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1997-165C \DOCS\ORD\DELHIGAS ORD ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, APPROVING ANINTERRUPTIBLENATURAL 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 interruptlble 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: ~. 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 lnoorporated herein. ~ That the expenditure of funds as provided in the attached agreement is hereby authorized. ~ That this ordinance shall become effective Immediately upon its passage and approval. PASSED AND APPROVED this the ~day of~ ~ , 1997. JAC~~ - ATTESTI: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY Standard Contract Standard Contract City of Denton Utlhtles Interrupt~ble Natural Gas Sales And Purchase Contract Agreement Date June 1, 1997 Dolhx Gas p~.gol~.ne Corporation .(SELLER) a D~laware Corporation agrees to dehver and sell gas to the City of Denton, Texas (Buyer) and BUYER agrees to purchase and receive smd natural gas from SELLER pursuant to the terms and conditions herematte~ set forth I DEFINITIONS: The term "Agreement" shall mean tbas Interrupttble Natural Gas Sales and Purchase Contract including Attachment A which ~s ~ncorporated herein The term "month" shall mean a calendar month The term "MMBtu" shall mean one mflhon (1,000,000) Bnnsh thermal umts The term "Receiving P~pehne" shall mean the ~nterstate, intrastate, or local d~stnbunon company tmmedmtely downstream of the Point Of Dehvery The term "Buyers Notice" shall mean the letter agreement a form copy et which is attached hereto as Attachment A, which may be executed by BUYER and SELLER from nme to nme and which shall brad BUYER and SELLER to particular transacnons for the purchase and sale of natural gas ~n accordance w~th the terms thereof and this Agreement The term "Point Of Dehvepy" shall mean the location of the physical dehvery to the Rece~wng P~pehne 2 TERM. The tint,al term will be one year from the date hereof, and month to month thereafter subject to the right ofe~ther party to terminate th~s Contract on 30 day's prior written nonce to the other party page 18 3 PRICE AND PAYMENT OF COSTS AND TAXES PRIOR TO DELIVERY On a monthly basts, the price to be paid by BUYER for gas delivered by SELLER shall be specified on the "Buyers Notice" shown m 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 ofgathenng and transportation charges to the Point Of Delivery, payments or other charges thereon apphcable before the title of gas passes to BUYER at the Point Of Dehvery 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 dehve~ will be specified on a monthly bas~s on the "Buyers Notice", as shown m Attachment A, signed by BUYER and by SELLER Requests for bids submission of bids, or prehrmnar~ correspondence will not act as a Buyers Notice and shall not be the basis for gas dehvenas under this contract SELLER shall deliver gas quantmes consistent w~th the quantity, Point Of Dehvery, Receiving P~pehne, and dates as specified m the "Buyers Notice" from the BUYER 5 BEST EFFORTS PERFORMANCE SELLER will make a best effort to deliver, and BUYER best effort to receive the gas quantities as specified m the Buyers Notice E~ther party may at any nme curtad or interrupt servme w~th no hab~hty to either party The curtmlmg party wdl make dd~gent efforts to nonfv 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 m points of dehvery by specifying these requests m a revised "Buyers Notice" to the SELLER If accepted by SELLER SELLER shall make all arrangements needed to revise dehvenes within 24 hours If SELLER wishes to increase gas quantities or change points ofdebvery he must not~fy BUYER and receive a revised Buyers Notice signed by BUYER to do so 7 OVER-DELIVERIES If SELLER provides gas quantit~es for a month ~n excess ot 4% above the quannt~es m the "Buyers Notice" or at points of delivery not specified ~n 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 hable for any penalties or excess storage or transportation charges owed by the BUYER as a result of the SELLERS deliveries ~n excess oI 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 o£ 60 degrees Fahrenheit, with both Mc£ and Btu free o£ water vapor (DRY) Prices wdl be m U S dollars 9 QUALITY AND PRESSURE' The gas dehvered by SELLER shall meet the pressure reqmrements and quahty specifications of the Receiving Pipeline 10 TITLE SELLER warrants for itself, its successors, heirs and assigns, title to all gas dehvered and accepted by BUYER hereunder SELLER warrants it has the right and lawful authont) to sell the gas and that such gas is free from hens, encumbrances and clmms ot every k~nd SELLER shall mdemmfy and save BUYER harmless from all stats, clmms hens, damages costs, losses, expenses and encumbrances of whatsoever nature arising out of clmms ot any or all persons to smd gas or the title of said gas SELLER shall be m control and possession of and responsible for any risk of loss, damage, clmm, habd~ty or injury caused thereby untd the gas has been delivered to the BUYER at the Point OfDehvery T~tle and risk of loss shall pass at the Point Of Dehvery from SELLER to BUYER 11 DETERMINING PAYMENT VOLUMES On apprordmately the 15th day following the end of each month of gas dehvenes SELLER shall furmsh BUYER a statement specifying volume dehvered, location and Recelwng PIpehne If these volumes differ from BUYER's ~ndependent momtonng ot deh~ertes or Receiving Pipelme's records, BUYER shall have the right to pay on the undisputed amount either (0 under protest, or (ii) upon final agreement being made on the dehvered volumes by BUYER, SELLER and Receiving Ptpehne BUYER and SELLER shall have the right to later revise payment volumes as a result of additional or revised volumemc data from the Receiving Pipeline or other compames associated with the producnon sale storage or transportation of the gas 12 PAYMENT W~thtn 12 days of receipt of the statement, BUYER shall make payment to SELLER for the gas quantities as determined m Paragraph 1 t Payments statements should be d~rected to BUYER at City of Denton UUht~es Electric Production Division 170 I-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 Delh~ Gas Pipeline Cor~]UYER City of Denton Utlllt,es 1700 Pacxf~.c Avenue Electric Production Division Dallas, Texas 75201-4696 1701-A Spencer Road Denton, TX 76205 Attn Jim Thune, Attn: Gas Sales 3xlm~n~stratzon Manager, Electric Production 14 PERFORMING NOMINATIONS BUYER will be solely responsible for nonunation of gas volumes to the Rece. vlng Pipeline unless SELLER is given specific written authorization from BUYER to perform these nonunations 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. Dunng the period of actual gas dehvenes, 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 momtoring of actual gas quant't'es dehvered If Seller is unable to provide current estimates of gas activity to BUYER, SELLER will assist BUYER in obtmmng smd information from pipeline transporters, processing plant operators well operators, or upstream suppliers 16 GOVERNING STATE Ttus agreement shall be construed pursuant to the laws of the State of Texas and venue tot its construction and enforcement shall lie in the courts of Denton County, Texas Th.ts agree'aent xs sub3ect to the Letter Addendum dated May 12, 1997 frcm Ben Reese of Delhi Gas Pxpelxne Corporatxon. SELLER Delhx Gas Plpellne Corporation BUYER City of Denton, Te~< By ~ By ~ Title vxce PresJ. dent Title ~ Date Ma:, 13, 1997 Date d, -/7- q 7 page 21 DATE JUNE 17, 1997 ~ REPORT TO Mayor and Members of the C~ty Council FROM Kathy DuBose Executtve Dtrector of Finance SUBJECT BID # 2047 - SPOT MARKET NATURAL GAS RECOMM~ENDATION. We recommend approval of a contract w~th Delh~ Gas P~pehne Corporation tor natural gas spot purchase constderatton SUM_MAR~. In May 1992 the Ctty of Denton ~nst~ruted b~dd~ng procedures for spot purchase,s of natural gas whereby contracts were estabhshed with gas compames interested m par~tc~patmg m the C~t~ s monthlx spot gas purchase program for ~uel at the Denton Mumc~pal Uttltty Electrm Productton Plant We currently have contracts for spot supply of natural gas w~th Enserch Mobd Tnmty Tristar H~ghland Taurus, Cornerstone, M~dcon andNatlonal Energy & Trade, LLC These contracts will remain ~n effect unttl e~ther party cancels Approval and execution of a contract w~th Delh~ wall extend the comvet~t~e btd opportunities for natural gas spot supply ' These contracts allow for the competmve btddmg on a monthly basts of prices for natural gas wtth all supphers b~ddmg under the same terms and cond~nons Enron took exception to our standard contract, therefore, we are not recommending they be added at th~s nme PROGRAMS, DEPARTMEN_TS OR GROUPS AFFECTED: C~tv of Denton Elecmc Produ;tlon D~wslon FISCAL IMPACT Funds for the purchase of Natural Gas as a fuel tor the Electric Production facdltx are part of the annual budget for supphes and services Attachments Contract w~th Delh~ Tabulatmn of responding supphers Respectfully submitted Kath.~DuBc~e ' Execuu,~e DYrector of F~nance Approx ed Name lomD Shaw CP'vl /~tle Purchasing 4gent 2 DELHI GAS PIPELINE CORPORATION May 12, 1997 C~ty of Denton Purchasing Department 901-B Texas Street Denton, Texas 76901 Attentaon. Tom Shaw RE Interruptlble Natural Gas Sales and Purchase Agreement, Dated June 1, 1997 ("Standard Contract"), Clarifying Addendum Gentlemen The purpose of tlu$ letter is memonahzed In wntzng certain clarifications g~ven by die City Denton ('Buyer') in response to quesuons by Delhi Gas Plpehne Corporauon ('DeLhi') concerning the meamng and intent of the Sohcltauon for Natural Gas Supply ('$ohcitauon') and Demon's Standard Contract There are vanous references in the Sohcttataon and the Standard Contract to the 'Buver's Nouce" which is a form attached to the Standard Contract Denton has clanfied its intent bv staung even xf Dellu's bid is accepted neither Dellu nor Buyer shall have any obhgauon w~th respect to purchase and sale of gas unless both DeLhi and Buyer execute a Buver's Nouce agreeing to purcbas~ and sell gas Section 6, Level of Service to be Provided of the Sohmtauon and the definition of, "InterruptJble Best Efforts Supply", on Appendix A of the Sohcltatton both mdmate that either party max interrupt, w~thout habihty, the purchase and sale of a gas quanratv after both parraes sign a 'Buyer s Notace" for that quanuty for any reason except price Ho~vever, Paragraph 5 of d~e Standard Contract does not exclude price as a basis for interruption w~thout habihrv Buyer has danfied inconsistency by explaining that neither party shall have the nght to interrupt or curtail the purchase and sale of gas under a fully executed 'Buver's Nouce'because of the pnce iii effect tot the gas purchased under that "Buyer's Norace'' or because ot changes iii the market price Dellu's bid is condttaoned upon the foregoing clanficauons Mcr',,, truly ,,ours Bt n Re~ st, "~ 1700 Pac~qc Avenue ! lhomelb~Tll~ord]knnllodamnd l~lcblr Dallas Texas 75201 214 954 2000 3 BID # ~047 ..... BID NAME NATURAL GAS DELHI GAS ENRON PIPELINE OPEN DATE MAY 13, 1997 ~ QUANTITY DESCRIPTION VENDOR VENDOR LT SPOT MARKET NATURAL OAS