1994-131J:\UPDOCS\ORD\PURCH.GAS
ORDINANCE NO. 94 -1,31
AN ORDINANCE PROVIDING FOR THE PURCHASE OF GAS FROM LONE STAR GAS
COMPANY, SUCH PURCHASE BEING AVAILABLE FROM ONLY ONE SOURCE, IN
ACCORDANCE WITH THE PROVISIONS OF STATE LAW EXEMPTING SUCH PUR-
CHASES FROM REQUIREMENTS OF COMPETITIVE BIDDING; AUTHORIZING THE
EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, Section 252.022 of the Local Government Code provides
for the procurement of items that are available from only one
source, such as electricity, gas, water and other utility services
without submitting such items to competitive bidding; and
WHEREAS, the City Council wishes to purchase gas from Lone Star
Gas Company at those times when the gas transportation system sup-
plying gas to Denton's Spencer Station does not have the capability
of supplying gas from the City's primary gas suppliers; and
WHEREAS, Lone Star Gas Company has occasionally supplied
natural gas to the City as a sole source from January 1, 1994
through the effective date of this ordinance without a formal
contract; and
WHEREAS, the City council has provided in the City Budget for
the appropriation of funds to be used for the purchase of sole
source gas from Lone Star Gas Company as of January 1, 1994; NOW,
THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION I. That the City Manager is hereby authorized to
execute a contract with Lone Star Gas Company for the purchase of
gas under the conditions set forth therein, a copy of which is
attached hereto and incorporated by reference herein as Exhibit A.
SECTION II. That by the execution of said contract, the City
Council hereby authorizes the expenditure of funds therefor in the
amount of, and in accordance with the written contract made pur-
suant thereto, and ratifies the expenditure of funds necessary to
compensate Lone Star Gas Company for all gas supplied the City from
January 1, 1994 through the effective date of this ordinance.
SECTION III. That this ordinance shall become effective immed-
iately upon its passage and approval.
PASSED AND APPROVED this the ICIZh day of 1994.
CASTLEBERRY,
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPROVED AS TO LEGAL FORM:
DEBRA A. DRAYOVITCH, CITY ATTORNEY
BY: ✓i o a Mj
PAGE 2
GAS SALES CONTRACT
LONE STAR GAS COMPANY, herein called "Seller," whose mailing address is 301 South
Harwood, Attention: Gas Marketing Division, Dallas, Texas 75201 agrees to sell and deliver natural
gas to the CITY OF DENTON, herein called "Buyer," whose mailing address is City of Denton Municipal
Utilities, 1701-A Spencer Road, Denton, Texas 76205 and Buyer agrees to purchase and receive such
gas from Seller for use in Buyer's Spencer Steam Electric Station located in Denton, Texas, subject to
and in accordance with all the terms and conditions contained in this Contract.
This Contract shall be effective January 1, 1994 and shall cover service for a primary term of
five (5) years, and year-to-year thereafter, provided that either party may cancel this Contract at the
end of the primary term, or at the end of any year subsequent to the primary term, by giving written
notice to the other party at least thirty (30) days prior to the effective date of such cancellation.
This Contract covers Buyer's plant protection gas requirements (i.e., the minimum gas required
to prevent physical harm to the plant facilities or danger to plant personnel when such protection
cannot be afforded through the use of an alternate fuel) up to one thousand (1,000) MMBtu per day.
Buyer shall not use gas under this Contract for service other than that classified by Seller as Electric
Generation. The gas delivered hereunder is for the use of Buyer and shall not be redelivered or resold
to others.
Bills rendered for gas delivered hereunder shall be payable at P. 0. Box 910255, Dallas, Texas
75391-0255, or such other address as may be from time to time designated by Seller upon reasonable
notice.
This Contract includes the additional terms, provisions and conditions contained in Articles I
through VIII entitled "General Terms," which are attached hereto and shall be a part of this Contract,
and such "General Terms" shall be applicable to the service rendered hereunder.
This Contract shall be binding upon both parties and their successors and assigns, but shall not
be assignable by Buyer without the written consent of Seller, which consent shall not be unreasonably
withheld.
WITNESS THE EXECUTION HEREOF as of the IgZA day of , 1994.
LONE STAR GAS COMPANY, a Division
of ENSERCH CORPORATION
By
Title
"SELLER"
CITY OF DENTON
By ✓
Title Atq
"BUYER"
Attest Attest
STATE OF
COUNTY OF
BEFORE ME, the undersigned authority, a Notary Public in and for said County and State, on
this day personally appeared Mt:,_ of CITY OF DENTON, a
municipal corporation, known to me to be the person whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for the purposes and consideration
therein expressed, in the capacity therein stated, and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 1 1 day of A.D.,
19_.
...u~ STEPHANIE FORD
\ Notary Public in and for
NOTARY PUBLIC, STATE Of
~ru ^A'•i'7.r~ 1ElU•9 1
My Commission Expires Feb. 19. County, 1 Y_ kL~S
My commission expires the I°4Yr
srvm:r'+w day of F f V,-Tf rtcif ~j , 19q1
STATE OF TEXAS
COUNTY OF DALLAS
BEFORE ME, the undersigned authority, a Notary Public in and for the State of Texas, on this
day personally appeared , Vice President of LONE STAR GAS COMPANY,
a Division of ENSERCH Corporation, a Texas corporation, known to me to be the person whose name
is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed, in the capacity therein stated, and as the act and deed
of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of , A.D.,
19
Notary Public in and for
County,
My commission expires the
day of , 19
GENERAL TERMS
(a) The gas delivered hereunder shall be measured at a meter location by standard meter or
meters owned and operated by Seller at the Spencer Steam Electric Station, located in Denton, Texas.
Buyer shall use due care to protect Seller's property which is located on Buyer's premises from damage
and shall permit no person other than an agent of Seller, or a person otherwise lawfully authorized, to
tamper with, inspect or remove same. All property belonging to Seller and located on Buyer's premises
shall be removable by Seller at any time during the term of this Contract and within a reasonable time
after its termination, title thereto remaining in Seller at all times. Seller shall have full and free ingress
to and egress from Buyer's premises for the construction, inspection, maintenance, repair and removal
of Sellers's property thereon or for any purpose connected with the service of gas hereunder.
Measurement records shall remain the property of Seller and shall be kept on file by Seller for a period
of not less than two (2) years. Upon request of Buyer, Seller shall submit to Buyer records from its
metering ;equipment, together with calculations therefrom, for Buyer's inspection and verification,
subject to return by Buyer within ten (10) days after receipt thereof.
(b) For the purpose of this Contract the unit of measurement shall be one thousand (1,000)
cubic feet of gas at an absolute pressure of fourteen and sixty-five one-hundredths 0 4.65) pounds per
square inch and a base temperature of sixty degrees (600) Fahrenheit. All volumes of gas measured
shall be adjusted by computation in accordance with the Ideal Gas Laws, corrected for deviation, from
the pressure and temperature conditions set forth in the immediately preceding sentence. In such
computations, a value of 60 degrees (600) Fahrenheit shall be used for the flowing temperature of the
gas; however, Seller, at its sole option, may install standard recording temperature instruments on
Seller's meter and correct the volume measured based on the actual flowing temperature of the gas.
(c) Meter measurements computed by Seller according to its standard operating practices shall
be conclusive except for when the meter is found to be inaccurate by as much as one percent (1
fast or slow or failed to register, in either of which cases Seller shall repair or replace the meter. The
quantity of gas delivered while the meter was inaccurate or failed to register shall be determined by
correcting the error if the percentage of error is ascertainable by calibration test or mathematical
calculation. If not so ascertainable, then it shall be determined by estimating the quantity on a basis
of deliveries under similar conditions when the meter was registering accurately. No adjustment or
correction for meter inaccuracy or failure shall be made for a period longer than ninety (90) days.
Seller shall deliver for receipt by Buyer natural gas which is of merchantable quality and is
commercially free from water, hazardous substances, hydrocarbon liquids, bacteria, and other
objectionable liquids, solids or gas components. In addition, the gas delivered shall specifically contain
(i) not more than five one hundredths of one percent (.05%) oxygen, (ii) not more than five (5) grains
of total sulphur consisting of not more than one quarter (A) grain of hydrogen sulphide and one (11
grain of mercaptan sulphur per one hundred (100) cubic feet of gas, (iii) not more than three percent
(3%) byvolume of carbon dioxide, IN) not more than six percent (6%) by volume total non-
hydrocarbon and inert gases (including carbon dioxide, nitrogen, oxygen, helium, etc.), and (v) not
more than seven (7!/) of water vapor per one million (1,000,000) cubic feet of gas. The gas shall be
at temperatures not in excess of one hundred twenty degrees (1200) Fahrenheit or less than forty
degrees (400) Fahrenheit, provided that the gas shall have a hydrocarbon dew point not to exceed
forty degrees 140°) Fahrenheit at the delivery pressure, and shall have a heat content of not less than
nine hundred fifty (950) or more than eleven hundred (1,100) British Thermal Units per cubic foot
under the conditions of measurement contained herein.
Gas shall be delivered to Buyer at Seller's operating pressure at the Point of Delivery. The Point
of Delivery of gas to Buyer hereunder shall be at the outlet flange of Seller's regulating and metering
stationson the sites of Buyer's Spencer Steam Electric Station, at which point the title to and
ownership of the gas shall vest in Buyer. Buyer understands that under no circumstances shall Seller
ever be obligated to attempt to deliver gas at a pressure in excess of seventy five (75) psig into
Buyer's Spencer Steam Electric Station located in Denton, Texas. Seller shall not be liable for any loss,
damage, or injury resulting from the gas or its use after it reaches the aforesaid Point of Delivery, all
risks thereof and therefrom being hereby assumed by Buyer.
IV.
Seller cannot and does not guarantee a constant supply of gas to Buyer hereunder and shall
have the right at any and all times, with notice if practicable, to curtail or interrupt, in whole or in part,
the supply of gas hereunder. Buyer agrees that Seller shall never be liable in damages or otherwise
on account of having exercised such rights and agrees to curtail or discontinue the use of gas
hereunder when requested by Seller to do so. Seller and Buyer recognize.that Buyer is classified as
an "electric generation" customer pursuant to Seller's filed Tariffs, as well as Texas Railroad
Commission Order 496 for purposes of curtailment of gas service by Seller hereunder. Such
curtailment priority shall be effective during the term hereof until such time as such Order may be
amended, replaced, or superseded. Inability or failure of Seller to deliver or Buyer to receive gas or
perform under this Contract, shall not be the basis of claims for damages sustained by either party or
for breach of contract when due to Act of God or governmental authority, the elements, labor troubles,
fires, accidents, breakage, repair or change of or obstructions in pipelines, equipment or machinery,
depletion or failure of gas supply, fluctuations in gas pressure, low gas pressure, high gas pressure,
demands in excess of the capacity of Seller's equipment, pipelines, or sources of gas supply, or other
causes or contingencies reasonably beyond the control of either party hereto. If Buyer considers
continuity of its fuel service essential to the public welfare, then Buyer shall provide stand-by fuel and
equipment adequate to meet its fuel requirements during periods of interruption of gas service under
this Contract.
V.
(a) The price payable by Buyer for the gas to be delivered hereunder during each month of the
term hereof shall be an amount per MMBtu equal to Seller's weighted average cost of gas during such
month, plus a base rate of thirty-eight cents ($.38) per MMBtu. Such base price shall escalate one
cent (S.01) beginning on January 1, 1995 and annually thereafter during the term of this Contract.
(b) The term "weighted average price" of gas purchased by Seller shall mean the weighted
average price per one thousand (1,000) cubic feet of all gas purchased by Seller during the month,
computed to the nearest one-hundredth of one cent ($.0001), and shall be determined by dividing the
total dollar amount paid or accrued on Seller's books during such month for all gas purchased by Seller
by the total number of thousands of cubic feet of gas purchased by Seller during such month, adjusted
to the same pressure base as gas sold hereunder, and shall include, in addition to the cost of gas itself,
any production, severance, dedication, or gathering tax paid or accrued by Seller directly or by way
of reimbursement to its gas suppliers, to producers, processors, transporters, or other sellers of gas;
provided, if any portion of the cost of gas which has been paid by Seller is refunded to Seller, or if
Seller is required by the terms of any gas purchase contract, or of any agreed settlement of a disputed
claim, or by a determination or judgement of a regulatory body or court having or asserting jurisdiction,
to make retroactive payments with respect to gas which has been or may be purchased by Seller, or
if billing corrections are made with respect to gas previously purchased by Seller, then such payments,
refunds, or corrections shall be included in Seller's determination of the weighted average price of gas
for the month during which any such payments, refunds or corrections occur.
(c) Additionally, Buyer hereby agrees to pay Seller each and every month, an amount of two
thousand five hundred dollars ($2500.00) plus any and all additional taxes due hereunder. This
amount shall be payable to Seller each and every month of the term hereof regardless of whether or
not Seller is actually called upon to supply gas hereunder to Buyer.
(d) Buyer agrees to pay Seller, by way of reimbursement, all taxes and fees levied upon and/or
paid by Seller (other than ad valorem, capital stock, income or excess profit taxes, general franchise
taxes imposed on corporations on account of their corporate existence or on their right to do business
within the state as a foreign corporation and similar taxes), including, but not limited to, gross receipts
tax, street and alley rental fees agreed upon in franchise ordinances, licenses, fees and other charges
levied, assessed or made by any governmental authority on the act, right or privilege of Seller selling
and delivering gas to Buyer hereunder.
VI.
(a) If Buyer shall fail to pay bills for services within twelve (12) days from the date they are
rendered hereunder or shall otherwise default under this Contract, Seller may suspend service and
deliveries of gas and such suspension shall not prevent enforcement by Seller of any other of its legal
rights. Additionally, in the event Buyer fails to pay bills for service when due, Buyer agrees to pay
interest at the rate of eighteen percent (18%) per annum, or the highest rate allowed by law,
whichever is less, on such past due amounts.
(b) If an inaccuracy in a statement and/or payment hereunder should ever be discovered, the
necessary adjustments in such statement and/or payment shall be promptly made; provided, however,
that no adjustments for any statement and/or payment shall be made for any inaccuracy claimed after
the lapse of twenty-five (25) months from the date payment for such statement is due.
VII.
(a) This Contract is expressly made subject to all future valid rules, orders or regulations of
duly constituted governmental authorities having jurisdiction over the subject matter hereof.
(b) If any provision hereof shall be held by any duly constituted governmental authority to be
illegal, void or unenforceable, such provision shall be of no force and effect, but the illegality or
unenforceability shall have no effect upon and shall not impair the enforceability of any other provision
of this Contract.
VIII.
This Contract supersedes and replaces that certain contract dated January 1, 1990 between
the parties hereto, or their respective predecessors in interest, for gas at the location and for the
purposes herein designated; however, the requirement to make payment of any amount(s) due under
such preceding contract shall not be extinguished. This Contract constitutes the entire agreement
between the parties and there are no other representations, warranties, understandings or other
agreements, except as set forth herein, and this Contract may not be modified except in writing.
Waiver by either party of a particular right or default hereunder shall not be deemed a waiver of other
rights or defaults whether similar or dissimilar. If any provision hereof shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such provision shall be of no force and
effect, but the illegality or unenforceability shall have no effect upon and shall not impair the
enforceability of any other provision of this Contract. THE PARTIES HERETO HEREBY AGREE THAT
THIS CONTRACT SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS,
NOTWITHSTANDING ANY CONFLICT OF LAW PRINCIPLES THAT MIGHT REQUIRE THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION.
cc\denton-2.gsc\lp
5-18-94