1998-012 O IN CENO
AN ORDINANCE AUTHORIZING THE CITY MANAGER 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, 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 Mumclpal
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 ganerat~on capacity, and desires to join the City of Garland and the Greenville
Electrtc 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 Utlhty System, the City of
Denton, Texas and LG&E Energy Marketing, Inc (the "Agreement") a copy of wluch
Agreement Is attached hereto as Exhtblt "A" and is incorporated herewith by reference
SECTION II. That the City Manager is further authorized to execute such other and
further documents, including without hmltatlon, any confirmation documents, which are
necessary and appropriate to effectuate the terms of the Agreement
SECTION III That the expenchture of funds as anthonzed ~n the Agreement is hereby
authorized
SECTION IV That flus ordinance shall become effective ~mme&ately upon ~ts passage
and approval
PAS SED AND APPROVED this the ~7~___~__2(_2t~day o f 0t(0t_~/7.~t/~/~g/~~ ,1998
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPR~Yv'ED AS TO LEGAL FORM
HERBERT L PROUTY, CITY ATTORNEY
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
mumclpal government with an electric utahty, and the GREENVILLE ELECTRIC UTILITY
SYSTEM, an autonomous mtmlelpal eleeme utility (collectively, "Counterpart¥"), 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 eonslderatlun 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
("FERC"), 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 w~ll 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
2 2 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, dehvery 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 capamty 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
3 2 Confirmations The Parties' Authorized Representative shall agree on and
confirm the price, quantity, terms, conditions, lnterruptlbflity, compensation, points of
delivery and scheduling provisions for all Transactions under this Agreement
3 2 1 Hourly and Dml¥ Transactions Any hourly or dmly 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 Pames, 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 Confirmataons may be in the form attached hereto as Schedule 3 2
3 2 4 Conflmts The terms of each Transaction and the apphcable Confirmatton
and thts Agreement form, shall be read and construed as, one stngle agreement
Any lnconststency or conflmt between thts Agreement and the apphcable
Confirmation shall be resolved in favor of the specffic Confirmatton for the
speeffic Transactton
3 3 Tyne of Enemy Unless otherwise agreed by the Parttes ~n the apphcable
Confirmatton, Transactions hereunder shall conform to the Electrm Rehablhty Counctl
of Texas ("ERCOT") interchange classfficahons as described tn the ERCOT Operattng
Grade No 1 Sectton E 2 dependent on type of resource utlhzed tn the transactton as
follows
3 3 1 Source Type A - Can be tnterrupted by the Seller for any reason, tnclud~ng
other economm opportumt~es
3 3 2 Source Type B - Can not be ~nterrupted by the Seller for any reason unless
so ordered by the ERCOT Independent System Operator ("ERCOT ISO") tn
accordance with the ERCOT Emergency Electric Curtmlment Plan ("EECP") and
on a pro-rata basts w~th the Seller's nattve load customers
3 3 3 Source Type C - Can be interrupted by the Seller for a system fome
majeure event Cannot be tnterrupted by the Seller for economic reasons
3 3 4 Source Type D - Can be interrupted by the Seller tf the resource or
resources designated prior to the transactton become hmtted ~n some way Cannot
be mterrupted by the Seller for economm reasons
3 4 Scheduhm, Buyer vall submit a written schedule for dehvery of energy to the
ERCOT ISO and to the Seller by 10 00 a m Eastern Standard Ttme on the day before the
reqmred dehvery of scheduled energy
3 5 Recordmgs The Part,es agree not to contest or assert any defense to the vahd~ty
or enforceabxllty of telephomc requests under laws relating to whether certatn agreements
are to be tn wnttng or s~gned by the Party to be thereby bound, or the authority of any
employee of such Party to make such communmatton Each Party consents to the
recording of ~ts representatxves' telephone conversattons wtthout any further notme All
recordings or electromc commun~catmns may be ~ntroduced tnto evtdence to prove oral
agreements between the Part,es
3 6 Gmdehnes It ts the ~ntent of the Part~es that tn effecttng all transacttons under
thru Agreement, both Parttes wtll operate ~n accordance wtth apphcable ERCOT Grades
and NERC gmdehnes and m a manner conststent wtth prudent utthty practices The
Partxes shall ~mmedmtely contact one another tn the event of sudden or emergency
curtailment or xntermptmn of energy deliveries hereunder
3 7 Delivery Point, Title and Risk of Loss
3 7 1 Dehver¥ Point The delivery point will be specified for each Transaction
m the apphcable 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 R~sk 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
3 9 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
4 1 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 m kilowatt-hours delivered, by one Party to the other In
mamtmnmg 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
4 2 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 durmg such month
in such detml and with such segregation as may be needed for operating records under
this Agreement
4 3 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 mall The system logs shall form the basis for the payments
described in this Section Buyer shall pay such amounts, by first class mai1 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 l0 3 All payments provided
hereunder shall be directed by Buyer to the address or wire transfer number specified m
Schedule l0 3
4
4 4 Late Payments All mounts owed by one Party hereto to the other shall be due
and payable on the fifteenth (15th) day following receipt of a ball Interest on unpmd
mounts shall accrue at the rate of two percent (2%) per annum above the prime eom-
merclal lendmg rate estabhshed from time to t~me by Chase Manhattan Bank, N A, New
York, New York, or the statutory ~nterest rate as set forth m the Texas Government Code,
whichever ~s less, from the date due until the date upon whmh payment ~s made Unless
otherwise agreed upon, a calendar month shall be the standard bdhng period Where
amounts are due from both Part,es to the other, bdls shall wherever possible be stated ~n
the net amount
4 5 Payment, Nettmg/Setoff If each Party ~s each reqmred to pay an amount to the
other Party ~n the same month, then such amounts w~th respect to each Party may be
aggregated and the Part,es may d~scharge their obhgattons to pay through netting, ~n
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 ~tself all rights,
setoffs, counterclmms and other remedies and defenses to the extent not expressly demed
or wmved here~n which such party has or may be entitled to arising from or out of th~s
Agreement All outstanding Transactions and the obhgatxons to make payment ,n
connection therewith or under th~s Agreement may be offset agamst each other, set off or
recouped therefrom
4 6 Bdhn~ D~s~utes If any port~on of any bill ~s ~n d~spute, then the d~sputed amount
shall be prod under protest when due Disputes shall be d~scussed and resolved by the
Authorized Representatives, who shall use their best efforts to ammably and promptly
resolve the d~sputes Upon detenmnat~on of the correct bflhng amount, the proper
adjustment shall be prod or refunded promptly after such determ~natmn w~th ~nterest
accrued on the amount of the adjustment m accordance with Section 4 4 and computed
from the date payment is received to the date the adjustment is made Invomes and other
bdlmg documentation shall be sent to the addresses specffied in Schedule 10 3
5 DEFAULTS AND REMEDIES
5 I Default The occurrence of the following shall constitute an "Event of
Default"
5 1 1 Fmlure by e~ther Party to pay any amounts due hereunder, and such
breach shall continue for a period of five (5) days after the date on whmh
wmten not,ce thereof shall have been received by the nonpaymg Party
5 1 2 E~ther Party materially breaches any contractual obhgat~on under this
Agreement, and such breach shall contmue for a period of ten (10) days after the
date on which written notxce thereof shall have been received by the defaulting
Party, prowded, that ~f ~t shall be ~mpractlcable or impossible to remedy any
such breach w~th~n such grace period, such grace period shall be extended for an
additional period reasonably necessary to remedy such failure ff dunng such
additional per~od the defaulting Party shall be dthgently pursmng a cure for such
breach
5 1 3 Either Party 0) makes any general assignment or any general arrangement
for the benefit of creditors, (u) files a petition or otherwise commences, authorizes
or acquiesces m the commencement of a proceeding or cause of action under any
bankruptcy or sunllar law for the protection of creditors, or has such a petition
involuntarily filed against it and such petition ts not withdrawn or dismissed
within thirty (30) days after such fihng, (m) otherwise becomes bankrupt or
insolvent (however evidenced), or (iv) ts unable to pay tis debts as they fall due
5 1 4 A representation made or repeated or deemed to have been made or
repeated by a Party proves to have been incorrect or mlsleadmg tn any material
respeat when made or repeated or deemed to have been made or repeated
5 2 Remedies
5 2 1 Seller's Default If Seller fmls to dehver energy and/or capacity, and such
failure ts not excused, then as Buyer's sole and exclusive remedy for such failure,
other than as set forth m 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 0) 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, tf any) minus 0Q the applicable energy and/or
capacity price agreed to for the specific Transaction, provided, however, tf the
amount determined tn the preceding clause 0) is negative, then the amount shall
be equal to zero for purposes of caleulatmg the deficiency payment
5 2 2 Buyer's Default If Buyer falls to schedule and to receive energy and/or
capacity, and such feulure ts 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 th~s transaction) an
amount for each Mwhr of such deficiency equal to the sum of 0) the apphcable
energy and/or capacity price agreed to for the specific Transaction mmus (u) 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 d~fferenees tn transmission costs, if any), provided, however, if
the mount determined m the preceding clause 0) ts 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 g~vmg not~ee of
termination to the defaulting Party m addition to recovering damages under Section 5 2
above
5 4 Additional Remedies In addition to the remedies set forth in Sections 5 2 and 5 3
above, if either Party falls to pay any mounts in accordance with this Article when due,
the aggrieved Party shall have the right to (1) suspend performance until such amounts
plus interest have been paid, and/or (n) exercise any remedy available at law or in eqmty
5 5 Duty to Mitigate Each Party shall use its best efforts to mitigate its damages
5 6 Release, No Consequential Damages Neither LEM nor Counterparty, as the case
may be, shall hold the other Party 0ncludlng its corporate affiliates, parent, subsidiaries,
d~rectors, officers, officials, employees and agents and, w~th respect to Counterparty, their
present and former agents, employees, officials and representatives in their officml,
lnd~wdual and representative capacities) bible for any claims, losses, costs and expenses
of any kind or character 0ncludmg, without hmltatlon, loss of earnings and attorneys'
fees) for damage to property of the other Party, ~n any way occurnng ~nmdent to, arising
out of, or in connection w~th the releasing Party's performance under th~s Agreement
Notwithstanding anything to the contrary elsewhere in this Agreement, neither Party, its
affihates, or their present and former agents, employees, officials and representatives ~n
their offimal, individual and representative capacities shall, ~n any event, be hable to any
other Party, its affihates, or their present and former agents, employees, officmls and
representatives m their official, lndlwdual and representative capacities for any md~rect,
incidental, special or consequentml damages, including but not hmlted to, loss of reve-
nue, cost of capital, loss of business reputation or opportumty whether such habdlty
arises out of contract, tort (including neghgence), strict hablhty or otherwise
6 REPRESENTATIONS AND WARRANTIES
6 1 Renresentat~ons 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 W~th respect to LEM, ~t 1s duly organized
and vahdly ex~stmg as a corporation ~n good standing under the laws of the juris-
diction of its incorporation W~th respect to each of the Counterpart~es, it ~s
organized and validly emstmg as a mumc~pal corporation having an electric
utthty, or as an autonomous municipal electric utthty under the laws of the State
of Texas
6 1 2 Power and Authority It has all reqms~te power and authority to own its
property and assets and to transact the business in whmh 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 obhgat~ons hereunder and thereunder
6 1 3 Due Authorization The execution, dehvery and performance of th~s
Agreement and each Confirmation and the performance of its obligations here-
under and thereunder and the consummation of the transactions described hereto
and therein have been duly authorized by all reqms~te action on its part
7
6 1 4 No Conflict Nexther the execution, dehvery or performance by it of th~s
Agreement or any Confirmation, tts comphance w~th the terms hereof and thereof,
tts fulfillment of any of the terms and condtttons hereof and thereof, nor the
consummatton of the transactions contemplated heretn and therein conflicts wtth,
results ~n a breach of or constttutes a default under 0) anY of the terms, cond~ttons
or prows~ons of its charter, articles of tncorporatton, by-laws, partnership
agreement or other constituent documents, (n) any federal, state or local law, or
any order, rule, writ, lnjtmctton, decree, or regulatton of any governmental
authority hawng jurlsdmt~on over it or tts properties or by whmh tt ~s bound, or
(m) any agreement or instrument to which it ~s a Party or by which any of tts
properties ~s bound or affected
6 1 5 Execution, Delivery and Performance It has duly executed and dehvered
thts Agreement and each Confirmation and th~s Agreement and each Confirmatton
constitutes tts legal, vahd and b~ndtng obhgatlon, enforceable agmnst tt m
accordance w~th tts terms
6 1 6 Governmental An~rovals Except for any tmttal authorization reeqmred
from the goverumg body of a mummpal corporation to enter this Agreement, no
approval or vahdat~on of, or fihng, recording or regtstratton with, or exemptton
by, any governmental anthonty ts reqmred to authorize, or ts reqmred ~n con-
nectlon w~th (0 the execution, dehvery and performance ofth~s Agreement or any
Confirmation or (n) the legahty, valldtty, btndtng effect or enforceab~hty of thts
Agreement and each Confirmation
6 1 7 No L~t~eat~on It has not recetved any nottce, nor to the best of tts
knowledge ts there pendtng or threatened any nottce of any vtolatton of any
apphcable law, rule, regulation, order, win, judgment, decree or other legal or
regulatory determination by a court, regulatory agency or governmental authority
of competent junsdmtton or of any stat, proceedtng, judgment, ruhng or order by
or before any court, tribunal or any governmental authority whmh may have a
material effect on tts ability to perform hereunder or under any Confirmation
6 1 8 T~tle All energy dehvered hereunder shall be free and clear of all hens or
other encumbrances
7 REGULATORY AUTHORITY
7 1 Ap~hcable Law Th~s Agreement and any amendments thereto shall be subject to
all applicable laws and to the rules and regulattons of governmental authorities and
agenmes hawng jurtsdmt~on Ifreqmred, LEM shall tender thts Agreement for filing w~th
FERC tn a t~mely fashion, tn the manner and to the extent reqmred by law
7 2 Chan~e tn Rates Nothing contained here~n shall be construed as affecttng in any
way e~ther Party's rights under thts Agreement, or any rate schedule lncorporattng tt, to
unilaterally make apphcat~on to FERC for a change ~n rates under Section 205 of the
Federal Power Act and pursuant to FERC Rules and Regulattons promulgated thereunder,
8
~rowded. 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 Part,es so agree
8 FORCE MAJEURE
8 1 Force Maleure The term "Force Maleure" shall be deemed for the purpose of th~s
Agreement to mean acts of God, condttlons reqmnng curtailment of transactions pursuant
to the ERCOT EECP, strikes or other labor d~fficultles, war, nots, requirements, actions
or failures to act on the part of governmental authorities preventing performance, lnabthty
despite due dxl~gence to obtmn reqmred hcenses, accidents, fires, fmlure of, damage to,
loss of right to or destruction or breakdown of necessary famhtles, fmlures of facilities, or
transportation or transmission delays or accidents, or other samlar or dlss~mdar causes
beyond the control of the Party affected which causes such Party could not have avoided
by exercise of due dthgence and reasonable care Nothing contained here~n shall be
construed to require a Party to settle any strike, lockout, work stoppage or other ~ndustnal
disturbance or d~spute ~n whmh it may be revolved or to take an appeal from any judm~al,
regulatory or administrative action Any Party rendered unable to fulfill any of ~ts
obhgat~ons under th~s Agreement by reason of Force MaJeure shall exercise due d~hgence
to remove such lnabd~ty with all reasonable d~spatch If either Party is unable, in whole
or m part, to perform any of its obhgatlons by reason of Force MaJeure, then the
obligations of the Party relying thereon, insofar as such obhgatlons are affected by such
Force MaJeure, shall be suspended and/or canceled during the continuance thereof but no
longer The Party invoking Fome MaJeure shall specifically state the full particulars of
the Force MaJeure and the t~me and date when the Force Majeure occurred Notices
g~ven by telephone under the prowslon of this Article 8 shall be confirmed in writing as
soon as reasonably possible When the Force MaJeure ceases, the Party relying thereon
shall g~ve prompt notice thereof to the other Party Sales or purchases pursuant to this
Agreement may be terminated by the Party not experiencing the Force Majeure if such
event of Force Majeure continues for a period of thirty (30) continuous days
9 INDEMNIFICATION AND LIMITATION OF LIABILITY
9 1 Indemmtv To the extent allowed by law, each Party shall mdemmfy, defend and
hold harmless the other Party from and against any habd~ty, 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 facd~tles 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
neghgence, willful misconduct or violation of any legal requirement of the indemnified
Party
9 2 Comnllance Each Party shall be responsible for its own comphance 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 habthty,
loss, cost or expense arising out of its fmlure to comply w~th such laws and regulations
10 MISCELLANEOUS
10,1 Entire Agreement This Agreement and each Confirmation constitutes the entire
agreement between the Part,es ralatmg to the subject matter hereof and supersedes any
other agreements, written or oral, between the Parties concerning such sub.~ect matter
10,2 Interpretation Defined terms m th~s Agreement shall include ~n the singular
number the plural and m the plural number the singular Whenever the context may
require, any pronoun shall include the corresponding mascuhne, fem~mne and neuter
forms Any reference m this Agreement to "Section," "Article," "Exhibit" or "Schedule"
shall be references to th~s Agreement The Parties acknowledge that each Party and its
counsel have reviewed and rewsed th~s 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 m the mterpretatton of this Agreement
10 3 Notices All notices, requests, statements or payments shall be addressed as
specified m Schedule 10 3 Notices required to be ~n writing shall be dehvered by letter,
facsimile or other documentary form Not,ce by facsimile or hand dehvery shall be
deemed to have been received by the close of the business day on which ~t was
transmitted or hand dehvered (unless transuntted or hand dehvered after close, m which
case ~t shall be deemed received at the close of the next business day) Not~ce by
overmght mall or courier shall be deemed to have been received two business days after ~t
was sent A Party may change ~ts address by providing not~ce of same m accordance
herewith
10 4 No Wmver No wmver at any time by any Party hereto of its r~ghts with respect to
the other Party or v~th respect to any matter arising m counect~un with th~s Agreement
shall be considered a waiver w~th respect to any subsequent default or matter
10 5 Assignment Neither Party shall assign th~s Agreement or its r~ghts hereunder
w~thout the prior written consent of the other Party, which consent shall not be
unreasonably w~thheld or delayed Notwithstanding the foregoing, e~ther Party may,
w~thout the need for consem from the other Party (and w~thout rel~ewng ~tself from
hab~hty hereunder), (a) transfer, pledge, or assign th~s Agreement as security for any
financing, (b) transfer or assign this Agreement to an affihate of such Party, or (c)
transfer or assign th~s Agreement to any person or entity succeeding to all or substantially
all of the assets of such Party, nrovlded, however, that any such assignee shall agree to be
bound by the terms and conditions hereof
10 6 Taxes If at any t~me during the term of th~s Agreement there should be levied or
assessed ag~unst e~ther of the Part~es any d~reet taxes by any taxing authority on the
capacity and/or energy generated, purchased, sold, transmitted, ~nterchanged, or
exchanged under th~s Agreement, which taxes are m addition to or different from the
forms of d~rect taxes being lewed or assessed on the date of th~s Agreement and such
d~rect taxes result m increasing the cost to e~ther or both Parties of carrying out the
provisions of th~s Agreement, then the rates and charges for such capacity and/or energy
furmshed hereunder shall be ~ncreased automatically to the extent permnted by apphcable
10
law or regulations as necessary to make adequate and equitable allowance for such taxes,
pr0wded~ however, that the Party whose rates and charges are to be ~ncreased hereunder
shall gxve thirty (30) days prior written notice of such increase to the other Party before
the increase may become effective
107 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
l0 8 Counterparts Th~s Agreement may be executed m several counterparts, each of
which ~s an original and all of which constitute one and the same instrument
10 9 Successors and Assmns 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
10 10 Severabfl~tv Should any provision of this Agreement for any reason be declared
lnvahd or unenfomeable by a final, non-appealable order of any court or regulatory body
hawng junsdmt~on, such decision shall not affect the validity of the remaamng portions of
the Agreement, and such portions shall remmn in full force and effect as ~f this
Agreement had been executed without the ~nvalld port~on In the event any provision of
this Agreement ~s declared mvahd, the Part, es shall promptly renegotlate to restore this
Agreement as near as possible to ~ts original intent and effect
10 11 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
Part,es
l0 12 No Dedmatlon Any undertaking by one Party to the other Party under any
provisions of this Agreement shall not constitute a dedication of e~ther Party's system or
any port, on thereof to the pubhe or to the other Party or any other person or entity, and it
~s understood and agreed that any such undertaking by either Party shall cease upon the
termination of such Party's obhgatlons under th~s Agreement
IN WITNESS WHEREOF, the Part,es hereto have caused this Agreement to be executed by their
duly authorized officers or representatives, and cop~es dehvered to each Party, as of the day and
year first above stated
II
CITY OF GARLAND ATTEST
Title City Manager t~ ~,~,c.
CITY OF DENTON ATTEST
By ~~.~0. /~L-~ A~~ -- _
Title City Manager
GREENVILLE ELECTRIC UTILITY ATTEST
SYSTEM
By ~. ~
Title General Manager
LG&E ENERGY MARKETING INC ATTEST
By (~_~f~)~ , ./~ , ~~
APPROVED AS TO LEGAL FORM.
HERBERT L. PROUTY, CITY ATTORNEY
CITY OF DENTON, TEXAS
12
SCHEDULE 3.2
FORM OF CONFIRMATION
[Date]
[Name of Recipient]
[T~tle]
[Organization]
[Address]
[City, State Z~p]
Ladles and Gentlemen
This letter shall confirm the agreement reached on [DATE] between [COUNTERPARTY]
("Counterparty") and LG&E Energy Marketing Inc ("LEM") and constxtutes a "Confirmatmn" as defined m the
Agreement for Interchange Service dated [DATE] (the "Interchange Agreement") The prows~ons of the
Interchange Agreement are incorporated herein by reference, except that, m case of conflict or inconsistency
between the terms of this letter and the terms of the Interchange Agreement, the terms of this letter shall prevml
Terms used but not del'reed m this letter shall have the meanings g~van to them in the lntarchange Agreement
Seller
Buyer
Term Th~s transaction shall begin at [TIME] on [DATE] and shall end [TIME] on [DATE], unless terminated
earher by elthar party m accordance w~th the prov~sions hereof
Price Include the following language If there ts a reservation fee or optlon premtum The obligation of Buyer to
pay the [Reservation Fee] ns absolute and unconditional, subject to no defenses, counterclmms or rights of offset or
recoupment
Quantity __ megawatts per hour
Type [A, B, C or D]
Dehver¥ P0mts The delivery point wdl be the ~nterface on 's
transmlsston system
RepresentaBon Each party represents and warrants to the other that ~t has the full power and authority to execute
and dehver this letter agreement and to perform all ~ts obhgat~ons hereunder, the execution, dehvery and
performance of th~s letter agreement and the performance of ~ts obhgat~ons hereunder and the consummation of the
transactions described herem have been duly authorized by all reqms~te action on ~ts part, and ~t has duly executed
and dehvered th~s letter agreement and this letter agreement constitutes its legal, valid and binding obligation,
enforceable agmnst it m accordance with its terms
lfyou are m agreement with the foregoing please execute where lndmated 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>
<T~tle>
AGREED TO AND ACCEPTED
[Counterparty]
<Name>
<T~tle>
<Date>
SCHEDULE 10 3
ADDRESSES
All Notices to Counterparty All Notices to LEM
Electric Ut~hty Director LG&E Energy Marketing Inc
C~ty of Garland 220 West Mmn Street, 7th Floor
504 State Street P O Box 32380 (40232)
Garland, Texas 75040 Lomswlle, Kentucky 40202
Attn Mr J~m Harder
Attention Rhoda L Wflhams
Greenville Electric Utlhty System Contract Admlmstrator
6000 Joe Ramsey Blvd Phone# 502-627-4197
Greenwlle, Texas 75402 Fax# 502-627-4177
Attn Mr Tom Darte, General Manager
C~ty of Denton
P O Box 2347
Denton, Texas 76201
Attn MS Sharon Mays,
Electric Utility Director
Scheduhng Requests Scheduhng Requests
Garland Operations Center LG&E Energy Marketzng Inc
972-205-3107 (Vmce) 502-627-4176/4177 (Fax)
972-205-3106 (Fax)
All bilhngs to Counterparty All bllhngs to LEM
Garland Power &Ltght LG&E Energy Marketing, lnc
Atto Paul Breltzman 220 West Mare Street
525 E Avenue B Lomswlle, KY 40202
Garland, Texas 75040 Attn Trading Accounts Payable, 7th Floor
All payments to Counterparty All payments to LEM
Garland Power & L~ght PNC Bank Kentucky
Attn Paul Bre~tzman Accounting T~tle LG&E Energy Marketing
525 E Avenue B Inc
Garland, Texas 75040 Account Number 3100532665
ABA Number 083000108
Confirmation LG&E Energy Marketing Inc
Credit and Collections
Attn Accounts Receivable
Fax # 502-627-4177
EXHIBIT A
POWER SALES BY
LG&E POWER MARKETING INC (LPM)
FERC ELECTRIC RATE SCHEDULE NO 1
1 Avmlabfl~ty LG&E Power Marketing Inc makes non-firm energy and firm
capacity and associated energy avmlable under th~s Rate Schedule for wholesale sales to
purchasers w~th whom it has entered mto a contract
2 Apphcab~llty~ Th~s schedule ~s apphcable to all sales of non-firm energy and firm
capacity and assocmted energy by LG&E Power Marketing Inc not otherwme subject to a
partmular rate schedule
3 Rates All sales shall be made at rates estabhshed by letter agreement between the
purchaser and LG&E Power Marketmg Inc
4 Other Terms and Conditions All other terms and conditions shall be estabhshed
by agreement between the purchaser and LG&E Power Marketing Inc
5 Affiliate Sales Prohibited No sale may be made pursuant to th~s Rate Schedule to
any entity controlled by, under common control w~th, or controlhng LG&E Power Marketing
Inc
6 Effective Date Th~s Rate Schedule is effective on and after August 24, 1994
n \paul\lem\~nte¢3a doc
/-G NERGY
MARK ,
September 24, 1997 L~E Energy Mark~t~ng In~
575 Anton Boulevard
VIA OVERNIGHT MAIL 77424 ~ 4790 FAX
Mr J~m Harder
Electric Utthty D~rector
C~ty of Garland
504 State Street
Garland, Texas 75040
Mr Tom Darte
General Manager
Greenville Electric Utthty System
6000 Joe Ramsey Blvd
Greenvdle, Texas 75402
Ms Sharon Mays
Electric Utd~ty D~rector
C~ty of Denton
P O Box 2347
Denton, Texas 76201
Dear S~rs and Madam
This letter shall confirm the agreement between the C~ty of Garland, Greenville Electric Utthty
System and the C~ty of Denton ("collectively DGG") and LG&E Energy Marketing Inc
("LEM") and constitutes a "Confirmation" as defined ~n the Agreement for Interchange Service
dated September 24, 1997 (the "Interchange Agreement") The provisions of the Interchange
Agreement are ~ncorporated herein by reference, except that, m case of conflict or lncons~stency
between the terms of this letter and the terms of the Interchange Agreement, the terms of this
letter shall prevml Terms used but not defined in th~s letter shall have the meamngs g~ven to
them in the Interchange Agreement
Seller DGG, Seller Agent to be City of Garland The City of Garland, Greenwlle Electric
Utd~ty System, and the C~ty of Denton wall be jmntly and severally hable for the obhgations of
DGG hereunder
Buyer LEM
Term May 1, 1998 to April 30, 1999
A SUBS/DIARY OF
/.G~NERGK
Mr Jim Harder
Mr Tom Darte
Ms Sharon Mays
September 24, 1997
Page 2
Capacity
DGG grants to LEM the right but not the obhgatlon 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 whmh are avmlable 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 Borne, Bridgeport and Farmersvdle 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 ~n turn lndmate 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
tnvomlng for energy deliveries LEM shall be relieved of its obligation to pay for capacity for
each day that DGG fails to have energy avmlable in accordance with its obllgatmns hereunder ~f
such failure is unexcused under any provision hereunder in addition to all other remedies
available to LEM under this Agreement
Scheduhn~
Upon telephonic request from LEM, by 9 30 a m central prevailing time ("CPT") each day
during the term hereof, DGG shall provide to LEM by telephone, telecopler, or instantaneous
electronic communication, its unit commitment, including any partial unit, avmlabdlty of the
remaining umts 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 m CPT, whmhever is later, LPM at its
option may either (i) nominate energy purchases from DGG, (11) nominate energy purchases from
DGG using fuel provided by LEM (''Tolling Nomination"), or (iii) not nominate energy
purchases from DGG, for the following day At the time that LEM nominates energy purchases,
LEM will submit by telecopler 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 m~mmum schedule
period is four hours Energy will be priced based on the units which are avmlable and are not
Mr Jim Harder
Mr Tom Darte
Ms Sharon Mays
September 24, 1997
Page 3
serwng 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
Type
Energy purchased from DGG hereunder will be ERCOT Type C System F~rm energy
Enerev Price
The energy price will be DOG's ~ncremental cost of generation DOG'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 apphcable umt multiplied by the d~spatch cost of fuel for the
umt for the apphcable day If LEM's nomination ~s a Tolhng Nomination, LEM will deliver gas
to the appropriate unit m quantities needed to generate scheduled energy based upon the mere-
mental heat rate set forth on Exhibit A attached hereto for the apphcable unit, and the energy
price will be zero In addition, ~f DOG ~s reqmred to start a umt in order to satisfy an LEM
nomination hereunder, then LEM shall pay a start-up fee ~n an amount of $20 per megawatt for
the full capacity of such umt
Responsive Sp~nnmg or Smnnln~ Reserves
LEM will notify the ISO and DGG of any responsive sp~nmng or spinning reserve carried by
DOG for the benefit of LEM Up to 20% of the capacity of any umt started for the benefit of
LEM and not serving load can be spmmng reserve
Transmission
The delivery point shall be the generator bus for all purposes ~ncludlng the calculatmn of VAMM
impacts under ERCOT regulations LEM is responsible for secunng and nominating to the ISO
planned transm~ssion service for receipt of power and energy from DGG Additionally, LEM is
responsible for losses ~ncurred in the dehvery of energy from DOG to LEM
Emergency Conditions
(a) At such times as the ERCOT ISO reqmres conversion of responsive spinning or spinning
reserves to energy, LEM will notify DOG of such an event and any or all of the spinning and
supplemental reserves carried on the DOG 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 DGO's then current dtspatch fuel costs
Mr J~m Harder
Mr Tom Darte
Ms Sharon Mays
September 24, 1997
Page 4
(b) If LEM submits a Tolhng Nomination and fads to dehver fuel for any reason other than
the fault of DGG, DGG w~ll prowde to LEM prompt notme of such fmlure and DGG's then
current d~spatch fuel costs for the apphcable period W~th~n two hours after receipt of such
not~ce, LEM shall g~ve notme to DGG that ~t wall e~ther 0) continue to receive scheduled energy
and pay ~ energy price based on DGG's stated fuel costs or (n) cuaml purchases from DGG
w~thom hab~hty here~der
(c) If dehveu of gas to a DGG ~t ~s cmmled due to fome majeure, or clmm of force
maje~e by a suppher, then DGG shall be reheved of ~ts obhgm~ons to supply energy at the
original price However, DGG shall remain obhgated to supply energy at ~ts ~ncremental costs of
generation using the cost of replacement fuel Accordingly, DGG shall g~ve prompt not~ce to
LEM of tts loss of gas supply ~d the ~en c~ent dmpatch fuel cost for the affected ~t Wtth~n
two ho~s a~er receipt of such notme, LEM shall g~ve not~ce to DGG that LEM w~ll rather 0)
continue to receive scheduled energy ~der ~e new pnmng or (n) curtal purchases from DGG
Representation
Each pa~y represents ~d w~ts to the o~er that tt has the full power and au&onty to execute
and dehver th~s letter agreement ~d to perfo~ all ~ts obhgat~ons hereunder, the execution,
dehvery and peffo~ce of th~s leRer agreement ~d the perform~ce of ~ts obhgat~ons
hereunder ~d the consumatlon of the tr~sact~ons described here~n have been duly authorized
by all reqms~te action on ~ts p~, ~d ~t has duly executed and dehvemd th~s letter agreement ~d
th~s letter agreement constitutes ~ts legal, vahd ~d b~nd~ng obhgat~on, enforceable agmnst ~t ~n
accord~ce Wl~ its terms
If you ~e ~n agreement w~th the foregoing please execute where ~nd~cated below ~d fax a copy
of th~s letter to the undersigned
Stncerely,
LG&E ENERGY MA~ETING INC ATTEST
Scott A Noll, ~~
Semor V~ce President
Mr hm Harder
Mr Tom Darte
Ms Sharon Mays
September 24, 1997
Page 5
AGREED TO AND ACCEPTED
CITY OF GARL~ ~ ATTEST
By ~)~ 1,.~~ (~d./~ ~
Title City ~er
Date ~/~
CITY OF DENTON ATTEST
Title City Manager ~7 ....
GREENVILLE ELECTRIC UTILITY ATTEST
SYSTEM
T~tle General Manager
~ ,, / /,¢ /¢ ,--)
Date
Mr J~m Harder
Mr Tom Darte
Ms Sharon Mays
September 24, 1997
Page 6
EXHIBIT A
Incremental
Capacity Heat Rate
Umt (MW) (mmbtu/kWh)
Ohnger 2 115 10,210
Ohnger 3 150 10,980
Denton 5 66 11,950
Ohnger 1 75 11,730
Denton 4 61 12,410
Newman 5 41 11,760
Denton 3 26 12,810
Greenwlle 3 40 13,190
Greenwlle 2 25 13,230
Denton 1 11 12,810
Greenwlle 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
n \paul\leto\hard3 doc