HomeMy WebLinkAbout1997-019ORDINANCE NO 9 9 '0
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS,
APPROVING AN INTERRUPTIBLE NATURAL GAS SALES AND PURCHASE AGREEMENT
BETWEEN THE CITY OF DENTON AND NATIONAL ENERGY & TRADE, L L C FOR THE
PURCHASE OF SPOT MARKET NATURAL GAS, AUTHORIZING THE EXPENDITURE OF
FUNDS, AND PROVIDING FOR AN EFFECTIVE DATE
WHEREAS, the City has a need for interruptible natural gas purchases to provide fuel for
the Spencer Electrical Generating Station, and
WHEREAS, the City could realize price savings by purchasing gas on the spot market, and
WHEREAS, the City has solicited bids for one year contracts with spot market suppliers of
natural gas, in accordance with Chapter 252 of the Local Government Code, NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION I That it authorizes the Mayor to execute the attached Interruptible Natural Gas
Sales and Purchase Agreement with National Energy & Trade, L L C providing for the purchase of
spot market natural gas
SECTION II That is authorizes the expenditure of funds in accordance with the terms of
the Agreement
SECTION III That this ordinance shall become effective immediately upon its passage and
approval
PASSED AND APPROVED this the day of 1997
w
JACI ILLER, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
BY
NATURA ASORD ANCE
APPROVED AS TO LEGAL FORM
HERBERT L PROUTY, CITY ATTORNEY
CITY COUNCIL AGENDA ITEM
TO. MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM- Ted Benavides, City Manager
SUBJECT ADDITIONAL NATURAL GAS SPOT SUPPLIER CONTRACTS
RECOMMENDATION -
The Electric Utility recommends executing a contract with National Energy & Trade,
L L C , for natural gas spot supply
SUMMARY.
National Energy & Trade, L L C responded to requests for natural gas spot supply per
the "Standard Contract, City of Denton Utdnies"and met requirements of the City of
Denton, Electric Production Division, and Spot Fuel Purchase Program for natural gas
spot supply
BACKGROUND:
In May 1992, the City of Denton instituted bidding procedures for spot purchases of
natural gas whereby contracts were established with gas companies interested in
participating in the City's monthly spot gas purchase program
The Electric Utility currently has contracts for natural gas spot supply with Enserch,
Mobil, Trinity, Tristar, Highland, Taurus, Cornerstone and Midcon Those contracts will
remain in effect until either party cancels allowing competitive bidding on a monthly basis
Execution of a contract with National Energy & Trade L L C will extend the competitive
opportunities for natural gas spot supply
City Council Item
Additional Gas Supplier
page 2
PROGRAMS, DEPARTMENTS OR GROUPS AFFECTED.
City of Denton, Electric Production Division, Spot Fuel Purchase Program
FISCAL IMPACT
Increase competition for the supply of fuel gas requirements
Respectfully submitted,
Ted Benavides
City Manager
Prepared by
Jim Thune, lant Manager
Approved by Approved by:
R E Nelson, Executive Director Tom D. Shaw, Purchasing Agent
Utilities
Exhibits I Signed contract, National Energy & Trade, L L C
II. Tabulation Sheet
Standard
Contract
Standard Contract
City of Denton Utilities
Interruptible Natuial Gas Sales And Purchase Contract Agieement
Date 12/01/96
National Energy & Trade, L.L.C. (SELLER)a Texas
C orpoiation
agrees to deliver and sell gas to the City of Denton i eras (Buva ) and BUYER agree, to puicha,L
and receive said natural gas from SELLER pill suant to the terms into wndnions h�i enOft Ll ,Cr tol ui
1 DEFINITIONS
I he teen "Agreement" shall mean this Interruptible Natuial Gas bales and Pm chase C ontr au
including Attachment A which is mcoi porated herein
The term "month" shall mean a calendar month
The term WNIBtu" shall mean one million (1,000 000) British thermal units
The term "Receiving Pipeline" shall mean the interstate intrastate of local distribution
company immediately downstream of the Point Of DehI eR
The term "Buyers Notice" shall mean the letter agreement a form copy of which is attached
hereto as Attachment A, which maybe executed by BUYER and SELLER li oni ante to tine
and which shall bind BUYER and SELLER to particular transactions toi the puiuimase and
sale of natural gas in accordance with the ter ms thereof and this Agi eement
The term "Point Of Delivery" shall mean the location of the physical deliveiN to the Recen inu
Pipeline
2 TERM
The initial term will be one year from the date hereof and month to month thci cattcr sublcu
to the right of enhei party to terminate this Contract on ,0 dav's prior write' ii mucc ro the
othei party
4 page 18
3 PRICE AND PAYMENT OF COSTS AND 1AXES PRIOR TO DELIVERN
On a monthly basis, the pace to be paid by BUYER for gas delivered by SELLER shall be
specified on the "Buyers Notice" shown in Attachment A Prices shall include Ind SELLLR
shall be responsible for payment of all royalties pioduction taxes, pioperty taxes sc�eianc,e
taxes, purchaser taxes, and all other taxes and license tees which attach to the ,as pi to] to
delivery hereunder Prices shall also include and SELLER shall be responsible toi pavnient
of gathering and transportation charges to the Point Of Delivery, payments or other charges
thereon applicable before the title of gas passes to BUYER at the Point Of Deliver \ BUYER
shall pay transportation charges on the Receiving Pipeline downstream of tine Point Of
Delivery
4 QUANTITY AND POINTS OF DELIVERY
Gas quantities and points of delivery will be specified on a monthly basis on the "Bu\CIS
Notice" as shown m Attachment A, signed by BL YER and by SELLER Requests for bids
submission of bids, or preliminary correspondence will not act as a Buyet s Nonce and shall
not be the basis for gas deliveries under this contract SELLER shall deh�er .,ab quanuuc S
consistent with the quantity, Point Of Delivery, Receiving Pipeline, and dates as specified in
the "Buyers Notice" from the BUYER
5 BEST EFFORTS PERFORMANCE
SELLER will make a best effort to deliver and BUYER best effort to tecu\� the gas
quantities as specified in the Buyers Notice Eitlici paity may at any time cur tail of interrupt
service with no Lability to either partv The curtailing partv will make diligent efforts to notlA
the other party of the situation within 48 hours
6 INCREASES IN QUANTITY AND CHANGES TO POINTS OF DELL ERN
BUYER may request increases to gas quantities of changes in points of deli\ cry by specifying
these requests in a revised "Buyers Notice" to the SELLER If accepted by SELLER
SELLER shall make all arrangements needed to revise deliveries within 24 hours if SELLER
wishes to increase gas quantities or change points of delivery, lie must notify BUN ER and
receive a revised Buyers Notice signed by BUYER to do so
7 OVER -DELIVERIES
If SELLER provides gas quantities for a month in excess of 4% above the quantities in the
"Buyers Notice" or at points of delivery not specified in the "Buyers Notice", BUYER shall
have the right to refuse the quantities of gas and shall be exempt from any payments on those
gas quantities SELLER shall be liable for any penalties or excess storage or tiansportauon
changes owed by the BUYER as a result of the SELLERS deliveries in execs of 4% of the
Buyers Notice or at locations not specified in the "Buvei s Notice"
5 page 19
8 GAS AND PRICE UNITS
All gas quantities and prices shall be in MMBtu adjusted to 14 650 psi at a temperature of
60 degrees Fahrenheit, with both Mcf and Btu tree of v atei vapoi (Drv) Pi ices will be in
US dollars
9 QUALITY AND PRESSURE
The gas delivered by SELLER shall meet the pressure i equirements and quality specifications
of the Receiving Pipeline
10 TITLE
SELLER warrants for itself its successors hens and assigns title to all uas deli\eied and
accepted by BUYER hereundei SELLER wariants it has the right and jarful authoiit\ to
sell the gas and that such gas is tree from liens eneumbiances and clainis of Lund
SELLER shall indemnify and save BUYER harmless hone all suits elarin, hues danndues
costs, losses, expenses and encumbiances of whatsoe\ei nature ausing Out of 0a1111S of am
or all persons to said gas or the title of said gas SELLER shall be in coati of and possession
of and responsible for any risk of loss, damage, claim liabiht� or inluiti caused thu ebv until
the gas has been delivered to the BUYER at the Point Of Delivery Title and i is], of loss shall
pass at the Point Of Delivery from SELLER to BUYER
11 DETERMINING PAYMENT VOLUiV1ES
On approximately the 15th day following the end of each month of gas dehvei reS SELLER
shall furnish BUYER a statement specifying volume delivered location and Receiving
Pipeline If these volumes diffei trom BUYER's independent monitoring of deln eves or
Receiving Pipeline's records, BUYER shall have the tight to pay on the undisputed amount
either (1) under protest, or (ii) upon final agreement being made on the dchtiei ee �oluntes M
BUYER, SELLER and Receiving Pipeline BUYER and SELLER shall hay e the i rim to laic]
ievise payment volumes as a result of additional or revised volumetric data from the
Receiving Pipeline or other companies associated with the production sale Stoi age of
transportation of the gas
12 PAYMENT
Within 12 days of receipt of the statement BUYER shall make payment to SELLER for the
gas quantities as determined in Patagraph l l Payments statements should be dneeted to
BUYER at City of Denton Utilities
Electric Production Division
1701-A Spencer Road
Denton TX 76205
Attn Jim Thune
Manager Electuc Production
6 page 20
13 NOTIFICATION
Communications regarding the perfoimance of this contract shall be directed to
SELLER
National Energy & Trade, LA
3700 Buffalo Speedway, Suite
Houston, Texas 77098
14 PERFORMING NOMINATIONS
BUYER Citv of Denton Utilweti
- Elects rc Production Dn ision
1100 1701-A Spencer Road
Denton TX 76205
Attn Jun Thune
Manager Eleatic PIUdl.101011
BUYER will be solely responsible for nomination of gas volumes to the ReCCi\ mg Pipeline
unless SELLER is given specific, written authorization from BUYER to peitoiin these
nominations SELLER shall be responsible for all necessan, nominations to a anspoi tei s and
all others related to the supply of natui al gas pi for to Point Of Delivery
15 EXCHANGE OF GAS QUANTITY INFORMATION
During the period of actual gas deliveries SELLER and BUYER shall male available to each
other current estimates ofgas flows at the Point(s) of delivery undei this agicenunt tot the
puiposes of nomination to otheis and the monitoring Of actual gas quantities delrveted It
Seller is unable to provide current estimates of gas activ itv to BUYER SELLER will assist
BUYER in obtaining said information from pipeline transporters processing plant Opel atoi s
well operators or upstream suppliers
16 GOVERNING STATE
This agreement shall be construed pursuant to the laws of the State of 7 evas and venue toi
its construction and enforcement shall he in the courts of Denton County, Teas
SELLER
Natio Ene gy I Trade, L.L.c
$y Jo Gutie ez
Title Vice President
Date 11/27/96
BUYER
By
Date r -a- I - 9 7
7 gaga _1
ATTACHMENT A
DENTON MUNICIPAL UTILITIES - SPE\C ER ST MON
170 1 A SPENCER ROAD
DENTON TE(As 76205
(e 1 7) 383 7551
FAx t81 7) 383 7555
Date
Firm Address
Dear
Below is a Buyers Notice for (month, year) supply to the City of Denton, Texas Under this
purchase the City of Denton, Texas, will take title to the gas at the point of delivei) and be i esponsible
for payments subject to the terms of the purchase contract
BUYERS NOTICE
GAS SALES AND PURCHASE AGREEMENT
Buyers Notice Number Conti act Date
BUYER City of Denton, SELLER
Electric Production Division
All volumes and prices are based on mmBtu's, adjusted to 14 65 di )/di v
Prices are in U S. dollars
Dates for Point of
delivery delivery
Accepted and Agreed
(Seller)
Dated
Pipeline Volume
(NlmBtu/
14 65 D/D)
Lone Star
(Buyer)
Accepted and Agreed
Dated
P1ice
(S/miu Bt u
14 65 D/D1
To facilitate payment, please sign the above Buyers Notice and i eturn via fax, attn Jim Thunc
page 22
BID # ��- -- - 1971
BID NAME NATURAL GAS NATIONAL
ENERGY
OPEN DATE DECEMBER 3, 1996 & TRADE
# QTY DE9CR[PT10N _� VENDOR
1 SPOT MARKET NATURAL GAS GAS DAILY INDEX
+ 14 / MMBTU
* 1 MILLION (1,000,000) BRITISH THERMEL UNITS
z
VENDOR VENDOR VENDOR