HomeMy WebLinkAbout1998-012ORDINANCE NO -qi-N
AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT FOR INTERCHANGE SERVICE BETWEEN THE CITY OF GARLAND,
GREENV,ILLE ELECTRIC UTILITY SYSTEM, THE CITY OF DENTON, TEXAS AND
LG&E ENERGY MARKETING, INC, PROVIDING FOR THE SALE OF EXCESS
ELECTRIC GENERATION CAPACITY, AS WELL AS OTHER DOCUMENTS IN
FURTHERANCE OF SAID AGREEMENT, AUTHORIZING THE EXPENDITURE OF
FUNDS THEREFOR, AND PROVIDING FOR AN EFFECTIVE DATE
WHEREAS, historically the City of Denton has participated in the sale of its excess
electric generation capacity, which sales have primarily occurred as a result of Texas Municipal
Power Pool arrangements with Brazos Electric Power Corporation, and the Cities of Bryan,
Garland, and Greenville, Texas, and
WHEREAS, the City of Denton desires to generate the most revenue from marketing its
excess electric generation capacity, and desires to join the City of Garland and the Greenville
Electric Utility System as sellers of their excess electric generation capacity to LG&E Energy
Marketing, Inc as Purchaser, pursuant to a one (1) year agreement, at terms which are
advantageous to the City of Denton, NOW THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION I. That the City Manager is authorized to execute an Agreement for
Interchange Service between the City of Garland, Greenville Electric Utility System, the City of
Denton, Texas and LG&E Energy Marketing, Inc (the "Agreement') a copy of which
Agreement is attached hereto as Exhibit "A" and is incorporated herewith by reference
SUCTION II. That the City Manager is further authorized to execute such other and
further documents, including without limitation, any confirmation documents, which are
necessary and appropriate to effectuate the terms of the Agreement
SECTION III That the expenditure of funds as authorized in the Agreement is hereby
authorized
SECTION IV That this ordinance shall become effective immediately upon its passage
and approval
PASSED AND APPROVED this the pw— day of 1998
MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
BY
APPR ED AS TO LEGAL FORM
HERBERT L PROUTY, CITY ATTORNEY
BY YU�W I s
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AGREEMENT FOR INTERCHANGE SERVICE
BETWEEN
CITY OF GARLAND
GREENVILLE ELECTRIC UTILITY SYSTEM
CITY OF DENTON
AND
LG&E ENERGY MARKETING INC
THIS AGREEMENT made and entered into this September 24, 1997 by and between the
CITY OF DENTON, TEXAS and the CITY OF GARLAND, TEXAS each an incorporated
municipal government with an electric utility, and the GREENVILLE ELECTRIC UTILITY
SYSTEM, an autonomous municipal electric utility (collectively, "Counterparty"), and LG&E
ENERGY MARKETING INC, a corporation organized and existing under the laws of the State
of California ("LEM," each of LEM and Counterparty may be referred to herein as a "Party," or
as `Buyer" or "Seller," as the case may be)
WITNESSETH
WHEREAS, LEM is engaged in the generation, purchase, and sale of wholesale electric
power in the United States, and
WHEREAS, Counterparty is engaged in the generation, purchase and sale of wholesale
electric power in the State of Texas, and
WHEREAS, the Parties believe mutual benefits can be realized from the interchange,
sale, and purchase of electric power, and
WHEREAS, the Parties desire to set the terms and conditions upon which such sale and
purchase may be conducted and upon which the furnishing of certain related services shall be
effected, and
NOW, THEREFORE, in consideration of the foregoing and of benefits to be obtained
from the covenants herein, the Parties agree as follows
1 TERM OF AGREEMENT
1 1 Term The term of this Agreement shall commence on the date executed by the
Parties or, if required, accepted for filing by the Federal Energy Regulatory Commission
("EURC"), and shall continue in effect until canceled by either Party upon thirty (30) days
written notice to the other Party, provided, however, that the term of this Agreement shall
not be terminated until all transactions scheduled hereunder are complete and all monies
have been paid
2 REQUIREMENTS
2 1 Facilities Each Party will provide, or arrange to have provided, such equipment
and/or such other facilities as are reasonably required to implement and carry out the
terms and conditions of this Agreement
22 Authorized Representatives Each Party shall appoint one or more "Authorized
Representatives" who shall be authorized to act on its behalf with respect to matters
contained herein Each Party shall provide in writing, to the other Party, the name of its
Authorized Representative(s) prior to any transaction contemplated herein Each Party
shall notify the other Party as promptly as possible, of subsequent changes in designated
Authorized Representative(s) Authorized Representatives shall have no authority to
modify any provisions of this Agreement
3 INTERCHANGE OF CAPACITY AND ENERGY
3 1 Transactions At any time during the term of this Agreement either Party may
notify the other that it has amounts of capacity and/or energy available for sale or
exchange or that it desires to purchase capacity and/or energy The terms and conditions
of any purchase, sale or exchange (including, price, quantity, delivery points and
scheduling) (each, a "Transaction") will be agreed to by the Parties' Authorized
Representatives prior to the commencement of the purchase, sale or exchange Nothing
herein shall obligate either Party to make any amounts of capacity or energy available for
purchase, sale or exchange
3 1 1 Sales by LEM hereunder shall be pursuant to FERC Electric Rate
Schedule No 1, attached hereto as Exhibit A, as established by FERC in Docket
No ER94-1188-0000
32 Confirmations The Parties' Authorized Representative shall agree on and
confirm the price, quantity, terms, conditions, interruptibility, compensation, points of
delivery and scheduling provisions for all Transactions under this Agreement
3 2 1 Hourly and Daily Transactions Any hourly or daily Transaction may be
formed and effectuated in a telephone conversation between the Authorized
Representatives of the Parties, during which conversation an oral offer and oral
acceptance shall bind the Parties, without the need for a prior written
Confirmation, provided, however, that a Confirmation shall be promptly delivered
by the selling Party to the other Party
3 2 2 Other Transactions All Transactions other than those specified in Section
3 2 1 above shall be confirmed in writing by the Authorized Representatives prior
to the commencement of the Transaction
3 2 3 Form Confirmations may be in the form attached hereto as Schedule 3 2
2
3 2 4 Conflicts The terms of each Transaction and the applicable Confirmation
and this Agreement form, shall be read and construed as, one single agreement
Any inconsistency or conflict between this Agreement and the applicable
Confirmation shall be resolved in favor of the specific Confirmation for the
specific Transaction
33 Type of Energy Unless otherwise agreed by the Parties in the applicable
Confirmation, Transactions hereunder shall conform to the Electric Reliability Council
of Texas ("ERCOT") interchange classifications as described in the ERCOT Operating
Guide No 1 Section E 2 dependent on type of resource utilized in the transaction as
follows
3 3 1 Source Type A - Can be interrupted by the Seller for any reason, including
other economic opportunities
3 3 2 Source Type B - Can not be interrupted by the Seller for any reason unless
so ordered by the ERCOT Independent System Operator ("ERCOT ISO") in
accordance with the ERCOT Emergency Electric Curtailment Plan ("BECP") and
on a pro-rata basis with the Seller's native load customers
3 3 3 Source Type C - Can be interrupted by the Seller for a system force
majeure event Cannot be interrupted by the Seller for economic reasons
3 3 4 Source Type D - Can be interrupted by the Seller if the resource or
resources designated prior to the transaction become limited in some way Cannot
be interrupted by the Seller for economic reasons
34 Scheduling Buyer will submit a written schedule for delivery of energy to the
ERCOT ISO and to the Seller by 10 00 a in Eastern Standard Time on the day before the
required delivery of scheduled energy
3 5 Recordings The Parties agree not to contest or assert any defense to the validity
or enforceability of telephonic requests under laws relating to whether certain agreements
are to be in writing or signed by the Party to be thereby bound, or the authority of any
employee of such Party to make such communication Each Party consents to the
recording of its representatives' telephone conversations without any further notice All
recordings or electronic communications may be introduced into evidence to prove oral
agreements between the Parties
36 Guidelines It is the intent of the Parties that in effecting all transactions under
this Agreement, both Parties will operate in accordance with applicable ERCOT Guides
and NERC guidelines and in a manner consistent with prudent utility practices The
Parties shall immediately contact one another in the event of sudden or emergency
curtailment or interruption of energy deliveries hereunder
3
37 Delivery Point, Title and Risk of Loss
3 7 1 Delivery Point The delivery point will be specified for each Transaction
in the applicable Confirmation Seller shall be responsible for all transmission
charges and other costs and expenses associated with the delivery of energy to the
delivery point Buyer shall be responsible for all transmission charges and other
costs and expenses associated with the energy at and from the delivery point
3 7 2 Title and Risk of Loss Title to and risk of loss of capacity and/or energy
shall transfer from Seller to Buyer at and from the delivery point specified for
each transaction
3 8 Character All energy provided hereunder shall be delivered to Buyer at the
delivery point in the form of three-phase, 60 hertz, with reasonable variation of frequency
and voltage
39 Disclaimer SELLER HEREBY DISCLAIMS ALL WARRANTIES OF
FITNESS AND MERCHANTIBILITY EXCEPT AS EXPRESSLY PROVIDED
HEREIN AND COUNTERPARTY AGREES TO BUY ENERGY "AS IS" EXCEPT
AS EXPRESSLY PROVIDED HEREIN
4 BILLING AND PAYMENT
41 Records The Parties shall keep complete records as may be needed to
substantiate a clear history of the various deliveries of electric power made, and of the
clock -hour integrated demands in kilowatt-hours delivered, by one Party to the other In
maintaining such records, the Parties shall effect such segregation and allocation of
electric power delivered as may be needed to properly bill for deliveries under this
Agreement A Party's records shall be available at all reasonable times for inspection by
the other Party's Representative and may be copied at such other Party's expense
42 Statements As promptly as practicable, but no more than ten (10) days after the
end of each calendar month, the Parties shall cause to be prepared a statement setting
forth the electric capacity and energy transactions between the Parties during such month
in such detail and with such segregation as may be needed for operating records under
this Agreement
43 Invoices Seller shall submit an invoice for energy delivered during the preceding
month to Buyer in a form acceptable to the Parties on or before the tenth (10"') day of
each month by first class mail The system logs shall form the basis for the payments
described in this Section Buyer shall pay such amounts, by first class mail or electronic
wire transfer, within fifteen (15) days of receipt of the invoice Invoices shall be
considered delivered when deposited with the U S Postal Service Either Party may
change its address, financial institution, or account numbers, as applicable, by written
notice to the other Party at the address specified in Schedule 10 3 All payments provided
hereunder shall be directed by Buyer to the address or wire transfer number specified in
Schedule 10 3
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44 Late Payments All amounts owed by one Party hereto to the other shall be due
and payable on the fifteenth (15") day following receipt of a bill Interest on unpaid
amounts shall accrue at the rate of two percent (2%) per annum above the prime com-
mercial lending rate established from time to time by Chase Manhattan Bank, N A, New
York, New York, or the statutory interest rate as set forth in the Texas Government Code,
whichever is less, from the date due until the date upon which payment is made Unless
otherwise agreed upon, a calendar month shall be the standard billing period Where
amounts are due from both Parties to the other, bills shall wherever possible be stated in
the net amount
45 Pament. Netting/Setoff If each Party is each required to pay an amount to the
other Party in the same month, then such amounts with respect to each Party may be
aggregated and the Parties may discharge their obligations to pay through netting, in
which case the Party, if any, owing the greater aggregate amount may pay to the other
Party the difference between the amounts owed Each Party reserves to itself all rights,
setoffs, counterclaims and other remedies and defenses to the extent not expressly denied
or waived herein which such party has or may be entitled to arising from or out of this
Agreement All outstanding Transactions and the obligations to make payment in
connection therewith or under this Agreement may be offset against each other, set off or
recouped therefrom
46 Billing Disputes If any portion of any bill is in dispute, then the disputed amount
shall be paid under protest when due Disputes shall be discussed and resolved by the
Authorized Representatives, who shall use their best efforts to amicably and promptly
resolve the disputes Upon determination of the correct billing amount, the proper
adjustment shall be paid or refunded promptly after such determination with interest
accrued on the amount of the adjustment in accordance with Section 4 4 and computed
from the date payment is received to the date the adjustment is made Invoices and other
billing documentation shall be sent to the addresses specified in Schedule 10 3
5 DEFAULTS AND REMEDIES
5 1 Default The occurrence of the following shall constitute an "Event of
Default„
5 1 1 Failure by either Party to pay any amounts due hereunder, and such
breach shall continue for a period of five (5) days after the date on which
written notice thereof shall have been received by the nonpaying Party
5 12 Either Party materially breaches any contractual obligation under this
Agreement, and such breach shall continue for a period of ten (10) days after the
date on which written notice thereof shall have been received by the defaulting
Party, provided, that if it shall be impracticable or impossible to remedy any
such breach within such grace period, such grace period shall be extended for an
additional period reasonably necessary to remedy such failure if during such
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additional period the defaulting Party shall be diligently pursuing a cure for such
breach
5 13 Either Parry (i) makes any general assignment or any general arrangement
for the benefit of creditors, (it) files a petition or otherwise commences, authorizes
or acquiesces in the commencement of a proceeding or cause of action under any
bankruptcy or similar law for the protection of creditors, or has such a petition
involuntarily filed against it and such petition is not withdrawn or dismissed
within thirty (30) days after such filing, (111) otherwise becomes bankrupt or
insolvent (however evidenced), or (1v) is unable to pay its debts as they fall due
5 14 A representation made or repeated or deemed to have been made or
repeated by a Party proves to have been incorrect or misleading in any material
respect when made or repeated or deemed to have been made or repeated
52 Remedies
5 2 1 Seller's Default If Seller fails to deliver energy and/or capacity, and such
failure is not excused, then as Buyer's sole and exclusive remedy for such failure,
other than as set forth in Sections 5 3 and 5 4, Seller shall pay to Buyer (on the
date payments would otherwise be due under the specific Transaction) an amount
for each Mwhr of such deficiency equal to the sum of (1) the price at which
Buyer is, or would be able, to purchase or otherwise receive comparable supplies
of energy and/or capacity at a commercially reasonable price (adjusted to reflect
difference in transmission costs, if any) minus (u) the applicable energy and/or
capacity price agreed to for the specific Transaction, provided, however, if the
amount determined in the preceding clause (i) is negative, then the amount shall
be equal to zero for purposes of calculating the deficiency payment
5 2 2 Buyer's Default If Buyer fails to schedule and to receive energy and/or
capacity, and such failure is not excused, then as Seller's sole and exclusive
remedy for such failure, other than as set forth in Sections 5 3 and 5 4, Buyer shall
pay Seller (on the date payment would otherwise be due under this transaction) an
amount for each Mwhr of such deficiency equal to the sum of (1) the applicable
energy and/or capacity price agreed to for the specific Transaction minus (it) the
price at which Seller is, or would be able, to sell or otherwise dispose of
comparable supplies of energy and/or capacity at a commercially reasonable price
(adjusted to reflect differences in transmission costs, if any), provided, however, if
the amount determined in the preceding clause (i) is negative, then the amount
shall be equal to zero for purposes of calculating the deficiency payment
5 3 Termination In the Event of Default with respect to a specific Transaction, the
non -defaulting Party shall have the right to terminate the Transaction by giving notice of
termination to the defaulting Party in addition to recovering damages under Section 5 2
above
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54 Additional Remedies In addition to the remedies set forth in Sections 5 2 and 5 3
above, if either Party fails to pay any amounts in accordance with this Article when due,
the aggrieved Party shall have the right to (i) suspend performance until such amounts
plus interest have been paid, and/or (it) exercise any remedy available at law or in equity
5 5 Duty to Mitigate Each Party shall use its best efforts to mitigate its damages
56 Release, No Consequential Damages Neither LEM nor Counterparty, as the case
may be, shall hold the other Party (including its corporate affiliates, parent, subsidiaries,
directors, officers, officials, employees and agents and, with respect to Counterparty, their
present and former agents, employees, officials and representatives in their official,
individual and representative capacities) liable for any claims, losses, costs and expenses
of any kind or character (including, without limitation, loss of earnings and attorneys'
fees) for damage to property of the other Party, in any way occurring incident to, arising
out of, or in connection with the releasing Party's performance under this Agreement
Notwithstanding anything to the contrary elsewhere in this Agreement, neither Party, its
affiliates, or their present and former agents, employees, officials and representatives in
their official, individual and representative capacities shall, in any event, be liable to any
other Party, its affiliates, or their present and former agents, employees, officials and
representatives in their official, individual and representative capacities for any indirect,
incidental, special or consequential damages, including but not limited to, loss of reve-
nue, cost of capital, loss of business reputation or opportunity whether such liability
arises out of contract, tort (including negligence), strict liability or otherwise
6 REPRESENTATIONS AND WARRANTIES
61 Representations Each Party warrants and represents to the other that as of the
date hereof and as of the date of each Confirmation
6 1 1 Organization and Existence With respect to LEM, it is duly organized
and validly existing as a corporation in good standing under the laws of the juris-
diction of its incorporation With respect to each of the Counterparties, it is
organized and validly existing as a municipal corporation having an electric
utility, or as an autonomous municipal electric utility under the laws of the State
of Texas
6 12 Power and Authority It has all requisite power and authority to own its
property and assets and to transact the business in which it is engaged or presently
proposes to engage and to execute and deliver this Agreement and each Confirma-
tion and to perform all of its obligations hereunder and thereunder
6 13 Due Authorization The execution, delivery and performance of this
Agreement and each Confirmation and the performance of its obligations here-
under and thereunder and the consummation of the transactions described herein
and therein have been duly authorized by all requisite action on its part
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6 14 No Conflict Neither the execution, delivery or performance by it of this
Agreement or any Confirmation, its compliance with the terms hereof and thereof,
its fulfillment of any of the terms and conditions hereof and thereof, nor the
consummation of the transactions contemplated herein and therein conflicts with,
results in a breach of or constitutes a default under (i) any of the terms, conditions
or provisions of its charter, articles of incorporation, by-laws, partnership
agreement or other constituent documents, (11) any federal, state or local law, or
any order, rule, writ, injunction, decree, or regulation of any governmental
authority having jurisdiction over it or its properties or by which it is bound, or
(in) any agreement or instrument to which it is a Party or by which any of its
properties is bound or affected
6 15 Execution, Delivery and Performance It has duly executed and delivered
this Agreement and each Confirmation and this Agreement and each Confirmation
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms
6 16 Governmental Approvals Except for any initial authorization required
from the governing body of a municipal corporation to enter this Agreement, no
approval or validation of, or filing, recording or registration with, or exemption
by, any governmental authority is required to authorize, or is required in con-
nection with (1) the execution, delivery and performance of this Agreement or any
Confirmation or (it) the legality, validity, binding effect or enforceability of this
Agreement and each Confirmation
6 17 No Litigation It has not received any notice, nor to the best of its
knowledge is there pending or threatened any notice of any violation of any
applicable law, rule, regulation, order, writ, judgment, decree or other legal or
regulatory determination by a court, regulatory agency or governmental authority
of competent jurisdiction or of any suit, proceeding, judgment, ruling or order by
or before any court, tribunal or any governmental authority which may have a
material effect on its ability to perform hereunder or under any Confirmation
6 18 Title All energy delivered hereunder shall be free and clear of all liens or
other encumbrances
7 REGULATORY AUTHORITY
71 Annlicable Law This Agreement and any amendments thereto shall be subject to
all applicable laws and to the rules and regulations of governmental authorities and
agencies having jurisdiction If required, LEM shall tender this Agreement for filing with
FERC in a timely fashion, in the manner and to the extent required by law
72 Change in Rates Nothing contained herein shall be construed as affecting in any
way either Party's rights under this Agreement, or any rate schedule incorporating it, to
unilaterally make application to FERC for a change in rates under Section 205 of the
Federal Power Act and pursuant to FERC Rules and Regulations promulgated thereunder,
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provided, however, that the rate agreed to in a transaction shall not be subject to change
except by mutual agreement of the Parties and neither Party shall file to change the rate or
other terms applicable to an ongoing or pending transaction unless the Parties so agree
8 FORCE MAJEURE
8 1 Force Maleure The term "Force Maleure" shall be deemed for the purpose of this
Agreement to mean acts of God, conditions requiring curtailment of transactions pursuant
to the ERCOT EECP, strikes or other labor difficulties, war, riots, requirements, actions
or failures to act on the part of governmental authorities preventing performance, inability
despite due diligence to obtain required licenses, accidents, fires, failure of, damage to,
loss of right to or destruction or breakdown of necessary facilities, failures of facilities, or
transportation or transmission delays or accidents, or other similar or dissimilar causes
beyond the control of the Party affected which causes such Party could not have avoided
by exercise of due diligence and reasonable care Nothing contained herein shall be
construed to require a Party to settle any strike, lockout, work stoppage or other industrial
disturbance or dispute in which it may be involved or to take an appeal from any judicial,
regulatory or administrative action Any Party rendered unable to fulfill any of its
obligations under this Agreement by reason of Force Maleure shall exercise due diligence
to remove such inability with all reasonable dispatch If either Party is unable, in whole
or in part, to perform any of its obligations by reason of Force Majeure, then the
obligations of the Party relying thereon, insofar as such obligations are affected by such
Force Maleure, shall be suspended and/or canceled during the continuance thereof but no
longer The Party invoking Force Majeure shall specifically state the full particulars of
the Force Majeure and the time and date when the Force Maleure occurred Notices
given by telephone under the provision of this Article 8 shall be confirmed in writing as
soon as reasonably possible When the Force Maleure ceases, the Party relying thereon
shall give prompt notice thereof to the other Party Sales or purchases pursuant to this
Agreement may be terminated by the Party not experiencing the Force Maleure if such
event of Force Maleure continues for a period of thirty (30) continuous days
9 INDEMNIFICATION AND LIMITATION OF LIABILITY
91 Indemnity To the extent allowed by law, each Party shall indemnify, defend and
hold harmless the other Party from and against any liability, loss, cost, damage and
expense because of injury or damage to persons or property resulting from, or arising out
of the use of its own facilities or the production or flow of electric energy by and through
its own facilities, except when such injury or damage results from the negligence, gross
negligence, willful misconduct or violation of any legal requirement of the indemnified
Party
92 Compliance Each Parry shall be responsible for its own compliance with all
applicable laws and regulations, including those relating to the environment, and to the
extent allowed by law, each Party shall hold the other Party harmless from any liability,
loss, cost or expense arising out of its failure to comply with such laws and regulations
G
10 MISCELLANEOUS
10,1 Entire Agreement This Agreement and each Confirmation constitutes the entire
agreement between the Parties relating to the subject matter hereof and supersedes any
other agreements, written or oral, between the Parties concerning such subject matter
10,2 Interpretation Defined terms in this Agreement shall include in the singular
number the plural and in the plural number the singular Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and neuter
forms Any reference in this Agreement to "Section," "Article," "Exhibit' or "Schedule"
shall be references to this Agreement The Parties acknowledge that each Party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the drafting Party
shall not be employed in the interpretation of this Agreement
103 Notices All notices, requests, statements or payments shall be addressed as
specified in Schedule 10 3 Notices required to be in writing shall be delivered by letter,
facsimile or other documentary form Notice by facsimile or hand delivery shall be
deemed to have been received by the close of the business day on which it was
transmitted or hand delivered (unless transmitted or hand delivered after close, in which
case it shall be deemed received at the close of the next business day) Notice by
overnight mail or courier shall be deemed to have been received two business days after it
was sent A Party may change its address by providing notice of same in accordance
herewith
10 4 No Waiver No waiver at any time by any Party hereto of its rights with respect to
the other Party or with respect to any matter arising in connection with this Agreement
shall be considered a waiver with respect to any subsequent default or matter
105 Assignment Neither Party shall assign this Agreement or its rights hereunder
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld or delayed Notwithstanding the foregoing, either Party may,
without the need for consent from the other Party (and without relieving itself from
liability hereunder), (a) transfer, pledge, or assign this Agreement as security for any
financing, (b) transfer or assign this Agreement to an affiliate of such Party, or (c)
transfer or assign this Agreement to any person or entity succeeding to all or substantially
all of the assets of such Party, provided, however, that any such assignee shall agree to be
bound by the terms and conditions hereof
106 Taxes If at any time during the term of this Agreement there should be levied or
assessed against either of the Parties any direct taxes by any taxing authority on the
capacity and/or energy generated, purchased, sold, transmitted, interchanged, or
exchanged under this Agreement, which taxes are in addition to or different from the
forms of direct taxes being levied or assessed on the date of this Agreement and such
direct taxes result in increasing the cost to either or both Parties of carrying out the
provisions of this Agreement, then the rates and charges for such capacity and/or energy
furnished hereunder shall be increased automatically to the extent permitted by applicable
10
law or regulations as necessary to make adequate and equitable allowance for such taxes,
provide , however, that the Party whose rates and charges are to be increased hereunder
shall give thirty (30) days prior written notice of such increase to the other Party before
the increase may become effective
10 7 GOVERNING LAW THIS AGREEMENT AND ANY QUESTIONS
CONCERNING ITS VALIDITY, CONSTRUCTION OR PERFORMANCE SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS AS APPLICABLE TO
RESIDENTS OF THAT STATE ENTERING INTO CONTRACTS TO BE
PERFORMED WHOLLY THEREIN, IRRESPECTIVE OF THE PLACE OF
EXECUTION OR OF THE ORDER IN WHICH THE SIGNATURES OF THE
PARTIES ARE AFFIXED OR OF THE PLACE OR PLACES OF PERFORMANCE
108 Counterparts This Agreement may be executed in several counterparts, each of
which is an original and all of which constitute one and the same instrument
109 Successors and Assigns The terms and provisions of this Agreement and the
respective rights and obligations hereunder of each Party shall be binding upon, and inure
to the benefit of, its successors and assigns
1010 Severabilrty Should any provision of this Agreement for any reason be declared
invalid or unenforceable by a final, non -appealable order of any court or regulatory body
having jurisdiction, such decision shall not affect the validity of the remaining portions of
the Agreement, and such portions shall remain in full force and effect as if this
Agreement had been executed without the invalid portion In the event any provision of
this Agreement is declared invalid, the Parties shall promptly renegotiate to restore this
Agreement as near as possible to its original intent and effect
1011 Amendments No amendment or modification of the terms and provisions of this
Agreement shall be or become effective except by written agreement executed by the
Parties
10 12 No Dedication Any undertaking by one Party to the other Party under any
provisions of this Agreement shall not constitute a dedication of either Party's system or
any portion thereof to the public or to the other Party or any other person or entity, and it
is understood and agreed that any such undertaking by either Party shall cease upon the
termination of such Party's obligations under this Agreement
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their
duly authorized officers or representatives, and copies delivered to each Party, as of the day and
year first above stated
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13
ManagerTitle City fie
CITY OF DENTON
By -:�
Title City Manager
GREENVILLE ELECTRIC UTILITY
SYSTEM
i
Title General Manager
LG&E ENERGY MARKETING INC
By Q� IL�AL
Title MCP\OC �1�- �lebl(�QA�
APPROVED AS TO LEGAL FORM.
HERBERT L. PROUTY, CITY ATTORNEY
CITY OF DENTON, TEXAS
By, ''I�/ ✓V ��
ATTEST
ATTEST
ATTEST
ATTEST
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SCHEDULE 3.2
FORM OF CONFIRMATION
[Date]
[Name of Recipient]
[Title]
[Organization]
[Address]
[City, State Zip]
Ladies and Gentlemen
This letter shall confirm the agreement reached on [DATE] between [COUNTERPARTY]
("Counterparty") and LG&E Energy Marketing Inc ("LEM") and constitutes a "Confirmation" as defined in the
Agreement for Interchange Service dated [DATE] (the "Interchange Agreement') The provisions of the
interchange Agreement are incorporated herein by reference, except that, in case of conflict or inconsistency
between the terns of this letter and the terms of the Interchange Agreement, the terms of this letter shall prevail
Terms used but not defined in this letter shall have the meanings given to them in the Interchange Agreement
Seller
Buyer
Term This transaction shall begin at [TIME] on [DATE] and shall end [TIME] on [DATE], unless terminated
earlier by either party in accordance with the provisions hereof
Price Include the following language if there is a reservation fee or option premium The obligation of Buyer to
pay the [Reservation Fee] is absolute and unconditional, subject to no defenses, counterclaims or rights of offset or
recoupment
Quantity _ megawatts per hour
Tyne [A, B, C or D]
Delivery Points The delivery point will be the interface on 's
transmission system
Representation Each party represents and warrants to the other that it has the full power and authority to execute
and deliver this letter agreement and to perform all its obligations hereunder, the execution, delivery and
performance of this letter agreement and the performance of its obligations hereunder and the consummation of the
transactions described herein have been duly authorized by all requisite action on its part, and it has duly executed
and delivered this letter agreement and this letter agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms
if you are in agreement with the foregoing please execute where indicated below and fax a copy of this letter to the
undersigned This offer expires at 5 00 P M on [DATE] (E S T )
Sincerely,
LG&E ENERGY MARKETING INC
<Name>
<Title>
AGREED TO AND ACCEPTED
[Counterparty]
<Name>
<Title>
<Date>
SCHEDULE103
ADDRESSES
All Notices to Counterparty
Electric Utility Director
City of Garland
504 State Street
Garland, Texas 75040
Attn Mr Jim Harder
Greenville Electric Utility System
6000 Joe Ramsey Blvd
Greenville, Texas 75402
Attn Mr Tom Darte, General Manager
City of Denton
P O Box 2347
Denton, Texas 76201
Attn Ms Sharon Mays,
Electric Utility Director
Scheduling Requests
Garland Operations Center
972-205-3107 (Voice)
972-205-3106(Fax)
All billings to Counterparty
Garland Power & Light
Attn Paul Breitzman
525 E Avenue B
Garland, Texas 75040
All payments to Counterparty
Garland Power & Light
Ann Paul Breitzman
525 E Avenue B
Garland, Texas 75040
All Notices to LEM
LG&E Energy Marketing Inc
220 West Main Street, 7`h Floor
P O Box 32380 (40232)
Louisville, Kentucky 40202
Attention Rhoda L Williams
Contract Administrator
Phone # 502-627-4197
Fax # 502-627-4177
Scheduling Requests
LG&E Energy Marketing Inc
502-627-4176/4177(Fax)
All billings to LEM
LG&E Energy Marketing, Inc
220 West Main Street
Louisville, KY 40202
Ann Trading Accounts Payable, 7th Floor
All payments to LEM
PNC Bank Kentucky
Accounting Title LG&E Energy Marketing
Inc
Account Number 3100532665
ABA Number 083000108
Confirmation LG&E Energy Marketing Inc
Credit and Collections
Ann Accounts Receivable
Fax 4 502-627-4177
EXHIBIT A
POWER SALES BY
LG&E POWER MARKETING INC (LPM)
FERC ELECTRIC RATE SCHEDULE NO 1
1 Availability LG&E Power Marketing Inc makes non -firm energy and firm
capacity and associated energy available under this Rate Schedule for wholesale sales to
purchasers with whom it has entered into a contract
2 Applicability, This schedule is applicable to all sales of non -firm energy and firm
capacity and associated energy by LG&E Power Marketing Inc not otherwise subject to a
particular rate schedule
3 Rates All sales shall be made at rates established by letter agreement between the
purchaser and LG&E Power Marketing Inc
4 Other Terms and Conditions All other terms and conditions shall be established
by agreement between the purchaser and LG&E Power Marketing Inc
5 Affiliate Sales Prohibited No sale may be made pursuant to this Rate Schedule to
any entity controlled by, under common control with, or controlling LG&E Power Marketing
Inc
6 Effective Date This Rate Schedule is effective on and after August 24, 1994
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September 24, 1997
VIA OVERNIGHT MAIL
Mr Jim Harder
Electric Utility Director
City of Garland
504 State Street
Garland, Texas 75040
Mr Tom Darte
General Manager
Greenville Electric Utility System
6000 Joe Ramsey Blvd
Greenville, Texas 75402
Ms Sharon Mays
Electric Utility Director
City of Denton
P O Box 2347
Denton, Texas 76201
Dear Sirs and Madam
ENERGY
N14RKETAG,M
LG&E Energy Marketing Inc
575 Anton Boulevard
Su,te 250
Costa Mesa Ca6torrea 92626
714 241 4700
714 241 4790 FAX
This letter shall confirm the agreement between the City of Garland, Greenville Electric Utility
System and the City of Denton ("collectively DGG") and LG&E Energy Marketing Inc
("LEM") and constitutes a "Confirmation" as defined in the Agreement for Interchange Service
dated September 24, 1997 (the "Interchange Agreement") The provisions of the Interchange
Agreement are incorporated herein by reference, except that, in case of conflict or inconsistency
between the terms of this letter and the terms of the Interchange Agreement, the terms of this
letter shall prevail Terms used but not defined in this letter shall have the meanings given to
them in the Interchange Agreement
Seller DGG, Seller Agent to be City of Garland The City of Garland, Greenville Electric
Utility System, and the City of Denton will be jointly and severally liable for the obligations of
DGG hereunder
Buyer LEM
Term May 1, 1998 to April 30, 1999
A SUBSIDIARY OF
LC78ENERGY
Mr Jim Harder
Mr Tom Darte
Ms Sharon Mays
September 24, 1997
Page 2
Capacity
DGG grants to LEM the right but not the obligation to call on up to 100 MW of capacity at any
time during the term Such capacity will come from those gas and oil fueled generating assets of
DGG which are available to DGG but not required to serve the native load of DGG As used in
this letter, the native load of DGG, in addition to the accepted industry understanding of the
definition of that term, shall include DGG's load under the existing sales arrangements between
DGG and the cities of Bowie, Bridgeport and Farmersville LEM shall have the right to
nominate 100 MW of DGG capacity as planned capacity in accordance with ERCOT procedures
to secure planned transmission service for the calendar year 1998 DGG will in turn indicate to
the ERCOT ISO that such capacity is a slice of the DGG gas and oil fuel generating resources
Capacity Price
LEM shall pay to DGG $18 per kW -year for capacity on a monthly basis DGG shall invoice
LEM for $1 50 per kW -month each month along with invoices for energy deliveries for the
applicable month in accordance with the provisions of the Interchange Agreement governing
invoicing for energy deliveries LEM shall be relieved of its obligation to pay for capacity for
each day that DGG fails to have energy available in accordance with its obligations hereunder if
such failure is unexcused under any provision hereunder in addition to all other remedies
available to LEM under this Agreement
Scheduline
Upon telephonic request from LEM, by 9 30 am central prevailing time ("CPT") each day
during the term hereof, DGG shall provide to LEM by telephone, telecoprer, or instantaneous
electronic communication, its unit commitment, including any partial unit, availability of the
remaining units on its system, and unit dispatch fuel costs for the following day Within 30
minutes after such information is provided or by 10 00 a in CPT, whichever is later, LPM at its
option may either (i) nominate energy purchases from DGG, (il) nominate energy purchases from
DGG using fuel provided by LEM ("Tolling Nomination"), or (in) not nominate energy
purchases from DGG, for the following day At the time that LEM nominates energy purchases,
LEM will submit by telecopier or instantaneous electronic communication a schedule to DGG
and the ERCOT ISO reflecting the megawatts to be purchased from DGG in each hour for the
schedule The maximum ramp rate for changes in scheduled quantities of energy (including any
curtailment under this agreement) is 2 5 megawatts per minute across a ten minute ramp window
commencing five minutes before the hour and ending five minutes after the hour Accordingly,
the maximum hour to hour change is 25 megawatts in either direction The minimum schedule
period is four hours Energy will be priced based on the units which are available and are not
Mr Jim Harder
Mr Tom Darte
Ms Sharon Mays
September 24, 1997
Page 3
serving DGG's native load on the applicable day and which have the lowest incremental heat
rates as shown on Exhibit A attached hereto or as otherwise selected by LEM
Tvpe
Energy purchased from DGG hereunder will be ERCOT Type C System Firm energy
Energy Price
The energy price will be DGG's incremental cost of generation DGG's incremental cost of
generation for the purposes of this agreement will be the incremental heat rate set forth on
Exhibit A attached hereto for the applicable unit multiplied by the dispatch cost of fuel for the
unit for the applicable day If LEM's nomination is a Tolling Nomination, LEM will deliver gas
to the appropriate unit in quantities needed to generate scheduled energy based upon the incre-
mental heat rate set forth on Exhibit A attached hereto for the applicable unit, and the energy
price will be zero In addition, if DGG is required to start a unit in order to satisfy an LEM
nomination hereunder, then LEM shall pay a start-up fee in an amount of $20 per megawatt for
the full capacity of such unit
Responsive Spinning or Spinning Reserves
LEM will notify the ISO and DGG of any responsive spinning or spinning reserve carried by
DGG for the benefit of LEM Up to 20% of the capacity of any unit started for the benefit of
LEM and not serving load can be spinning reserve
Transmission
The delivery point shall be the generator bus for all purposes including the calculation of VAMM
impacts under ERCOT regulations LEM is responsible for securing and nominating to the ISO
planned transmission service for receipt of power and energy from DGG Additionally, LEM is
responsible for losses incurred in the delivery of energy from DGG to LEM
Emergency Conditions
(a) At such times as the ERCOT ISO requires conversion of responsive spinning or spinning
reserves to energy, LEM will notify DGG of such an event and any or all of the spinning and
supplemental reserves carried on the DGG units started for the benefit of LEM will be converted
into energy and the price for such energy shall be DGG's incremental costs of generation (as
described under "Energy Price") using DGG's then current dispatch fuel costs
Mr Jim Harder
Mr Tom Darte
Ms Sharon Mays
September 24, 1997
Page 4
(b) If LEM submits a Tolling Nomination and fails to deliver fuel for any reason other than
the fault of DGG, DGG will provide to LEM prompt notice of such failure and DGG's then
current dispatch fuel costs for the applicable period Within two hours after receipt of such
notice, LEM shall give notice to DGG that it will either (i) continue to receive scheduled energy
and pay an energy price based on DGG's stated fuel costs or (u) curtail purchases from DGG
without liability hereunder
(c) If delivery of gas to a DGG unit is curtailed due to force maJeure, or claim of force
maJeure by a supplier, then DGG shall be relieved of its obligations to supply energy at the
original price However, DGG shall remain obligated to supply energy at its incremental costs of
generation using the cost of replacement fuel Accordingly, DGG shall give prompt notice to
LEM of its loss of gas supply and the then current dispatch fuel cost for the affected unit Within
two hours after receipt of such notice, LEM shall give notice to DGG that LEM will either (i)
continue to receive scheduled energy under the new pricing or (n) curtail purchases from DGG
Representation
Each party represents and warrants to the other that it has the full power and authority to execute
and deliver this letter agreement and to perform all its obligations hereunder, the execution,
delivery and performance of this letter agreement and the performance of its obligations
hereunder and the consummation of the transactions described herein have been duly authorized
by all requisite action on its part, and it has duly executed and delivered this letter agreement and
this letter agreement constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms
If you are in agreement with the foregoing please execute where indicated below and fax a copy
of this letter to the undersigned
Sincerely,
LG&E ENERGY MARKETING INC ATTEST
By.
Scott A Noll,
Senior Vice President
Mr Jim Harder
Mr Tom Darte
Ms Sharon Mays
September 24, 1997
Page 5
AGREED TO AND ACCEPTED
CITY OF GARLAND
Title
Date
CITY OF DENTON
By
Title City Manager
Date 1,aOAQ2
GREENVILLE ELECTRIC UTILITY
SYSTEM
Title General Manager
Date ) /1¢/�;-)
ATTEST
ATTEST
- /j,
71
ATTEST
Mr Jim Harder
Mr Tom Darte
Ms Sharon Mays
September 24, 1997
Page 6
EXHIBIT A
Unit
Capacity
(MW)
Incremental
Heat Rate
(mmbtu/kWh)
Olinger 2
115
10,210
Olinger 3
150
10,980
Denton 5
66
11,950
Olinger 1
75
11,730
Denton 4
61
12,410
Newman 5
41
11,760
Denton 3
26
12,810
Greenville 3
40
13,190
Greenville 2
25
13,230
Denton 1
11
12,810
Greenville 1
18
13,200
Newman 4
17
13,010
Newman 3
17
13,200
Denton 2
11
13,030
Newman 1
8
15,270
Newman 2
7
15,320
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