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