1997-019 ORDINANCE NO 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 OAS, AUTHORIZING THE EXPENDITURE OF
FUNDS, AND PROVIDING FOR AN EFFECTIVE DATE
WHEREAS, the C~ty has a need for ~nterrupt~ble natural gas purchases to provide fuel for
the Spencer Electrical Generating Statmn, and
WHEREAS, the C~ty could reahze price savings by purchasing gas on the spot market, and
WHEREAS, the C~ty has sohc~ted Nds for one year contracts w~th spot market supphers of
natural gas, ~n accordance w~th Chapter 252 of the Local Govemment Code, NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION I That ~t authorizes the Mayor to execute the attached Intermpt~ble Natural Gas
Sales and Purchase Agreement w~th Nattonal Energy & Trade, L L C prowd~ng for the purchase of
spot market natural gas
SECTION II That ~s authorizes the expenditure of funds ~n accordance w~th the terms of
the Agreement
SECTION III That ttus ordinance shall become effective ~mmed~ately upon ~ts passage and
approval
AND APPROVED tNs the t~] ~ day of /~~.~, 1997
PASSED
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
HERBERT L PROUTY, CITY ATTORNEY
CITY COUNCIL AGENDA ITEM
TO. MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM' Ted Benawdes, City Manager
SUBJECT ADDITIONAL NATURAL GAS SPOT SUPPLIER CONTRACTS
RECOMMENDATION'
The Electric Utility recommends executing a contract w~th 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, C~ty of Denton Utd~t~es"and met reqmrements of the C~ty o~'
Denton, Electric Production D~v~s~on, and Spot Fuel Purchase Program ~or natural gas
spot supply
BACKGROUND:
In May 1992, the C~ty of Denton instituted b~ddmg procedures £or spot purchases o£
natural gas whereby contracts were estabhshed wtth gas compames ~nterested ~n
participating in the C~ty's monthly spot gas purchase program
The Electric Utd~ty currently has contracts for natural gas spot supply with Enserch,
Mobd, Tnmty, Tristar, H~ghland, Taurus, Cornerstone and Midcon Those contracts will
remmn ~n effect unttl e~ther party cancels allowtng competitive btddtng on a monthly basis
Execution ora contract w~th NaUonal Energy & Trade L L C will extend the competitive
opportumt~es for natural gas spot supply
2
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 Benavldes
City Manager
Prepared by
ant Manager
Approved by Approved by:
R E Nelson, Executive Director Tom D. Shaw, Purchas~.ng Agent
Utdltles
Exhibits I Signed contract, National Energy & Trade, L L C
II. Tabulation Sheet
Standard
Contract
Standard Contract
City et Denton Utfimes
Interrupt~ble Natm al Gas Sales A~d Put chase (cnn act Agi eemem
Date 12/01/96
National Energy & Trade, L.L.C. (SELLER) a Texas
agrees to dehver and sell gas to the C~ty of Denton Texas (Burro} and BUYER,tg~ce, Io im~cha~
and receive said natural gas from SELLER pm suant to the [erms ,mo cOlldlllOllb ]lt~l
1 DEFINITIONS
I he te~ m "Agreement" shall mean fins lnterrupnble Natu~ al Gas Sales and Pul chab~. (ontl act
including Attachment A Much ~s mcm porated hereto
The term "month" shalI mean a calendar month
The term "MMBtu" shall mean one m~lhon (1,000 000) B~tlsh thermal units
The term "Recelvmg P~pehne" shall mean the interstate mnastate o~ local d~st~bunon
company ~mmedmtely downstream of the Point Of Dehx erx
The term "Buyers Nonce" shall mean the letter agreement alm m cop), et Mm.l~ ~s attached
hereto as Attachment A, wNch may be executed by BUYER and SELLER hem tulle to nme
and wNch shall b~nd BUYER and SELLER to pamculm nansact~ons fo~ the purchase and
sale of natural gas ~n accordance w~th the te~ ms thereol- and tins Agteement
The term "Pmnt Of Dehvery" shall mean the location et the physmal dehve~x to the Rece~ mg
P~pehne
2 TERM
The m~tml term w~II be one year from the date hmeof and month to month the~ealxer subjct, l
to the right ofmthe~ party to terminate tNs Contract on 30 day's pno~
othe~ proxy
4 page 18
3 PRICE AND PAYMENT OF COSTS AND q[AXES PRIOR TO DELIVER'~
On a monthly basis, the puce to be paid by BUYER for gas delivered by SELLER shall be
specified on the "Buyers Nonce" shown m Attachment A Prices shall include md SELLER
shall be respons,ble for payment of all royalties ploduct~on taxes, p~operty taxe~ ~c~ex,tnce
taxes, purchaser taxes, and all other taxes and hcense tees whmh attach to thc g,ts p~lo~ to
delivery hereunder Prices shall also include and SELLER shall be responsible to~ payment
ofgathenng and transportat,on charges to the Point Of Delivery, payments or other charges
thereon applicable before the title of gas passes to BUYER at the Point Of Dehvet x BUYER
shall pay transportation charges on the Rece~wng Pipehne downstream ot llle Point Ot
Dehvery
4 QUANTITY AND POINTS OF DELIVERY
Gas quantities and points of dehvery will be specified on a monthly ba~s on tile "Bux e~ s
Notice" as shown in Attachment A, ,lgned by BL YER and by SELLER Request~ I or b~ds
submiss~on of bids, or preliminary correspondence wdl not a~t as a Buyers Nonce and shall
not be the bas~s for gas del,venes under this contract bELLER shall &h'~er g,t~ qu,mtmcs
consistent with the quantity, Point Of Delivery, Receiving P~pehne, and dates as specmed
the "Buyers Notice" from the BUYER
5 BEST EFFORTS PERFORMANCE
SELLER will make a best effbrt to dehve~ and BUYER best effort to xecc~_ the gas
quantities as specified m the Buyers Notice E~the~ pm ty may at any tmle cm taft o~ interrupt
service with no liability to either partv The curtadmg pmXv will make diligent efforts to noun
the other party of the situation within 48 hours
6 INCREASES IN QUANTITY AND CHANGES TO POINTS OF DELI%
BUYER may request increases to gas quantities o~ changes m points of dehx el3, by specdymg
these requests in a revised "Buyers Notice" to the SELLER If accepted by SELLER
SELLER shall make all arrangements needed to revise dehvenes within 24 hours It SELLER
w~shes to increase gas quantities or change points ofdehvery, he must notd¥ BUh ER and
receive a revised Buyers Notice s~gned by BUYER to do so
7 OVER-DELIVERIES
If SELLER provides gas quantit~es for a month m excess of 4% above the quantities m the
"Buyers Notice" or at points ofdehvery not specified m the "Buyers Notice", BUYER shall
have the right to refuse the quantities of gas and shall be exempt from any paFments on those
gas quantities SELLER shall be liable for any penalnes or excess storage or t~ansportation
chaiges owed by the BUYER as a result of tile SELLERS deliveries in execs,, ot 4% ot the
Buyers Notice or at locations not specified m the "Buve~ s Notice"
5 page
8 GAS AND PRICE UNITS
All gas quantit~es and prmes shall be in MMBtu adjusted to 14 650 psi ,It a tempelatme of
60 degrees Fahrenhe.t, w~th both Mcr and Btu lree of watel vapol (Drv} Pl~ces wdl be m
U S dollars
9 QUALITY AND PRESSURE
The gas dehvered by SELLER shalI meet the pressure ~eqmrements and quahty specmcanons
of the Rece~v.ng Ptpehne
10 TITLE
SELLER warrants for ~tself ~ts successors hens and asstgns t~tle to all ~as dchxe~ed and
accepted by BUYER hereunde~ SELLER xvar:ants ~t has the right and I,ixxlul autho~ax to
sell the gas and that such gas .s free from hen, encumbrances and clam~s ol t.xep,, kind
SELLER shall ~ndemndy and saxe BUYER haimless horn all stats al,mn, [ic.~ cmlnaae~
costs, losses, expenses and encunlblflllCeS of whatsoex el natule allslllg Otl[ Ol t-lallllS OI'~IIIX
or all persons to satd gas or the role of smd gas SELLER shall be m cont: el and poaaess~on
of and respons.ble for any r:sk of loss, damage, clam~ hab~ht5 or lnlur~ caused th~lebv until
the gas has been dehvered to the BUYER at the Potnt Of Dehvery T~tle and ~sl. ot loss shall
pass at the Point Of Dehvery from SELLER to BUYER
11 DETERMINING PAYMENT VOLUMES
On apprommately the 15th day following the end of each month ol gas dehYe~ ~t_a 'gELLER
shall furmsh BUYER a statement spec.lTmg volume dehvered locatton and Recel,~mg
P~pehne If these volumes d.ffe~ from BUYER's ~ndependem momtonng ol dehx e~:es or
Rece:wng Pxpehne's records, BUYER shall have the ~ght to pa~ on the tmd~spt~ted amount
e~ther (0 under protest, or (u) upon final agreement being made on the dch~ e~ cc~ ~ olumes 10x
BUYER, SELLER and Receiving Plpehne BUYER and SELLER shall hax e the ~gl~t to late:
~ewse payment volumes as a result of add:tmnal or revised volmnemc clara from the
Receiving P:pehne or other companies assocmted w~th the producnon aale sto:age o~
transportat,on of the gas
12 PAYMENT
WztNn 12 days of receipt of the statement BUYER shall make payment to SELLER lot the
gas quanm~es as determzned in Pmagraph 11 Payments statements should be d~ected to
BUYER at C~ty of Denton Unht~es
Elecmc Productmn Dtwmon
1701-A Spencer Road
Denton TX 76205
Attn J~m Thune
Manage~ Elect~m Productmn
6 page 20
13 NOTIFICA FION
Commumcations regarding the perfoimance of this contract shall be directed to
SELLER BUYER City o[ Denton Utlht,es
National Energy & Trade, L.L.C. glecmc Production Dtx
3700 Buffalo Speedway, Suxte I100 170 ] -A Spencer Road
Houston, Texas 77098
Denton TX 76205
Aim Jun Thune
Manager Electric P~oduclton
14 PERFORMING NOMINATIONS
BUYER will be solely responsible for nomination ot gas ~olumes to the P. ecmx mg lhpehne
unless SELLER is given specific written authorization trom BUYER to perform these
nominations SELLER shall be responsible for all necessary nonnnatlol~s to t~ anspo~ tel s and
all others related to the supply of natm al gas pl ~or to Point Of Deh'~e~,,
15 EXCHANGE OF GAS QUANTITY INFORMATION
Dunng the period of actual gas deliveries SELLER and BUYER shall make a,,adable to each
other current estimates of gas flows at the Point(s) of dehveiy unde~ th~s aglccmcnl l-oi
proposes ofnominanon to othels and the momtonng ot actual gas quantme~ deh~e~ed I1
Seller ~s unable to prov,de current estmmtes ot gas actl~ ~tv to BUYER SELLER x~ ~ll assist
BUYER in obtaimng sald reformation from p~pehne transporters process.ag pldnt opel ato~ s
well ope, ators or upstream supphers
16 GOVERNING STATE
Tlus agreement shall be construed pursuant to the lax~s ot the State ol '1 exas and venue lot
its construction and enforcement shall lie in the courts of Denton County, Texas
SELLER BUYER
Natlo~rade~
By Jo~. Gutle~ By
Date 11/27/96 Date
~age 21
7
ATTACHMENT A
DENTON MUNICIPAL UTILITIES - SPE~N( ER ST %TION
170 I A 5~31~NC[R ROAD
D£NTON TD<~S 76205
(817) 383 7651
Date
F~rm Address
Below ~s a Buyers Not~ce for .(month, year) supply to the C~ty of Denton, Texas Under this
purchase the City of Denton, Texas, wdl take tstle to the gas at the point of dehve~) aud be I espons~ble
for payments subject to the terms of the purchase contract
BUYERS NOTICE
GAS SALES AND PURCHASE AGREEMENT
Buyers Notice Number Coma act Date
BUYER Cnty of Denton, SELLER
Electric Productmn D~wsmn
All volumes and prices are based on mmBtu's, adJusted to 14 65 dl )/dl y
Prices are m U S. dollars
Dates for Pmnt of Plpehne Volume Pllce
delivery debvery (MmBtu/ ($/mmBtu
14 65 D/D) 14 65 D/D1
Lone Star
Accepted and Agreed Accepted and Agreed
(Seller) (Buyer)
Dated Dated
To facd~tate payment, please s~gn the above Buyers Notice and leturn via fax. atto Jim Thu.e
8 page 22
~BID # 1971
BID NAME NATURAL GAS NATIONAL
ENERGY
~OPEN DATE DECEMBER 3, 1996 & TRADE
l# [~o~ b~sc~P~oN -- ~fio~i VEN~O~ WN~OR VEN~O~
1 ~ SPOT MARKET NATURAL GAS GAS DALLY INDEX
+ 14/MMBTU *
* I MILLION (1,000,000) BRITISH THERMEL UNITS