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HomeMy WebLinkAbout1997-165C \DOCS\ORD\DELHIGAS ORD ORDINANCE NO. QH(05 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 DELHI GAS PIPELINE CORPORATION FOR THE PURCHASE OF SPOT MARKET NATURAL GAS; AUTHORIZING THE EXPENDI- TURE OF FUNDS THEREFOR; 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 the City Manager is hereby authorized to execute an Interruptible Natural Gas Sales and Purchase Agreement with Delhi Gas Pipeline Corporation providing for the purchase of spot market natural gas, a copy of which is attached hereto and incorporated herein. SECTION II. That the expenditure of funds as provided in the attached agreement is hereby authorized. SECTION III. That this ordinance shall become effective immediately upon its passage and approval. r PASSED AND APPROVED this the I ttday of^, 1997. JACVel JALER, MAYOR ATTEST; JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY BY: Mi-W �0 Standard Contract Standard Contract City of Denton Utilities Interruptible Natural Gas Sales And Purchase Contract Agreement Date June 1, 1997 Delhi Gas Pipeline Corporation (SELLER)a Delaware Corporation agrees to deliver and sell gas to the City of Denton, Texas (Buyer) and BUYER agrees to purchase and receive said natural gas from SELLER pursuant to the terms and conditions hereinafter set forth I DEFINITIONS: The term "Agreement" shall mean this Interruptible Natural Gas Sales and Purchase Contract including Attachment A which is incorporated herein The term "month" shall mean a calendar month The term "MMBtu" shall mean one million (1,000,000) British thermal units The term "Receiving Pipeline" shall mean the interstate, intrastate, or local distribution company immediately downstream of the Point Of Delivery The term "Buyers Notice" shall mean the letter agreement a form copy of which is attached hereto as Attachment A, which may be executed by BUYER and SELLER from time to time and which shall bind BUYER and SELLER to particular transactions for the purchase and sale of natural gas in accordance with the terms thereof and this Agreement The term "Point Of Delivery" shall mean the location of the physical delivery to the Receiving Pipeline 2 TERM. The initial term will be one year from the date hereof, and month to month thereafter subject to the right of either party to terminate this Contract on 30 day's prior written notice to the other party page 18 3 PRICE AND PAYMENT OF COSTS AND TAXES PRIOR TO DELIVERY On a monthly basis, the price to be paid by BUYER for gas delivered by SELLER shall be specified on the 'Buyers Notice" shown in Attachment A Prices shall include and SELLER shall be responsible for payment of all royalties, production taxes, property taxes, severance taxes, purchaser taxes, and all other taxes and license fees which attach to the gas prior to delivery hereunder Prices shall also include and SELLER shall be responsible for payment 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 Delivery BUYER shall pay transportation charges on the Receiving Pipeline, downstream of the Point Of Delivery 4 QUANTITY AND POINTS OF DELIVERY. Gas quantities and points of delivery will be specified on a monthly basis on the 'Buyers Notice", as shown in Attachment A, signed by BUYER and by SELLER Requests for bids submission of bids, or preliminary correspondence will not act as a Buyers Notice and shall not be the basis for gas deliveries under this contract SELLER shall deliver gas quantities consistent with the quantity, Point Of Delivery, Receiving Pipeline, and dates as specified in the 'Buyers Notice" from the BUYER i BEST EFFORTS PERFORMANCE SELLER will make a best effort to deliver, and BUYER best effort to receive the gas quantities as specified in the Buyers Notice Either party may at anytime curtail or interrupt service with no liability to either party The curtailing party will make diligent efforts to notify the other party of the situation within 48 hours 6 INCREASES IN QUANTITY AND CHANGES TO POINTS OF DELIVERY BUYER may request increases to gas quantities or changes in points of delivery 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 he must notify BUYER 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 transportation charges owed by the BUYER as a result of the SELLERS deliveries in excess of 4% of the Buyers Notice or at locations not specified in the 'Buyers Notice" 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 free of water vapor (Dry) Prices will be in US dollars 9 QUALITY AND PRESSURE' The gas delivered by SELLER shall meet the pressure requirements and quality specifications of the Receiving Pipeline 10 TITLE SELLER warrants for itself, its successors, heirs and assigns, title to all gas delivered and accepted by BUYER hereunder SELLER warrants it has the right and lawful authority to sell the gas and that such gas is free from liens, encumbrances and claims of every kind SELLER shall indemnify and save BUYER harmless from all suits, claims liens, damages costs, losses, expenses and encumbrances of whatsoever nature ansing out of claims of any or all persons to said gas or the title of said gas SELLER shall be in control and possession of and responsible for any nsk of loss, damage, claim, liability or injury caused thereby until the gas has been delivered to the BUYER at the Point Of Delivery Title and risk of loss shall pass at the Point Of Delivery from SELLER to BUYER t 1 DETERMINING PAYMENT VOLUMES On approximately the 15th day following the end of each month of gas deliveries SELLER shall furnish BUYER a statement specifying volume delivered, location and Receivin, Pipeline If these volumes differ from BUYER's independent monitoring of delivenes or Receiving Pipeline's records, BUYER shall have the right to pay on the undisputed amount either (i) under protest, or (n) upon final agreement being made on the delivered volumes by BUYER, SELLER and Receiving Pipeline BUYER and SELLER shall have the right to later revise payment volumes as a result of additional or revised volumetric data from the Receiving Pipeline or other companies associated with the production sale storage or 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 Paragraph 11 Payments statements should be directed to BUYER at City of Denton Utilities Electric Production Division 1701-A Spencer Road Denton, TX 76205 Attn Jim Thune, Manager, Electric Production page 20 13 NOTIFICATION. Communications regarding the performance of this contract shall be directed to SELLER Delhi Gas Pipeline CorpIJYER 1700 Pacific Avenue Dallas, Texas 75201-4696 Attn: Gas Sales Administration 14 PERFORMING NOMINATIONS City of Denton Utilities Electric Production Division 1701-A Spencer Road Denton, TX 76205 Attn Jim Thune, Manager, Electric Production BUYER will be solely responsible for nonunation of gas volumes to the Receiving Pipeline unless SELLER is given specific written authorization from BUYER to perform these nominations SELLER shall be responsible for all necessary nominations to transporters and all others related to the supply of natural gas prior to Point Of Delivery 15 EXCHANGE OF GAS QUANTITY INFORMATION. During the period of actual gas deliveries, SELLER and BUYER shall make available to each other current estimates of gas flows at the Point(s) of delivery under this agreement for the purposes of nomination to others and the monitoring of actual gas quantities delivered If Seller is unable to provide current estimates of gas activity to BUYER, SELLER will assist BUYER in obtaining said information from pipeline transporters, processing plant operators well operators, or upstream suppliers 16 GOVERNING STATE This agreement shall be construed pursuant to the laws of the State of Texas and venue for its construction and enforcement shall lie in the courts of Denton County, Texas This agreement is sub3ect to the Letter Addendum dated May 12, 1997 from jj Ben Reese of Delhi Gas Pipeline Corporation. 1`t� SELLER Delhi Gas Pipeline Corporation BUYER City of Denton, Te s By Ben se By Title Vice President Title /� Date May 13, 1997 Date Co —/% — 9 page 21 DATE JUNE 17, 1997 [SiV619401"C1411 TO Mayor and Members of the City Council FROM Kathy DuBose Executive Director of Finance SUBJECT BID # 2047 - SPOT MARKET NATURAL GAS RECOMMENDATION- We recommend approval of a contract with Delhi Gas Pipeline Corporation for natural gas spot purchase consideration SUMMARY- 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 Citv s monthh spot gas purchase program for fuel at the Denton Municipal Utility Electric Production Plant We currently have contracts for spot supply of natural gas with Enserch Mobil Trinity Tristar Highland Taurus, Cornerstone, Midcon and National Energy & Trade, LLC These contracts will remain in effect until either party cancels Approval and execution of a contract with Delhi will extend the competitive bid opportunities for natural gas spot supply These contracts allow for the competitive bidding on a monthly basis of prices for natural gas with all suppliers bidding under the same terms and conditions Enron took exception to our standard contract, therefore, we are not recommending they be added at this time PROGRAMS, DEPARTMENTS OR GROUPS AFFECTED: Cm- of Denton Electric Production Division FISCAL IMPACT Funds for the purchase of Natural Gas as a fuel for the Electric Production facilm are part of the annual budget for supplies and services Attachments Contract with Delhi Tabulation of responding suppliers Respectfullv submitted KathV,,Vut3jje Executive LYrrector of Finance Approved rc Name Tom D Shaw C 7-Vf— Title Purchasing \gent DELHI GAS PIPELINE CORPORATION May 12, 1997 City of Denton Purchasing Department 901-B Texas Street Denton, Texas 76201 Attention- Tom Shaw RE Interruptible Natural Gas Sales and Purchase Agreement, Dated June 1, 1997 ("Standard Contract"), Clarifying Addendum Gentlemen The purpose of tliis letter is memorialized in writing certain clarifications given by the City of Denton ('Buyer) in response to questions by Dellis Gas Pipeline Corporation ('Delhi') concerning the meaning and intent of the Solicitation for Natural Gas Supplv ('Solicitation') and Denton's Standard Contract There are vanous references in the Solicitation and the Standard Contract to the 'Buver's Notice" which is a form attached to the Standard Contract Denton has clarified its intent by stating that even if Dellu's bid is accepted neither Dellis nor Buyer shall have any obligation with respect to this purchase and sale of gas unless both Delhi and Buyer execute a Buver's Notice agreeing to purchase and sell gas Section 6, Level of Service to be Provided of the Solicitation and the definition of, "Interruptible Best Efforts Supply", on Appendix A of the Solicitation both indicate that either party ma% interrupt, without liability, the purchase and sale of a gas quantitv after both parties sign a 'Buver s Notice" for that quantity for any reason except price However, Paragraph 5 of the Standard Contract does not exclude price as a basis for interruption without habihty Buyer has clarified this inconsistency by explauumg that neither party shall have the right to interrupt or curtail the purchase and sale of gas under a fully executed 'Saver's Notice"because of the price in effect for the gas purchased under that "Buyer's Notice" or because of changes in the market price Delhi's bid is conditioned upon the foregoing clarifications Very truly Hours Bt n Re(se 1700 Patric Avenue ! Uiomeihtru�ordl�nnl�ndanrnd Lublr Dallas Texas 75201 214 954 2000 3 BID ## 2047 BID NAME NATURAL GAS DELHI GAS ENRON PIPELINE OPEN DATE MAY 13, 1997 # QUANTITY DESCRIPTION VENDOR VENDOR LT SPOT MARKET NATURAL GAS 0 n