, recall, promote, demote, discharge,

assign, direct, reward, discipline and train employees and address

grievances, and to establish and control rates of pay, employee

benefits, job descriptions, time in grade and all other conditions

of employment for such employees. The Project Operator shall have

complete and exclusive responsibility for employee relations

matters, including, but not limited to, payroll for such

employees, federal income tax withholding and reporting the same,

social security taxes, dealings with any bargaining representative

of employees, unemployment compensation, worker's compensation,

employee insurance coverage and any other burdens, practices and

policies related to such personnel and employees. The Committee

shall have no control or right of control over the Project

Operator's personnel policies, including employment and labor

policy matters, supervision and employment conditions of

employees, except as required in Section 5.1.

6.11 Monthly Expense Reimbursement

6.11.1 All direct and out-of-pocket expenses reasonably incurred

by the Project Operator, including a reasonable allocation of

overheads, to perform its duties hereunder with respect to the

Storage Project shall be the responsibility of the Storage

Project, and the Project Operator shall be reimbursed therefor by

the Owners from time to time in accordance with this

Section 6.11.1 or otherwise upon receipt of the Project Operator's

invoice therefor. The Project Operator will keep a full and