1997-207C \DOCS\ORD\TWUUNTORD
AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE MAYOR TO
EXECUTE A COMPROMISE AND SETTLEMENT AGREEMENT BY AND BETWEEN THE
CITY OF DENTON, THE UNIVERSITY OF NORTH TEXAS, AND THE TEXAS
WOMAN'S UNIVERSITY RESOLVING THEIR DISPUTE RESPECTING THE APPLICA-
BILITY OF SECTION 2 2141 OF THE PUBLIC UTILITY REGULATORY ACT OF
1995 TO THE PARTIES, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR,
AND PROVIDING FOR AN EFFECTIVE DATE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
~ That the Mayor is hereby authorized to execute a
Compromise and Settlement Agreement providing for the settlement
and compromise of a dispute now pending between the City of Denton,
Texas, the University of North Texas, and the Texas Woman's
University regarding the applicability of Section 2 2141 of the
Public utility Regulatory Act of 1995 to the parties, which
agreement shall be in substantial accordance with the terms and
provisions of the proposed Compromise and Settlement Agreement
attached hereto as Exhibit A
~ That the Mayor, with the concurrence and approval
of the Clty Attorney, is hereby authorized to alter the form of the
proposed Compromise and Settlement Agreement, attached hereto as
Exhlblt A, as necessary to accomplish the substantive goals of said
document, and as necessary to secure agreement among the three
parties thereto
~ That the Mayor is further hereby authorized to
execute any other documents which are necessary or required to
implement the terms and spirit of the Compromise and Settlement
Agreement
~ That the expenditure of funds as provided in the
attached "Compromise and Settlement Agreement" is hereby autho-
rized.
~ That the C~ty Council, by separate ordinance to be
enacted on this date, authorizes and approves the enactment of an
electric service rate "Discount Rider For State Universities and
Colleges", also in furtherance of this Compromise and Settlement
Agreement
~ That this ordinance shall become effective
immediately upon its passage and approval
PASSED AND APPROVED this the day of , 1997
ATTEST
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM
~{ERBERT L PROUTY, CITY ATTORNEY
COMPROMISE AND SETTLEMENT AGREEMENT
THE STATE OF TEXAS ~5
COUNTY OF DENTON ~
THIS AGREEMENT is made and entered into by and between the City of Denton,
Texas, a Texas Municipal Corporation ("DENTON"), the University of North Texas
("UNT"), and the Texas Woman's University ("TWU"), each party acting herein by and
through their respective duly-authorized governing bodies and representatives
WHEREAS, the legislature of the State of Texas passed a law, Section 2 2141 of the
Public Utility Regulatory Act of 1995 (hereinafter the "Statute"), which Statute became
effective September 1, 1995 The Statute was entitled "Discounted Rates foi Certain State
Institutions of Higher Education" and mandated a 20% discount of electric rates to state
universities The Statute allowed mumcipal elecmc utilities an exemption from its
provisions provided that the discount exceeded 1% of its total annual revenues, and
WHEREAS, at the time the Statute was passed, Denton, in its communlcaUon to the
office of the Attorney General of the State of Texas, mmntamed that the Statute was
unconstitutional, or in the alternative, that if the Statute was not unconstitutional, that
Denton was nonetheless exempt from its provisions by means of its belief that it satisfied
the 1% of total annual levenue test set forth in the Statute In late January, 1997, Denton
ieceived notice from UNT, TWU and the universities' outside auditing firms that UNT and
TWU each claimed entitlement to 20% electuc rate discounts flora and after September 1,
1995 according to the Statute, and
WHEREAS, thereafter, communications ensued between Denton, UNT and TWU
regarding the apphcabthty of Section 2 2141 of the Public Utility Regulatory Act oi- 1995 to
the parties Negotiations occurred between Denton, UNT and TWU in attempts to reach a
resolution of the dispute and in order to foster continued good community relations
between Denton and the two universities, who are two of Denton's largest elecUic utility
seivlce customeis On June 10, 1997, an agreement in principle was reached between the
parties, and a Memorandum of Undeistandlng was prepared, memorializing the parties'
proposed settlement, subJeCt to the approval of then respective governing bodies and duly-
authorized officers, and
WHEREAS, Denton, UNT and TWU, in ordei to dispose ol the dispute between
them as hereinabove described in ordei to avoid the costs, delays and uncertainties of
htigat~on, and in order to matntam the strong ties existing between Denton and the two
unlversitaes, the parties desire to dispose of the entire controversy and dispute between
them including all ctatms and causes of action of any kind that cmrently exist or that may
exist in the future which relate to the applicability of the Statute to each of them The
parties have agreed, by this Compromise and Settlement Agreement ("Agreement") to a
compronuse and settlement of their respective claims arising under the Statute herelnabove
described
COMPROMISE AND SET~[ LEMENT AGREEMENT - PAGE I
WITNESSETH, that in consideration of the amounts to be paid hereunder and in
further conslderatxon of the covenants and agreements of the parties herein contained, the
parties hereto do hereby AGREE as follows
1 Denton agrees to pay UNT and TWU a pomon of their respective clmms for
arrearages respecting the discounts which would have accrued under the Statute for
the period beginning September 1, 1995 and ending April 30, 1997 for UNT and
May 15, 1997 for TWU Denton agrees to pay the two umverstties the total sum of
$564,632, which amount ts allocated $387,802 to UNT and $176,830 to TWU
2 The $564,632 settlement payment made by Denton to UNT and TWU set forth tn
paragraph 1 above, shall be satisfied as follows
A Denton shall pay, of the total $564,632 settlement amount, a cash payment of
$197,621 on or before 30 days after the parties' execution of this agreement,
with the sum of $135,930 being payable to UNT and the sum of $61,691 being
payable to TWU
B The remamlng sum of $367,011 shall be satisfied by means of credits made by
Denton to the electric utility service bills of each of the two umversltles, issued
on or after July 1, 1997, August l, 1997, and September 1, 1997, as further
prowded tn paragraphs 2 C and 2 D hereinbelow
C Denton shall crecht the electric utility service bills issued to UNT in the total
remmmng amount of $251,872 consisting of three consecutive monthly credits
of $83,957 33, $83 957 33 and $83,957 34 for the bills issued by Denton on
or after July 1, 1997, August 1, 1997, and September 1, 1997
D Denton shall credit the electric utahty service bills issued to TWU tn the total
remaining amount of $115,139 consisting of three consecutive monthly credits
of $38,379 67, $38,379 67 and $38,379 66 for the bills issued by Denton on
July 1, 1997, August 1, 1997, and September 1, 1997
E In cons~deranon of the $44,198 reducnon tn the initial settlement amount herein,
the C~ty agrees to lecetve as full payment for those months the discounted UNT
payments for electrical useage for April 1997 and May 1997
3 Denton, UNT and TWU hereby agree, by this document, to a seven-year power
supply agreement with the following terms The power supply agreement shall
commence effective July 1, 1997 Dmmg the first five years of the term of this
agreement, Denton agrees to provide all electric service needs (within the City of
Denton or outside the city hrmts where currently being supphed by the City) of UNT
and TWU, and UNT and TWU each agree and covenant to uncondmonally remmn as
the electric service customers of Denton Upon the expiration of the hrst five years of
this agreement, and before the expiration of this Power Supply Agreement on June
30, 2004, UNT and TWU shall each have the option to select a bona-fide pubhc
sector power supply cooperative purchasing agreement Denton shall retain a right of
first refusal to match any such bona-fide offer from such other public sector power
provider, and thereby retain either or both universities as Denton's customers for the
remmmng term of the agreement For purposes of the operation of this paragraph,
the term "bona-fide offer" is a proposed offer or agreement in wrmng, dated, and
signed by a duly-authorized officer or repreqentatlve of a public sector power
provider The university or universities tequesnng that Denton exercise its right of
first refusal, shall make that request tn wrmng, signed by a duly-authorized officer or
COMPROMISE AND SETTLEMENT AGREEMENT PAGE 2
representative of the university or unlversities The request shall provide that Denton
has at least thirty (30) days to evaluate the offer or agreement, in order to exercise ~ts
option, and which written offer or agreement communicated by the umversity or
umversmes to Denton shall state that the pubhc sector power provider offer or
agreement is bona-fide, is m full force and effect, and that the umvers~ty or
umvers~t~es are ready to take action to approve the offer or proposed agreement
4 Denton agrees to adopt the attached "Discount Rider for State Umversmes and
Colleges" to the electric rate ordinance The rates initially established by this
D~scount Pdder shall be the maximum or ceiling rate charged to the University of
North Texas and Texas Woman's Umvers~ty during the term of the seven year power
supply agreement However, the City of Denton shall continue to provide electrical
services to UNT and TWU under tariffed rates avadable to the general community
and under the same apphcable rate structure as cunently utdlzed, and shall not adopt a
specific tariff rate for the universities other than the aforementioned 20% discount
rider The 20% chscount applies to all electatc accounts of UNT and TWU for usage
on or after May 1, 1997 for UNT and on ot after May 15, 1997 for TWU and for the
duration of this Agreement
5 If any applicable tariffed base rate (excluding ECA charges) ~s reduced by more than
10% during the life of this agreement, the discounted rates to the umversmes will be
reduced such that the discounted base rates are always at least 10% below any tariffs
that would be applicable to the otherwise tariffed rate In other words, at no tame
shall tariffed rate decreases cause the universmes' rates to be less than 10% below the
otherwise tariffed rates to other non-umverslty customers Base rates are defined as
the sum of the following charges the Facthty Charge, the Demand Charge, the
Energy Charge and/or the adjustment for short/extended lead cycles of the apphcable
rate schedules Base rates do not include the Energy Cost AdJustment At no time
shall tariffed rate decreases cause the rate discount to the two umversmes to decrease
by more than 50% over the term of this Power Supply Agreement (from City)
6 Th~s Agreement is a comprormse of d~sputed clmms regarthng the applicability of
Section 2 2141 of the Public Utility Regulatory Act of 1995 to the parties hereto
Nothing in th~s agreement is an admission of habthty by any party, and nothing in
this agreement may be interpreted as an admission of habthty Each party to this
agreement expressly demes liability to every other party to th~$ agreement
7 Denton hereby releases UNT and TWU, thmr officers, agents and employees from
any and all claims, demands or causes of action, known or unknown, fixed or
contingent, hqmdated or unhqmdated, arising threctly or ~nd~rectly from the
apphcabdlty of the Statute to the parties
8 UNT and TWU each hereby releases Denton, ~ts officers, agents and employees from
any and all claims, demands or causes of action, known or unknown, fixed or
contingent, liquidated or unhqmdated, arising directly o~ indirectly from the
apphcabdity of the Statute to the parties, ~ncludmg, w~thout hn'ntation, the claims and
demands of UNT and TWU made by and through then authtors in the approximate
amount of $1 2 million as alleged arrearages arising under the Statute
9 This Agreement is made according to the laws of the State of Texas The part~es
expressly agree that th~s Agreement ~s governed by, and wall be construed and
enforced in accordance with Texas law Venue of any suit or cause of action under
this Agreement shall lie exclusively ~n Denton County, Texas
COMPROMISE AND SETTLEMENT AGREEMENT PAGE 3
10 This Agreement ~s bindtng on and inures to the benefit of the parties, their respective
successors and asmgns
11 Ttns Agreement contains the entire agreement between the parries It supersedes any
and all prior agreements, arrangements, or understandings between the parties
regarding the apphcabthty of Sectton 2 2141 of the Public Utdlty Regulatory Act of
1995 to the pames hereto No oral understandings, statements, promises, or
inducements contrary to or consistent with the terms of this agreement extst The
agreement ts not subject to any modificatmn, watver, or addition that ts made orally
Thts agreement ts subject to modtficatton, waiver, or addition only by means of a
written document mgned by all parties hereto
12 Thru Agreement ts executed in three identical counterparts, each of which shall be
deemed an original for all purposes
IN WITNESS WHEREOF, the parties heret~ have caused this Compromise and
Settlement Agreement to be executed,bjL~nd throug~t.hmr j~specttve governing bodtes and
duly-authorized officers on thts the,~ day of ~, 1997, to be effective as
ol July 1, 1997 ~} ~/
CITY OF ON, .TEXAS
, J~,t~ M1LLER, MAYOR
ATTEST
JENN~I;~ER
WALTERS, CITy SECRETARY
APPI~; AS-~o LEGAL FORI~
HERBerT ~ ¢{~UDC~Y ATTORNEY
UNIVE~ITY OF NORTH TEXAS
ATTE ,
TEXAS WOMAN'S UNIVERSITY
Vice President forfFinance
ATq]~ST/ ~ / ~ ~ and mdrainiqtration
COMPROMISE AND SETFLEMENT AGREEMENT PAGE 4
DISCOUNT RIDER FOR
STATE UNIVERSITIES ]%ND COLLEGES
APPLICATION
Service provided herein is applicable to electric service
billed under the otherwise appllcable tarrlffed rate for
service supplied to a facility of a "four year state un~versl-
ty, upper level institution, the University of North Texas,
Texas Women's University or college" as provided for in Section
2.2141, under Subtitle E, Title II, Public Utility Regulatory
Act of 1995.
CREDIT TO MONTHLY BILL OR MONTHLY RATE
customer's monthly bill and/or monthly rate shall be in
accordance with the applicable rate schedule(s) minus a credit
as determined below.
Customer's monthly bill for "Base Rates" under the applica-
ble rate schedule(s) in effect on the effective date of
this rate rider, shall be reduced by 20%
"Base Rates" are defined as the sum of the followIng
charges: The Facility Charge, the Demand Charge, the Energy
Charge and/or the adjustment for short/extended read cycles
of the applicable rate schedules. Base rates do not
include the Energy Cost Adjustment ("ECA") as currently
calculated.
All other charges and calculatlons in the rate schedule are
unchanged.
The rates initially established on the effective date of this
Discount Rider shall be maximum or ceiling rate charged to the
University of North Texas ("UNT) and Texas Women's University
("TWU") during the term of the seven year power supply agree-
ment. If during the term of the power supply agreement any
applicable tariffed "Base Rates" are reduced by more than 10%,
the discounted rates for UNT and TWU will be reduced such that
the discounted "Base Rates" are always at least 10% below any
tariffs that will otherwise be applicable to the universities
At no time shall tariffed base rate decreases cause the rate
discount to the two universities to decrease by more than 50%
over the term of the power supply agreement.
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