1998-280AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON TEXAS, APPROVING
INTERRUPTIBLE NATURAL GAS SALES AND PURCHASE AGREEMENTS BETWEEN THE
CITY OF,DENTON AND CROSSTEX ENERGY SERVICES INC AND ENERGY UNLIiVflTED
I'NC FOR THE PURCHASE OF SPOT MARKET NATURAL GAS, AUTHORIZING THE
EXPENDITURE OF FUNDS THEREFOR, AND PROVIDING AN EFFECTIVE DATE (BID #
2258 NATURAL GAS AWARDED TO CROSSTEX ENERGY SERVICES INC AND ENERGY
UNLIlVIITED INC )
WHEREAS, the City has a need for lnterruptlble natural gas purchases to provide fuel for
the Spencer Eleemeal Generating Station, and
WHEREAS, the City could realize price savings by purchasing gas on the spot market and
WHEREAS, the C~ty has sohe~ted b~ds for the attached contracts Exhibit "A & B" with spot
market supphers of natural gas, m accordance with Chapter 252 of the Local Government Code,
NOW THEREFORE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION I That the Council authorizes the Mayor to execute the attached Interruptlble
Natural Gas Sales and Purchase Agreements with Crosstex Energy Services Inc and Energy
Unlimited Inc providing for the purchase of spot market natural gas
SECTION II That it authorizes the expenditure of funds ~n accordance with the terms of
the Agreements
SECTION III. That thts ordinance shall become effective nnmediately upon ~ts passage and
approval
PASSED AND APPROVED th~s the/~-~ day of~998
JAC~?I~LLER, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
HERBERT L PROUTY, CITY ATTORNEY
2258 NATURAL GAS CONTRACT ORDINANCE
EXHIBIT "A"
Standard
Contract
Standard Contract
City ofDanton Ut,lztles
Interruptlble Natural Gas Sales And Purchase Contract Agreement
Date August 17, 1998
Partnership
Crosstex Energy Servicest Ltd(SELLER)a Texas Limited
agrees to dehver nad sell ~as to the CiD/ofDantorg Texas (Buyer) and BUYER agrees to purchase
and recetve sa~d natural gas from SELLER pmmmnt to the terms and conditions hereinafter set forth
1, DEFINITIONS:
The term "Ageement" shaH mean t~s/n~errupt~ble 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 rmlhon (1,000,000) Bntlsh thermal umts
The term "Receiving Pipeline" shall mean the ~nterstate, intrastate, or local distnbuuon
company imraed,ately downstream of the Point Of Dehvery
The term "Buyers Notice" shall mean the letter agreement a form copy of which ~s attached
hereto as Attachment A, which may be executed by BUYER and SELLER from time to time
and which shah bind BUYER and SELLER to particular transactions for the purchase and
sale of natural gas in accordance w~th the terms thereof and this Agreement
The term "Point Of Dehveu" shall mean the locauon of the physical delivery to the Receiving
Pipeline
2o TERM:
The mits] term will be one year from the date hereof, and month to month thereafter, subject
to the right of either party to terrmnate this Contract on 30 day's prmr written notice to the
other party
3. PRICE AND PAYMENT OF COSTS AND TAXES PRIOR TO DELIVERY:
On a monthly bas~s, the price to be prod by BUYER for gas dehvered by SELLER shall be
specked on the "Buyers Nouce" shown m Attachinent A Pnces shall include and S~I.I.I=~
shall be respormble for payment of all royalties, production taxes, property taxes, severance
taxes, purchaser taxes, and all other taxes and hcense fees which attach to the g~ts pnor to
dehvery hereunder Prices shall also include and SI~I.I.ER shall be responsible for payment
ofl~therm~ and transportation char~es to the Point Of Dehvery, payments or other charges
thereon apphcable before the utle of gas passes to BUYER at the Point Of Dehvery BUYER
shall pay transportauon charses on the Receiving Pipeline, downstream of the Point Of
Dehvery
4. QUANT1TY AND POINTS OF DELIVERY:
Gas quantities and points of dehvery will be specified on a monthly basis on the "Buyers
Nonce", as shown m Attachment A, s~ned by BUYI~ and by SELLER Requests for bids,
subm~ssion of bids, or prallmmary correspondence will not act as a Buyers Notice and shall
not be the basis for ~as delivenes under flus contract SELLER shall dehver gas quantities
consistent with the quantity, Point Of Dehvery, Receiving Pipeline, and dates as specified m
the "Buyers Notice" fi'om the B~
5. BEST EFFORTS PERFORMANCE:
SELI.,I/R will make a best effort to dehver, and BUYER best effort to receive, the gas
quantities as spesdied m the Buyers Notice Either party may at any time curtail or interrupt
semce with no liability to either party The curtagmg party vail make diligent efforts to not~fy
the other party of the slttlation within 48 hours
6. INCREASES IN QUANTITY AND CHANGES TO POINTS OF DELIVERY:
BUYER may request increases to ~as quantmes or changes in points of delivery by specify~ng
these requests m a rewsed 'Buyers Notice" to the SELLER If accepted by SELLER,
S~ shall make all arrangements needed to rewse dehvenes within 24 hours If SELLER
wishes to increase gas quantities or chanse points ofdehvery, he must notify BUYER, and
receive a ro~ased Buyers Notice sl~ned by BUYER to do so
?. OVER-DELIVERIES
If SELLER prowdes gas quantnies for a month m excess of 4% above the quantities in the
~Buyers Notice" or at points of dehvery not specified in the "Buyers Notice", BUYER shall
have the nsht to refuse the qufii/a/~es Of~aS and shall be exempt from any payments on those
g~s quanut~es SELLER shall be liable for any penalties or excess storage or transponatlon
char~es owed by the BUYF. R as a result of the SELLERS dehvenes in excess of 4% of the
Buyers Notice or at locations not spec, died in the "Buyers Notice"
8. GAS AND PRICE UNITS:
All g~s quanuues and prices shall be In MMBm adjusted to 14 650 psi, at a temperature of
60 degrees Fahrenheit, w~th both Mcfand Btu free of water vapor (Dry) Prices unll be :n
U S dollars
9. QUALITY AND PRESSURE:
The ~z dehvered by Sh-q'~l' .~RR. shall meet the pressure requirements and cluahty specifications
of the Aecezvmg Pzpehne
10. TITLE:
SF. LL~ warrants for ltsel~ its successors, he,rs and assigns, title to all gas delivered
accepted by BUY~ hereunder ,~ELL~ warrants It has the right and lawful authon~ to
sell the gas and that such gas ~s free from liens, encumbrances and clmms of every kand
SELLER shall mdemnn~ and save BUY~ harmless from all stats, chums, liens, damages
costs, losses, expenses and encumbrances of whatsoever nature arising out of chums of any
or ell persons to ~ud gas or the t~tle ofs~ud gas S~LL~R shall be m control and possession
of and responsible for any mk of loss, damage, clann, liability or injury caused thereby
the gas has been delivered to the BUYER a~ the Point OfDehvery T~tle and nak of loss
pass a~ the Point Of Dehvery from SELLER to BUYER
I I, DETERMII~TI~G PAYMENT VOLUMES:
On approxunately the 15th day foHowng the end of each month of gas deliveries, SELLER
shall furnish BUYF~ a statemen~ specl~ng volume delivered, locat~on~ end R. ecelvmg
Pipalme If these volumes &fief from BUYER's Independent momtonng of dahve~es or
Rece~wng Pipelme's records, BUYE~ shall have the right to pay on the undisputed amoun~
e~ther (0 under protest, or (h) upon final agreement being made on the delivered volumes by
BUYEI~ SFL!.~ and Receiving P~pehne BUY~ and SELLF~ shall have the right to later
revise payment volumes es a result of addmonal or revised volumemc data from the
Receiving Pipeline or other compames eesoclated w~th the production, sale, storege, or
transportation of the gas
12. PAYMENT
Wkhm 12 days ofrece~p~ of the statemee~, BUYER shall make payment to SELLER for the
gas quanutms as de~ernuned m Paragraph 11 Payments statements should be directed to
BUYER at City of Denton Uuht~es
£1ecmc Production Dlwston
1701-A Spencer Road
Denton, TX
Attn Phil Rennaker
Manager, Electric Production
13. NOTIFICATION:
Communications regarding the performance ofth~s contract shall be d~rected to
SF-LLER. BUYER City of Denton Unliues
Crosstex Energy Servzces, Inc ElecmcProducuonDl~on
2501 Cedar Springs, Suite 600
Dallas, TX 79201 1701-A Spencer Road
Attn. Gas Marketing Denton, TX 76205
Atto l'hil Rannakar
Manager, Electric Productmn
14. PERFORMING NOMINAT/ONS:
BUYER w~l be so/ely raspons~ble for nommauon of gas volumes to the Receiving Plpehne,
unless SELLF. R is ~von specafic written anthormmon from BUYER to perform these
nomm~ons ~.l.l~ shall be responsible for ifil necessary nommauons to transporters and
all others related to the supply of natural gas pnor to Point Of Dehvery
15. Y-XCRANGE OF GAS QUANTITY INI~ORMATION:
Dunng the pined of actual ga~ delntet~ea, .gl~.r.~ and BUYER shall make avmlable to each
other current estimates of gas flows at the Point(s) ofdehvery under flus agreement for the
purposes of nomination to others and the momtonng of actual gas quantmes dehvered If
Seller is unable to prowde current e.~mates of gas aet~wty to BUYER, SELLER will assist
BUYER m obtanlmg smd reformation fl~m plpehne transporters, processing plant operators,
well operators, or upstream supphers
16. GOVERNING STATE:
Tbs agreement shall be constru~l pursuant to the laws of the State of Texas and venue for
~ts construction and enforcemant shall he m the courts of Denton County, Texas
SELLER BUYER
Crosstex Energy Services,Ltd.
by its General Partner,
By Crosstex Energy Services, ~j~.
John ~ Daugherty
~fle V~ce President Tnle
Date August 17, 1998 Date
ATTAC"~I]VIENT A
DE~'roN MUNICIPAL UTILITIES - SPENCER STATION
O~o~, ~ 7~05
Fax 9~0-3~9-755~
Date:
Fzrm Address
Dear
Below ts a Buyers Notice for (month, year) supply to the C~ty of Denton, Texas. Under thu
purchase the City of Denton, Texas, will take title to the gas nt the point of dehvery and be responsible
for payments subject to the terms of the purchase contrnct
BUYERS NOT/CE
GAS SALES AND PURCHASE AGREEMENT
Buyers Notice Number: Contract Date:
BUYER: City of Denton, SELLER:
KlectFic Production Division
Afl volumes and prices are based on mmBtu's, adjusted to 14 6S dry/d~
Prices aFe in U.S. dollars.
Dates for Point of Pipeline Volume Price
dehve~y deliver~ (MmBtu/ (S/mmBtu
14.6S D/D) 14.65 D/D)
Lone Star
Accepted and Agreed Accepted and Agreed
(Seller) (Buyer)
Dated: Dated.
To fa~ilitate payment, please sign the above Buyers Notice and return vm fax, attn. Ph~.l Rennaker
EXHIBIT "B"
Standard
Contract
Standard Contract
City of Denton Unhtles
Interrupnble Natural Gas Sales And Purchase Contract Agreement
Date ~,,O-=e IR: 19q8
· --iiF~.~T,i' .......... '~n w~r' (SI~!.I.FR) a TEXAS Corporation
agretm to deliver and sell gas to the City of Denton, Texas (Buyer) and BUYER. agrees to purchase
and receive smd rmmral gas ii'om SEI/.ER pursuant to the terms and conditions hereinafter set forth
1. DEFINITIONS..
The term ".4~zem~nt" shall mean rhs lmerrupuble Natural Gas Sales and Purchase Contract
including Attachment A which m incorporated herean
The term "month" shall mean a calendar month
The term "MIVIBtu" shall mean one n~lhon (I,000,000) Bnush thermal umts
The term "Receiv~ng Pipeline" shall mean the interstate, intrastate, or local dlstnbution
company immedmteiy downstream of the Point Of Dehvery
The term "Buyers Notice" shall mean the letter agreement a form copy of which is attached
hereto as Al~achment A, which may be executed by BUYER and SELLER from time to time
and which shall brad BUYER and SFJ. J.,ER to particular transactions for the purchase and
sale of natural gas m accordance w~th the terms thereof and this Agreement
The term "Point Of Dehvery" shall mean the loc. a~on of the physical deiwery to the Receiwng
Pipeline
TERM:
The mmal term w~l be one year Irom the date hereof, and month to month thereafter, subject
to the nght of either party, to terminate this Contract on .10 day's prior wntten nonce to the
other party.
3. PRICE AND PAYMENT OF COSTS AND TAXES PRIOR TO DELITERY.
On a monthly barns, the price to be prod by BUY'F~ for gas dehvered by SF. LI~R shall be
specked on the "Buyers Nouce" shown m Attachraent A Prices shall include and S~LLHR
shall be responmble for payment of'all royalues, producuon taxes, property taxes, sevenmce
taxes, purchaser taxes, a~d all other taxes and hcense tees wluch a~tach to the gas prior to
de, very hereunder Prices shall also include and S~I'~Ir~R shall be responmble tot payment
of'ga~erm& and transportauon charges to the Point Of.Deliver% payments or other charges
thereon apphcable be.~ore the utle ot'ges passes to BUYt~ at the Point OfDehvery BC,r~R
shall pay tmasportauon charges on the Receivmff Pipeline, downstream of the Point Of'
D~very
4. QUANTITY A.ND POINTS OF DELITERY:
Gas quantmes and points of delwery wdl be specked on a monthlv basis on the "Buvers
Nouce", as shown m ,~-.,~ment A, ~gned by BUYER and by SELL~ Requests for bids
subrmssion of bids, or preliminary cortespundence w~l not act as a Buyers Notice and shall
not be the bas~s forges debvenes under tlus contract S~.T.I:R shall deliver gas quantities
consistent w~th the quanuty, Point O£Dehve~7, Recmvmg Plpehne, and dates as specified ~n
the "Buyen Nouce" fi.om the BUYER.
BEST EFFORTS PERFORMANCE:
SEI'-!r~R wdl make a best effort to debver, and B~ best eft'on to receive, the gas
qummues as specked m the Buyers Nouce E~ther party may at any tune cunml or interrupt
service w~th no I~.b~aty to e~ther party The curtadmg party ~ make dd~gent eft'OhS to notl~
the other patty of the sltuauon w~dun 48 hours
6. INCREASES IN QUANTITY AND CHANGES TO POINTS OF DELI'~RY:
BUYER may request increases to ~* quauuues or cbenges in points of dehvery by speci .~ng
these requests m a reused "Buyers Nouce" to the S~IJ_I:R It' accepted by
~.1'.1:R shall make all arrmlgeme~ts needed to re~se dehvenes w~thm 24 hours If SF_.LL~R
w~shes to increase gas quanuues or change points of'dehvery, he must nouSy BUYER, and
recmve a rewsed Buyers Nouce slsned by BUY'ER to do so
?. OVER-DELIVER[ES
If'SF. LLHR provides gas qua.urines for a month in excess of 4% above the quantmes in the
'~uvers Nouce" or at points o£dehvery not specified in the "Buyers Notice", BUYER shall
~ave the n~t to re~use the qua~uues or'gas and shall be exempt fi.om any payments on those
~ quanuues SELLER shall be hable tbr any peualues or excess storage or transponauon
charges owed by the B~ as a result of the SELI~RS dehvenes m ~,ccess of 4% or'the
Buyers Not~ce or at locauons not specified in the "Buyers ~ouce"
8, GAS AI~D PRICE UI~IT$:
Afl gas qua~tltles and pnc~ s~l be m ~tu ~justed to 14 ~50 psL ~ a t~pe~e o~
~0 de~ F~et, ~th both Mcg~d Bm ~ of water ~por (D~) Prices
U S
9. QUA~ ~D
~e ~ d~v~ ~ S~.r ~ s~ m~t ~e p~ requir~ents ~d qu~ sp~flcanons
of the Rec~g P~p~e
10. ~E:
SFLL~ w~ts ~or ~e~ its suco~so~, h~s ~d ~sl~s, tl~e to ~ g~ deilv~
~c~pt~ by ~ ~d~ S~LL~ w~ts it ~ the ~t ~ la~l autho~ to
sell ~he ~ ~d ~ such g~ ~s ~ ~m 11~ ~b~c~ ~d ci~ of
S~LLF~ ~ md~ ~d save ~ ~ ~m ~ smt~ ~, lle~,
~ loss~ ~ nd ~c~ ofw~o~ ~ m~g out of~ o~y
or ~ p~om to ~ ~ or ~e uno of smd ~ S~.r-~ ~ b~ m ;on~i ~d poss~on
of~d ~o~ble ~or ~y m~ oflos~ ~ ~ ~ or mj~ ~ ~by
· e ~ ~ b~ d~ to ~ B~ ~ ~ Po~ O~D~e~ T~tlo ~d ~sk of loss s~
p~s ~ the Point OfD~v~ ~om ~.r.~ to ~
1 I. DE~~G PA~ VOL~S:
Off ~pm~y ~e 1S~ ~y foilomng the end of~h month of~ dehv~ne~
shMl ~sh ~ a st~em~t sp~ng ~oi~e dehver~ lo~uo~ ~d
Pipeline ~ thee voi~ ~ ~m ~'s mdep~d~t momto~ng o~ dellVe~
~mng Pip~e's r~o~ B~ ~h~fl ~ve ~e n~t to pay on th8 ~sput~ ~o~
~ (i) ~ ~t~ or (fl) upon ~ ~em b~g ~ on th~ d~lve~d vol~
~ ~.r.~ ~d ~ Plp~ ~ ~ ~.~.~ ~ ~w the ~ght to
re~se p~t vol~ ~ a r~t of ~Uo~ or ~sed volt,mc d~a ~om the
~ec~vmg Pip~e or oth~ ;omp~ ~o~ Mth ~e produ~o~ ~e, ~o~ or
~po~on ofth~ ~
12. PAYMENT
g~s qu~t~t1~s ~ detained m P~h I 1 P~ents statements shoed be dir~teO to
~ at Cl~ of Denton Ut~ht~es
EI~c Pro~u~lon ~slon
D~to~ ~
13. NOTIFICATION:
Commumcatlons re~u'dmg the performance of this contract shal! be directed to
SFJJ.~.R Energy Unlimited, ~ C~ty of Denton Ut~hues
1601 Capital Ave, Ste 101 E]ecmcProductionDlv~slon
Plane, TX 75074 1701-A.qpencerRoad
Denton. TX 76205
Attn: N Berthusen Atm Phil Rennaker
CEO Man.er, Elecmc Production
14. PERFORMING NOM/NATIONS:
BUYER w~] be soieiy responsible for nomination of F~as volumes to the Rece~wng Pipeline
unless SELLF_.R is ~ven specfl]¢ written authonzauon from R~ to perform these
nomma~ons S17r.I']TR ~ be responsible for ali necessa~ normnauons to transporters aha
ail others related to the supply of natural ~as prior to Point Of Dehvery
15. EXCHANGE OF GAS QUAN'ITFY INFORMATION:
Dunng the penod ofacnmi ~as dehve~, ~.r !eR and BUYER shall make avmlabie to each
other current estimates of~as/lows at the Point(s) ofdeiwery under this a~'eement for the
purposes of nommanon to others and the momtonng of actual g~s quanuues dehvered If
Seller is unable to provide current estun~es ofg~s acuwty to BUYER. SELLER wd] assist
BUYER m obtaining smd mform~on from pipeline transporters, processing plant operators
well operators, or ul)str~.m suppl~=.s
16. GOVERNING STATE:
This a~'sement shall be construed pursuant to the laws of the State of T~xas and venue t'or
its constructwn and enforcement shall he in the courts of Denton County, T~xas
S~~D, INC BUYER
By 'N(rman %erthusen By
~tle Chief Executive Officer ~t|e
D~e August 18, 1998 D~e
A~'TACHMENT A
DE~"rON MU,~ ICIPAL UTILITIES- SPENCER STATION
1701 A ~p~c~ ~o~o
Fax 940-349-7555
Date:
Firm Address
Dear
Below is a Buyers Notice for (mouth. 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 delivery and be responsible
for payments subject to the terms of the purchase contract.
B UYE1LS NOTICE
GAS SALES AND PURCHASE AGREEMENT
Buyen NoUce Number: Contract Dam.
BUYEI/~ City of D~ton, SELLER:
El~mc Producuen Di~s~on
~1 volum~ end pn~ a~ b~ed off mmBtu's, adj~t~ to 14 65 d~/d~
Pncu are m U.S. dorian.
Dat~ for Point of Pipehne Volume Pace
dehve~ debve~ (~t~ (~mmBtu
~4 65 D/D) 14 65 D~)
Lone Star
Accepted and Agreed Accepted and Agreed
(Seller) (Buyer)
Dated: Dated:
To facilitate pavment, please sign the above Buyers Notice and return via fax. attn' Phil Rennaze=