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1990-189ORDINANCE NO. AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE CITY OF BOWIE FOR THE PURCHASE OF FIRM POWER AND ENERGY; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION I. That the Mayor is hereby authorized to execute an agreement between the City of Denton and the City of Bowie for the purchase of firm power and energy, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof. SECTION II. That this ordinance shall become effective immediately upon its passage and appal. PASSED AND APPROVED this the day of A-~, 1990. ATTEST: JENNIFER WALTERS, CITY SECRETARY VlJ W BY: APPROVED AS T LEGAL FORM: DEBRA A. DRAYOVITCH, CITY ATTORNEY BY: Ytl~~ /z CASTLEBERRY, bouieord CONTRACT FOR SALE AND PURCHASE OF FIRM POWER AND ENERGY between CITY OF BOWIE, TEXAS as Purchaser and each of CITY OF BRYAN, TEXAS, CITY OF DENTON, TEXAS, CITY OF GARLAND, TEXAS, CITY OF GREENVILLE, TEXAS, each acting on its own behalf severally and not jointly, as Seller Dated as of TABLE OF CONTENTS Page SECTION 1: Capacity of Parties: Nature and Number of SECTION SECTION 2: 3: Contracts Definitions Sale and Purchase of Firm Power and Energy 2 3 4 SECTION 4: Delivery of Firm Power and Energy 6 SECTION SECTION 5: 6: Rates and Charges Meter Readings and Seller's Billing 8 10 SECTION 7: Meter Testing and Billing Adjustment 10 SECTION 8: Payments to Constitute Operating Expenses of SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION 9: 10: 11: 12: 13: 14: 15: 16: 17: 18: Purchaser's System Covenants of the Purchaser Covenants of the Seller Remedies in Event of Default Payment Due Dates and Delinquency Term of Contract Force Majeure Records and Accounts Access Assignment Successors and Assigns 11 11 12 13 14 15 17 _ 18 18 19 19 SECTION 19: Governmental Rates, Regulations and Laws 19 SECTION SECTION SECTION SECTION SECTION 20: 21: 22: 23: 24: Notices Severability Entire Contract No Waiver Venue 20 20 20 20 21 EXHIBITS Exhibit A ...............................................................23 Exhibit B ...............................................................24 Exhibit C ...............................................................25 Exhibit D ...............................................................26 Exhibit E ...............................................................27 Exhibit F ...............................................................28 CONTRACT FOR SALE AND PURCHASE OF FIRM POWER AND ENERGY between City of Bowie, Texas, as Purchaser and each of City of Bryan, Texas, City of Denton, Texas, City of Garland, Texas, City of Greenville, Texas each acting on its own behalf severally and not jointly, as Seller This Contract, made and entered into as of the day of , 1990 (but effective on the date provided in Section 13 hereof), by and between the City of Bowie, Texas (the "Purchaser"), a municipal corporation and political subdivision of the State of Texas, and the City of Bryan, Texas, the City of Denton, Texas, the City of Garland, Texas, and the City of Greenville, Texas, each of which cities is a municipal corporation and a political subdivision of the State of Texas (herein called "Seller" with respect to provisions applicable to each of them and called "Bryan," "Denton," "Garland," or "Greenville," as the case may be, with respect to provisions applicable to them severally). WITNESSETH: WHEREAS, the Purchaser has need of an economical, reliable source of Firm Power and Energy to meet the demands of its customers and has determined to purchase such Firm Power and Energy from the Seller; and WHEREAS, the Seller owns electric generating facilities and transmission lines and purchases Power and Energy from TMPA for the purpose of supplying Firm Power and Energy to its customers; 1 WHEREAS, the Seller is authorized by Section 402.001 of the Local Government Code to sell electric service to any person outside its boundaries and to contract with persons outside its boundaries to permit them to connect with its System on terms Seller considers in its best interest; and WHEREAS, the Purchaser is a person, within the meaning of that term as defined in Section 311.005 of the Government Code, located outside the boundaries of Seller and desires to purchase, and the Seller, having found that the terms herein set forth are in the best interest of the Seller desires to sell, Firm Power and Energy on the terms and conditions herein set forth. NOW THEREFORE, in consideration of the mutual undertakings herein contained between the Purchaser and each of Bryan, Denton, Garland, and Greenville acting on its own behalf severally and not jointly, the Seller and the Purchaser agree as follows: SECTION 1: Capacity of Parties: Nature and Number of Contracts. This instrument is four separate contracts between the Purchaser and each of Bryan, Denton, Garland, and Greenville, respectively. Each of the four separate contracts contain substantially identical terms except insofar as a particular provision is clearly applicable only to one or more of the separate contracts by specifying its application to Bryan, Denton, Garland, or Greenville rather than Seller. The rights, duties, obligations, and benefits of "Seller" herein apply to each of Bryan, Denton, Garland, and Greenville, severally and not jointly. This instrument contains no agreements or undertakings and imposes no duties or obligations between any of Bryan, Denton, Garland, or Greenville to any of Bryan, Denton, Garland or Greenville but this declaration does not affect in any respect the obligations of the Seller to the Purchaser under this 2 Contract. A breach or termination of this instrument by one or more of Bryan, Denton, Garland, or Greenville does not in any manner affect the non-breaching or non-terminating parties and does not affect the contracts herein contained of such non-breaching or non-terminating parties with the Purchaser. This Contract shall be binding between Seller and Purchaser, with respect to each separate Contract, on the date both of the Purchaser and the applicable Seller have duly authorized, executed, and delivered this Contract. These Contracts shall terminate as provided in Section 13. The dates which the Contracts are executed and binding may be, but are not required to be, the same. The failure of one or more Sellers to execute this instrument does not affect the formation of a Contract by the Purchaser and Seller that execute this instrument since the Sellers that do execute this Contract are required to provide all of the Firm Power and Energy requirements of the Purchaser as described in Section 3(c). Subject to the foregoing, this Contract may be executed in counterparts. - SECTION 2: Definitions. As used herein: (a) "Bryan" shall mean the City of Bryan, Texas. (b) "Denton" shall mean the City of Denton, Texas. (c) "Garland" shall mean the City of Garland, Texas. (d) "Greenville" shall mean the City of Greenville, Texas. (e) "Energy" shall mean kilowatt-hours (kWh). (f) "ERCOT" shall mean the Electric Reliability Council of Texas. (g) "Firm" shall mean continuous and without interruption (except for an event of Force Majeure as defined in Section 14.) (h) "Points of Delivery" shall mean the points on the System of, or available to, the Seller, as determined from time to time by the Seller and the Purchaser, at which Power and Energy are made available to the Purchaser pursuant 3 to this Contract. Such Points of Delivery shall be attached hereto as Exhibit "A", and a change therein, approved by the Seller and the Purchaser shall not be considered as an amendment to this Contract. (i) "Power" shall mean kilowatts (kW). (j) "Purchaser" shall mean the City of Bowie, Texas. (k) "Seller" shall mean each of Bryan, Denton, Garland, and Greenville acting on its own behalf, severally and not jointly. (1) "System" shall mean the Sellers' electric utility systems. (m) "TMPA" shall mean Texas Municipal Power Agency. (n) "Uniform System of Accounts" and all other accounting methods and terminology contained or referred to in this Section or elsewhere in this Contract means accounting principles, methods and terminology followed and construed, as nearly as practicable, in conformity with the Uniform System of Accounts for Class A and Class B Public Utilities and Licensees and accounting - rules and regulations thereunder prescribed by the Federal Energy Regulatory Commission for privately owned power companies which are subject to its jurisdiction and engaged in business comparable to the business of the Seller insofar as the System is concerned, as amended from time to time, or such other system as may be required by any regulatory agency. SECTION 3: Sale and Purchase of Firm Power and Energy. (a) The Seller agrees to sell and deliver Firm Power and Energy and the Purchaser agrees to purchase and receive the Purchaser's total requirements for the operation of the Purchaser's electric system in excess of (i) any amount generated from facilities which the Purchaser jointly owns with TMPA, (ii) any amount purchased from TMPA after re-creation of TMPA by the addition of one or more of cities including, but not limited to, the Purchaser, (iii) any amount 4 purchased from a joint powers agency created by the Purchaser and by one or more of Bryan, Denton, Garland, or Greenville, for the purpose of construction of future generating facilities, (iv) any amount generated by the Purchaser from a facility which is jointly owned by the Purchaser and by a joint powers agency created by one or more of Bryan, Denton, Garland and Greenville, (v) any amount purchased from a city other than the Seller which is a member-city of TMPA pursuant to a contract substantially identical to this contract, (vi) any amount supplied by renewable resources, provided that Purchaser is an owner of the supplying facility, (vii) any amount supplied from a facility certified by the Federal Energy Regulatory Commission as a Qualifying Facility, provided that the Qualifying Facility is located in the service area of the Purchaser and is electrically connected to the electric system of the Purchaser, (viii) any amount supplied by cogeneration or other "on-site" generation associated with economic development activities of the Purchaser, provided that the facility is located - in the service area of the Purchaser and is electrically connected to the electric system of the Purchaser, and (ix) any amount-supplied by contracts with governmental agencies for supply of Capacity or Energy to Purchaser as a preference customer as defined by Section 5 of the Flood Control Act of 1944 (16USC Sec. 825s). The Purchaser shall provide written notice to the Seller when the Purchaser has taken formal action to accept a potential supply of Power and Energy under items (vi) through (ix) of this section. (b) It is the intent of this Contract that if any Seller, as that term is defined in Section 2 of this Contract, do not execute this Contract, then the remaining Sellers who do execute this Contract will be responsible for providing all of the Power and Energy requirements of the Purchaser, as required under subsections (a) and (c), for the term of this Contract. The formula which dictates how much power and energy each Seller is required to provide is contained in Section 3(c) of this Contract. 5 (c) The Seller's obligation to provide Firm Power and Energy under this contract is limited to a proportion of Purchaser's total requirements for Firm Power and Energy, calculated by multiplying Purchaser's total requirements by a fraction, the numerator of which is the difference between Seller's available capacity including its then. current entitlement from Gibbons Creek, and 1.:5 times the Seller's native peak load after excluding other firm or non-firm sales and the denominator of which is the sum of the numerators for all of the Sellers. Exhibit "B" reflects two examples of calculations of the above formula. (d) In association with the Power and Energy being sold to Purchaser, Seller will provide all of the operating and planning reserves required by applicable operating agreements with other members of ERCOT in proportion to its obligation to provide Firm Power and Energy under Section 3(c) above. - (e) On January 1 of each year during the term of this Contract, the Purchaser shall provide to Seller (at the addresses set forth in Exhibit D) a forecast of its requirements for Power and Energy for the next five years and other information reasonably required by Seller to enable Seller to plan for the Power and Energy requirements of Purchaser. SECTION 4: Delivery of Firm Power and Energy. (a) The Firm Power and Energy to be furnished under this Contract shall be three (3) phase, alternating current, at a nominal standard voltage of 138,000 volts at the Points of Delivery, and a nominal frequency of sixty (60) Hertz, subject to conditions of delivery and measurement as hereinafter provided. 6 (b) The Points of Delivery and the conditions of service pertinent thereto shall be in accordance with Exhibit "A" attached to this contract, as may be modified by the Seller and the Purchaser from time to time. The location of the Points of Delivery, for service commencing on January 1, 1992, shall be mutually agreed upon between Purchaser and Seller. After commencement of service under this Contract, no delivery points will be added without permission of the Purchaser. The Seller at its expense will provide for the construction of all facilities on the supply side of the metering point and for the operation and maintenance of those facilities, except as noted on Exhibit "A". (c) The Seller will be responsible for Firm delivery of Firm Power and Energy under this Contract, to the Purchaser at the Points of Delivery, and any costs related to Firm delivery of Firm Power and Energy. (d) Metering equipment shall be furnished, installed and maintained by the Seller at each Point of Delivery. If transforming equipment is located at the Point of Delivery, said metering equipment shall be located on the high voltage side of the transformer. (e) The Purchaser shall maintain its electric system such that the power factor at each metering point shall be between 0.90 lagging and 0.90 leading. In the event that the power factor at the time of monthly peak demand is less than 0.90 lagging, the demand for billing purposes will be adjusted by the following formula: Adjusted demand = Actual demand x 0.90 Power Factor 7 SECTION 5: Rates and Charges. (a) The rates and charges of the Seller to the Purchaser for Firm Power and Energy and for services supplied shall be: (i) non-discriminatory, (ii) fair and reasonable, and be calculated based upon the average costs of providing the Firm Power and Energy or providing the service with respect to which the rate or charge is based as shown in Exhibit E, and (iii) adjusted annually to reflect the average Energy cost as calculated on an annual basis in the manner described in this section. (b) Except with respect to adjustments expressly allowed by Section 5(c), the rates and charges set forth on Exhibit "C" are firm until the earlier of January 1, 1994 or such date as the Purchaser receives (i) any power or energy generated from facilities which the Purchaser jointly owns with TMPA, or (ii) any Power or Energy generated by the Purchaser from a facility which is jointly owned by the Purchaser and by a joint powers agency created by one or more of Bryan, Denton, Garland, and Greenville. After such date, the rates and charges in Exhibit "C" shall be amended. The amended rates and charges shall be based on the criteria in subsection 5(a). (c) On January 1 of each year during the term of this Contract, Seller's average Energy cost for the preceding year ending September 30 shall be compared with Purchaser's average Energy cost for the same time period under the rates charged in Exhibit "C", the Purchaser's average Energy cost adjusted to reflect Purchaser's average Energy cost at the system load factor. Seller's average Energy cost shall be calculated by dividing the sum of the total production costs of Seller by the combined Energy supplied to Firm load by Seller as shown in 8 Exhibit "E". The total production costs of Seller shall be calculated by summing the demand charge paid to TMPA, the Energy charge paid to TMPA, the operating and maintenance costs for Power generation incurred by Seller, debt service for generation paid by Seller, and other associated costs of generation and any cost of additional Power and Energy purchased by Seller pursuant to Section 10(a) of this Contract incurred by Seller and consented to by Purchaser, which consent shall not be unreasonably withheld, as shown in Exhibit "E". Purchaser's adjusted average Energy cost will be the actual average Energy cost paid under the rate in Exhibit "C", adjusted to reflect System load factor. An example calculation of the Purchaser's adjusted average Energy cost is shown in Exhibit "F". If Purchaser's adjusted average Energy cost under Exhibit "F" is less than Seller's average Energy cost, no rebate is required. If Purchaser's adjusted average Energy cost is greater than Seller's average Energy cost from Exhibit "E", Seller shall rebate to Purchaser on or before January 1 of each year the - difference, without interest, between Seller's average Energy cost and Purchaser's adjusted average Energy cost, multiplied by the Purchaser's Energy billing units of Exhibit "F". Under no ci"rcumstances will the Purchaser be required to reimburse monies to the Seller if Seller's average Energy cost is more than Purchaser's average Energy cost. From and after the date the Purchaser receives Power and Energy from one of the sources enumerated in subsection 3(a), if a reduction in the Purchaser's demand for Firm Power and Energy from the Seller occurs, the calculation of average Energy cost shall be changed to reflect the lower demand of Purchaser for Firm Power and Energy from the Seller and the Seller's costs at such time. The term "Seller" in this paragraph shall include Bryan, Denton, Garland and Greenville, whether or not each is a party to this Contract. 9 SECTION 6: Meter Readings and Seller's Billing. The Seller shall read meters or cause meters to be read and submit one combined bill and cause the Purchaser to be billed for Firm Power and Energy furnished under this Contract at monthly intervals. If multiple Points of Delivery are provided by Seller, then the demand utilized for billing purposes shall be calculated on a coincident peak demand basis. Payment of the bill is due within fifteen (15) days after receipt by Purchaser. Payment of the bill shall be made to the person, at the address, in the manner, specified in the bill. Seller may cause billing services to be performed by TMPA or by some other legal entity, and Seller's bill may be aggregated with the bills to Purchaser of any other member city of TMPA. In such event, the Purchaser may pay a single amount to TMPA or to the other entity, as the case may be, for credit to the account of the Seller and the other cities as detailed on the bill. - SECTION 7: Meter Testing and Billing Adjustments. The Seller shall test and calibrate meters or cause meters to be tested and calibrated by comparison with accurate standards at intervals of twelve (12) months, or such other intervals as the parties agree. The Seller shall also make or cause to be made special meter tests at any time at the Purchaser's request. The costs of all tests shall be borne by the Seller; provided, however, that if any special meter test made at the Purchaser's request shall disclose that the meters are recording accurately, the Purchaser shall reimburse the Seller for the cost of such test. Meters registering not more than 1/2 of 1% above or below normal shall be deemed to be accurate. The readings on any meter which shall have been disclosed by test to be inaccurate shall be corrected from the beginning of the monthly billing period immediately preceding the billing period 10 during which the test was made in accordance with the percentage of inaccuracy found by such test, provided, that no correction shall be made for a longer period unless the Seller and the Purchaser mutually agree thereto. Should any meter fail to register, the Power and Energy delivered during such period of failure shall, for billing purposes, be estimated by the Seller and the Purchaser from the best information available. The Seller shall notify the Purchaser or cause the Purchaser to be notified in advance of the time of any meter test so that the Purchaser's representat.ive may be present at such meter test. For the purpose of notifying the Purchaser in advance of a meter test, the Seller is not required to provide written notification as required by section 21. SECTION 8: Payments to Constitute Operating Expenses of Purchaser's System. The Purchaser reserves the right to pay operating expenses of its electric system from any funds legally available for the purpose, but the Purchaser's obligation to make payments under this Contract shall constitute an operating expense of its electric system payable solely from the gross revenues of such system. SECTION 9: Covenants of the Purchaser. (a) The Purchaser covenants to establish, maintain and collect rates and charges for the electric service of its electric system which shall produce revenues at least sufficient, together with other revenues available to such electric system and available electric system reserves, to enable it to pay to the Seller, when due, all amounts payable by the Purchaser under this Contract. 11 (b) The Purchaser covenants that Firm Power and Energy supplied under this Contract will be used only to supply Purchaser's retail customers as members of the general public and will not be resold to other utilities at wholesale or resold to any person or business pursuant to a written contractual arrangement or other understanding which differs in any respect from sales to the public generally. For purposes of this section 9(b), purchases of Firm Power and Energy by industrial or business customers pursuant to a rate structure published by the Purchaser and available to any customer meeting the established criteria (size of load, load factor, etc.) are treated as sales to the public generally and are not prohibited by this section. SECTION 10: Covenants of the Seller. (a) The Seller covenants to use the same degree of diligence it would use for its native load to provide Firm Power and Energy hereunder. If by reason of Force Majeure, the supply of Firm Power and Energy shall fail, or be interrupted, or become defective as hereinafter provided, the Seller shall not be liable therefore or for damages caused thereby. Pursuant to the Power Sales Contract, as amended, between Seller and TMPA, Seller is obligated to take all of its requirements from TMPA and is prohibited (except in certain limited circumstances) from constructing additional generating facilities. Therefore, no provision of this Contract requires Seller to construct capacity to provide Firm Power and Energy to Purchaser. If Seller does not have sufficient capacity to provide to Purchaser the Firm Power and Energy required under this Contract, Seller shall purchase the additional Power and Energy that is required. 12 (b) The Seller covenants that it will operate, maintain and manage its System or cause the same to be operated, maintained and managed in an efficient and economical manner, consistent with prudent utility practice and in accordance with standards normally used by ERCOT utilities owning and operating like properties. SECTION 11: Remedies in Event of Default. (a) If the Purchaser fails or defaults in meeting the terms, conditions and covenants of this Contract, the Seller shall give notice to the Purchaser. The Purchaser shall from the date of the mailing of such notice, have a period of thirty (30) days to cure the default; provided, however, in the event the failure or default is a failure to make payment within fifteen (15) days after receipt of the bill, the Purchaser shall, from the date of mailing of such - notice, have a period of fifteen (15) days to cure the default. (b) If the Purchaser does not cure its default within the period specified in subsection (a), then, so long as the Purchaser remains in default, and in addition to any other rights which the Seller has under this Contract and at law and in equity, the Seller may terminate all service to the Purchaser; provided, however, that Seller shall provide written notice to Purchaser prior to the date of termination. In the event the default is a failure to pay a bill for Power and Energy within fifteen (15) days after receipt of the bill, the Seller shall provide notice of termination at least fifteen (15) days prior to the date of termination. In the event of a default by Purchaser which does not include a failure to pay a bill within fifteen (15) days of receipt of the bill, the Seller shall provide notice of termination of least thirty (30) days prior 13 to the date of termination. The notice of termination may be included in the notice required under subsection (a) and, in such a case, the period of time in which the Purchaser may cure the default may also serve as the notice period prior to termination of service. Termination of service hereunder shall not reduce or change the obligation of the Purchaser or Seller under the other provisions of this Contract. (c) If the Seller fails or defaults in meeting the terms, conditions and covenants of this Contract, the Purchaser shall give notice to the Seller. Following such notice, the Seller shall have a period of fifteen (15) days to cure the default. If the default is not cured in the fifteen (15) day period, then the Purchaser shall have all of the rights and remedies provided at law and in equity, including the right to offset any obligations otherwise due Seller and the right for mandatory injunction. - SECTION 12: Payment Due Oates and Delinauencv. In the event that the Purchaser fails to make any payment within fifteen (15) days after receipt of the bill, interest on the delinquent amount shall accrue at the rate of ten percent (10%) per annum from such date until paid in full. Following the fifteen (15) day period in which Purchaser may cure such default as provided in Section 11, the Seller may, in addition to any other remedy in this Contract including termination of service and including any other remedy available at law or in equity, institute a proceeding for a mandatory injunction requiring the payment of the amount due and interest thereon, such action to be instituted in a court of competent jurisdiction. 14 SECTION 13: Term of Contract. (a) The Seller's duty to commence Firm Power and Energy under this Contract shall commence on January 1, 1992. In the event Seller is unable to deliver Firm Power and Energy to Purchaser on said commencement date, and the inability to perform is not an event of "Force Majeure", the Seller shall (consistent with its contract with TMPA) make arrangements with another utility to deliver Firm Power and Energy to Purchaser at no additional cost to Purchaser until such time as Seller is able to deliver Firm Power and Energy under this Contract. Prior to January 1, 1992, the Seller shall energize the 138,00 volt portion of the substation at the Point of Delivery in order to allow Purchaser to test its facilities. Seller will endeavor to energize the 138,000 volt portion of the substation by not later than December 1, 1991. (b) If Seller does not request Purchaser to enter into a contract as specified in subsection (c) hereunder, then this contract shall terminate on January 1, 2002. (c) During the term of this Contract, Seller may in writing, request Purchaser to enter into a contract (i) with TMPA, for the joint ownership of a generating unit with TMPA, (ii) with TMPA, for the purchase of Firm Power and Energy from TMPA, following the re-creation of TMPA by the addition of one or more cities, including Purchaser, (iii) with a joint powers agency, created by Purchaser and by one or more of Bryan, Denton, Garland or Greenville, for the purchase of Firm Power and Energy from the joint powers agency, (iv) with a 15 joint powers agency created by one or more of Bryan, Denton, Garland or Greenville, for the joint ownership of a generating unit with the joint powers agency, or (v) with TMPA for the construction of electric generating facilities for the Purchaser utilizing the proceeds of special contract revenue bonds to be issued by TMPA. Hereinafter, such a contract shall be referred to as a "contract of participation":. (d) Within one year after the xeceipt by Purchaser of a request under subsection (c), Purchaser shall (i) enter into the contract of participation and elect to have this Contract terminate on the date of termination agreed upon by the parties specified in the contract of participation, (ii) deny the request and elect to terminate this Contract, effective two years after receipt of the request, or (iii) deny the request and elect to have this Contract continue on a "rolling" five year term. If, during the "rolling" five year term, no notice - terminating the Contract is received before any January 1, then the Purchaser and the Seller will be deemed to have continued the Contract for another five year term commencing on January 1. If, however, during the "rolling" five year term, the Purchaser or the Seller provides written notice to the other before any January 1 terminating the Contract, then the Contract will terminate at the end of the five year period commencing on January 1. (e) If the Purchaser fails to respond to a request under subsection (c) within one year after the receipt of the request, the request will be deemed automatically denied and this Contract shall continue on a "rolling" five year term as more specifically described in subsection (d). 16 SECTION 14: Force Ma.ieure. (a) If for any reason of "Force Majeure" any of the parties hereto shall be rendered unable, wholly or in part, to carry out its obligations under this Contract, then if such party shall give immediate notice and follow with the full particulars of such reasons in writing to the other party as soon as possible after the occurrence of the event or cause relied on: the obligation of the party giving such notice, so far as it is affected by such "Force Majeure", shall be suspended during the continuance of the inability then claimed, but for no longer period, and such party shall use the same degree of diligence it would use for its native load to remove or overcome such inability with all reasonable dispatch. The term "Force Majeure" as employed herein shall mean acts of God, strikes, lockouts, or other industrial disturbances, acts of the public enemy, orders or actions of any kind of the government of the United States or of the State of Texas or any civil or military authority, regulatory or other - litigation, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, hurricanes, storms, floods, washouts, droughts, arrests, restraints of government and people, civil disturbances, explosions, breakage or accident to dams, machinery, pipelines, or canals or other structures or machinery, on account of any other cause not reasonably within the control of the party claiming such inability. It is understood and agreed that the settlement of strikes and lockouts shall be entirely within the discretion of the party having the difficulty, and that the above requirement that any "Force Majeure" shall be remedied with all reasonable dispatch shall not require the settlement of strikes and lockouts by acceding to the demand of the opposing parties when such settlement is unfavorable to it in the judgment of the party having the difficulty. (b) No damages shall be recoverable from the Seller or from the Purchaser by reason of Force Majeure. 17 (c) Upon an event of Force Majeure which interrupts the supply of Firm Power and Energy, Seller will use the same degree of diligence it would use for its native load to secure an alternative temporary source of Power and Energy in the event of an interruption of the supply of Power and Energy. SECTION 15: Records and Accounts. The Seller will keep accurate records and accounts of the System and of the transactions relating to each facility constituting the System as well as of the operations of the Seller in accordance with the Uniform System of Accounts, which shall include depreciation. Within one hundred twenty (120) days after the close of each fiscal year of the Seller, the Seller shall cause such records and accounts with respect to such fiscal year of the Seller to be subject to an annual audit by an independent certified public accountant. A copy of each such annual audit shall be sent by the Seller to the Purchaser. The Purchaser shall have reasonable access to examine any and all books and records of the Seller which are public records under the Open Records Act and to examine any facility of the System. SECTION 16: Access. The Seller and the Purchaser will give the other access to the facilities and (when permitted by existing easement) to the easements, rights-of-way and property of each other at all reasonable times for the purpose of constructing, maintaining, repairing or removing facilities, reading meters and performing work necessary or incidental to delivery and receipt of Firm Power and Energy 18 furnished hereunder. To the extent it is necessary to authorize the delivery of the Firm Power and Energy required under this Contract to Purchaser (and not to others), Purchaser will cooperate with Seller for the extension of Seller's electric lines inside the incorporated boundaries of Purchaser, which cooperation will include the routing of lines and the acquisition of rights of way and easements which Purchaser will acquire at Seller's cost. SECTION 17: Assignment. This Contract shall not be assignable without the written consent of the Purchaser and each Seller. Such consent shall not be unreasonably withheld. It shall not be deemed unreasonable for a Seller to withhold consent to (among other assignments) an assignment of this Contract to an entity other than a political subdivision of this State. The Sellers' obligations to provide Firm Power and Energy to any assignee of this Contract shall not exceed, in the - aggregate, 20,000 W. SECTION 18: Successors and Assigns. This Contract will inure to and be binding upon the successors and assigns of the respective parties. SECTION 19: Governmental Rates. Regulations and Laws. The Contract shall be subject to all valid rules, regulations and laws applicable thereto, as promulgated by the United States of America, the State of Texas, or any other governmental body or agency having lawful jurisdiction or any authorized representative or agency of any of them. 19 SECTION 20: Notices. Any notice, request, demand, statement or bill provided for in this contract shall be in writing and shall be considered to have been duly delivered and received when sent by registered or certified mail, addressed as provided in Exhibit "D", unless another address has been designated, in writing, by the party entitled to receive same. SECTION 21: Severability. The parties hereto agree that if any of the provisions of this contract should contravene or be held invalid under the laws of the State of Texas, such contravention or invalidity shall not invalidate the whole contract but it shall be construed as though not containing that particular provision, and the right and obligations of the parties shall be construed and in force accordingly. SECTION 22: Entire Contract. This Contract shall constitute the entire understanding between the parties hereto, superseding any and all previous understandings, oral or written, pertaining to the subject matter contained herein. No party hereto shall have any relief, or be entitled to rely, upon any oral representation or oral information made or given to such party by any representative of the other party or anyone on its behalf. SECTION 23: No Waiver. The failure of a party to enforce at any time any of the provisions of this contract or to require at any time performance by the other party of any of the provisions of this contract shall not be construed as a waiver of such 20 provisions or of the right of such party thereafter to enforce each and every provision of this contract. SECTION 24: Venue. Venue for any cause of action instituted by reason of the existence of this contract shall lie in Travis County, Texas. IN WITNESS WHEREOF, the parties hereto have caused this Contract to be executed in their corporate names and their corporate seals affixed, all by the proper officer duly authorized thereunto, as of the day and year first hereinabove written. (Seal) ATTEST: By: City Secretary (Seal) ATTEST: By : City Secretary CITY OF BOWIE, TEXAS By: Date of Execution: CITY OF BRYAN, TEXAS By : Mayor Date of Execution: 21 CITY OF DENTON, TEXAS (Seal) ATTEST: By: • Date of By WUL&M Execution: o~d~~g9o Ci Sec etary CITY OF GARLAND, TEXAS By: (Seal) Mayor ATTEST: Date of By: Execution: City Secretary (Seal) ATTEST: By: Board Secretary CITY OF GREENVILLE, TEXAS By : Board Chairman Date of Execution: 22 EXHIBIT "A" POINT OF DELIVERY The Point of Delivery shall be at the Purchaser's proposed substation located near the intersection of Roach and Galia Streets in Bowie, Texas. The Seller shall own, provide and install, in a space provided by the Purchaser in the Purchaser's relay house, all necessary transmission line relaying and metering equipment for two 138 kV lines. Seller shall provide two 138 kV circuit breakers for physical installation by Purchaser. Seller will provide pre-operational check and will own and maintain, at its expense, these breakers. Purchaser shall reimburse Seller, as a contribution-in-aid-of construction, for the cost of one breaker. Seller will invoice Purchaser for the actual cost of this breaker after delivery to the substation site, and Purchaser will pay this invoice within 30 days. Seller will notify Purchaser of Seller's requirements for control and relaying cable for transmission line relaying and metering between both breakers and Purchaser's Relay House within 30 days of execution of the Contract. Purchaser will own, provide, install and maintain these cables. Seller will connect both ends of these cables. 23 EXHIBIT "B" Example Calculation of the Proportional Share of Firm Power and Energy to be Provided by each Seller to Purchaser Seller's Available Capacity - MW Seller's Native Peak Load 1.15 times Peak Load Difference - Numerator Denominator - Sum of Numerators Fraction Purchaser's Load - 14083 KW Obligation Bryan Denton Garland Greenville 310 258 616 144 153 176 367 83 176.0 202.4 422.0 95.4 134.1 55.6 194.0 48.6 432 432 432 432 0.3102 0.12"7 0.4488 0.1123 4369 1812 6320 1582 If, for example, only Bryan, Denton and Greenville executed this Contract, then their individual obligations would be calculated as follows: Seller's available capacity - MW Seller's Native Peak Load 1.15 times Peak Load Difference - Numerator Denominator - Sum of Numerators Fraction Purchaser's Load - 14083 KW Obligation Bryan Denton Greenville 310 258 144 153 176 83 176.0 202.4 95.4 134.1 55.6 48.6 238.3 238.3 238.3 0.5627 0.2333 0.2039 7924 3286 2873 * The numbers appearing in this Exhibit are for illustrative purposes only and are not intended to specify exact obligations to provide Firm Power and Energy under this Contract. 24 EXHIBIT "C" RATES AND CHARGES Demand Charge ...............................$11.78/KW Energy Charge $ 2/M W H THE DEMAND CHARGE SHALL APPLY TO THE LARGER OF THE ACTUAL MONTHLY METERED DEMAND (AS ADJUSTED BY THE POWER FACTOR ADJUSTMENT, IF NECESSARY) OR 50% OF THE LARGEST MONTHLY METERED DEMAND (ADJUSTED FOR POWER FACTOR) IN THE LAST ELEVEN MONTHS. A MONTHLY FUEL CHARGE WILL BE MULTIPLIED BY THE METERED ENERGY. THE FUEL CHARGE WILL BE THE AVERAGE COST OF FUEL FOR BRYAN, DENTON, GARLAND, GREENVILLE AND PURCHASER. THE FUEL CHARGE WILL BE CALCULATED ON AN "ESTIMATE AND CORRECT" BASIS. 25 EXHIBIT "D" NOTICES All notices, requests, demands, statements or bills shall be mailed to the following: CITY OF BOWIE Attention: City Manager 304 Lindsey St. Bowie, Texas 76230 CITY OF BRYAN Attention: City Manager P.O. Box 1000 Bryan, Texas 77805 CITY OF DENTON Attention: City Manager 215 E. McKinney Denton, Texas 76201 CITY OF GARLAND Attention: City Manager P.O. Box 469002 Garland, Texas 75046 CITY OF GREENVILLE Attention: Director of Electric Utilities P.O. Box 1049 Greenville, Texas 75401 26 Exhibit E Example Calculation of Sellers' Average Cost TMPA Capacity Charge TMPA Coverage Refund Purchased Capacity (Sec 10(a)) City Generation Debt Service Bryan Denton Garland Greenville City Generation Operation & Maintainance Bryan Denton Garland Greenville $132,483,800.00 TMPA Billings to Cities (527,838,713.16) TMPA Billings to Cities $0.00 $4,175,000.00 City Records $1,980,000.00 City Records $6,285,000.00 City Records $1,836,000.00 City Records $2,000,000.00 City Records $1,200,000.00 City Records $3,200,000.00 City Records $800,000.00 City Records TOTAL FIXED COST $124,931,886.84 MWh Cost TMPA Energy Cost 2,800,000 $34,748,000.00 Purchased Energy (Sec 10(a)) 0 $0.00 Cities Gas Cost Bryan 860,000 $11,626,250.00 City Records Denton 200,000 $4,200,000.00 City Records Garland 860,000 $15,202,250.00 City Records Greenville 80,000 $1,680,000.00 City Records Economy Purchases Lignite 2,500 $35,000.00 City Records Gas 200,000 $4,000,000.00 City Records Economy Sales Lignite (180,000) ($1,985,800.00) City Records Gas (450,000) ($9,000,000.00) City Records TOTAL ENERGY COSTS 4,172,500 $80,504,900.00 TOTAL COST 5186,438,788.84 AVERAGE ENERGY COST $44,44 SYSTEM PEAK 980,000 kW SYSTEM LOAD FACTOR 48.80% The numbers In this Exhibit are for illustrative purposes only Exhibit F 1 Example Calculation of Purchaser's Adjusted Average Energy Cost 2 System Average Load Factor 48.60% 3 Peak Demand 14,083 KW From Peak Month's Bill 4 Demand Billing Units 112,839 KW-MO from Billings b Energy Billing Units 47,270,000 KWH from Billings 6 Demand Rate $11.78 per KW 7 Less Dist Charge $0.00 per KW 8 Equivalent Transmission Rate $11.78 per KW (Line 6 minus line 7) 9 Demand Bill at Trans Level $1,329,243.42 Line 8 times Line 4 10 Actual Bill for Fuel & Energy $779,966.00 From Billings 11 Average Cost for Fuel & Energy $0.01660 Line 10 divided by Line b 12 Energy Required to Produce System Load Factor 59,960,628 Line 3 times Line 2 times 8760 13 Energy Bill at System L. F. $989,348.71 Line 11 times Line 12 14 Total Bill at System L. F. 52,318,592.13 Line 9 plus Line 13 15 Adjusted Average Energy Cost $0.03867 Line 14 divided by Line 12 The numbers in this Exhibit are for illustrative purposes only TABLE OF CONTENTS Page SECTION 1: Capacity of Parties: Nature and Number of SECTION SECTION 2: 3: Contracts Definitions Sale and Purchase of Firm Power and Energy 2 3 4 SECTION 4: Delivery of Firm Power and Energy 6 SECTION SECTION 5: 6: Rates and Charges Meter Readings and Seller's Billing 8 10 SECTION SECTION 7: 8: Meter Testing and Billing Adjustment Payments to Constitute Operating Expenses of 10 SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION 9: 10: 11: 12: 13: 14: 15: 16: 17: 18: 19: Purchaser's System Covenants of the Purchaser Covenants of the Seller Remedies in Event of Default Payment Due Dates and Delinquency Term of Contract Force Majeure Records and Accounts Access Assignment Successors and Assigns Governmental Rates, Regulations and Laws 11 11 12 13 14 15 17 _ 18 18 19 19 19 SECTION SECTION SECTION SECTION SECTION 20: 21: 22: 23: 24: Notices Severability Entire Contract No Waiver Venue 20 20 20 20 21 EXHIBITS Exhibit A ...............................................................23 Exhibit B ...............................................................24 Exhibit C ...............................................................25 Exhibit D ...............................................................26 Exhibit E ...............................................................27 Exhibit F ...............................................................28 CONTRACT FOR SALE AND PURCHASE OF FIRM POWER AND ENERGY between City of Bowie, Texas, as Purchaser and each of City of Bryan, Texas, City of Denton, Texas, City of Garland, Texas, City of Greenville, Texas each acting on its own behalf severally and not jointly, as Seller This Contract, made and entered into as of the day of , 1990 (but effective on the date provided in Section 13 hereof), by and between the City of Bowie, Texas (the "Purchaser"), a municipal corporation and political _ subdivision of the State of Texas, and the City of Bryan, Texas, the City of Denton, Texas, the City of Garland, Texas, and the City of Greenville, Texas, each of which cities is a municipal corporation and a political subdivision of the State of Texas (herein called "Seller" with respect to provisions applicable to each of them and called "Bryan," "Denton," "Garland," or "Greenville," as the case may be, with respect to provisions applicable to them severally). WITNESSETH: WHEREAS, the Purchaser has need of an economical, reliable source of Firm Power and Energy to meet the demands of its customers and has determined to purchase such Firm Power and Energy from the Seller; and WHEREAS, the Seller owns electric generating facilities and transmission lines and purchases Power and Energy from TMPA for the purpose of supplying Firm Power and Energy to its customers; 1 WHEREAS, the Seller is authorized by Section 402.001 of the local Government Code to sell electric service to any person outside its boundaries and to contract with persons outside its boundaries to permit them to connect with its System on terms Seller considers in its best interest; and WHEREAS, the Purchaser is a person, within the meaning of that term as defined in Section 311.005 of the Government Code, located outside the boundaries of Seller and desires to purchase, and the Seller, having found that the terms herein set forth are in the best interest of the Seller desires to sell, Firm Power and Energy on the terms and conditions herein set forth. NOW THEREFORE, in consideration of the mutual undertakings herein contained between the Purchaser and each of Bryan, Denton, Garland, and Greenville acting on its own behalf severally and not jointly, the Seller and the Purchaser agree as follows: SECTION 1: Capacity of Parties: Nature and Number of Contracts. This instrument is four separate contracts between the Purchaser and each of Bryan, Denton, Garland, and Greenville, respectively. Each of the four separate contracts contain substantially identical terms-except insofar as a particular provision is clearly applicable only to one or more of the separate contracts by specifying its application to Bryan, Denton, Garland, or Greenville rather than Seller. The rights, duties, obligations, and benefits of "Seller" herein apply to each of Bryan, Denton, Garland, and Greenville, severally and not jointly. This instrument contains no agreements or undertakings and imposes no duties or obligations between any of Bryan, Denton, Garland, or Greenville to any of Bryan, Denton, Garland or Greenville but this declaration does not affect in any respect the obligations of the Seller to the Purchaser under this 2 Contract. A breach or termination of this instrument by one or more of Bryan, Denton, Garland, or Greenville does not in any manner affect the non-breaching or non-terminating parties and does not affect the contracts herein contained of such non-breaching or non-terminating parties with the Purchaser. This Contract shall be binding between Seller and Purchaser, with respect to each separate Contract, on the date both of the Purchaser and the applicable Seller have duly authorized, executed, and delivered this Contract. These Contracts shall terminate as provided in Section 13. The dates which the Contracts are executed and binding may be, but are not required to be, the same. The failure of one or more Sellers to execute this instrument does not affect the formation of a Contract by the Purchaser and Seller that execute this instrument since the Sellers that do execute this Contract are required to provide all of the Firm Power and Energy requirements of the Purchaser as described in Section 3(c). Subject to the foregoing, this Contract may be executed in counterparts. - SECTION 2: Definitions. As used herein: (a) "Bryan" shall mean the City of Bryan, Texas. (b) "Denton" shall mean the City of Denton, Texas. (c) "Garland" shall mean the City of Garland, Texas. (d) "Greenville" shall mean the City of Greenville, Texas. (e) "Energy" shall mean kilowatt-hours (kWh). (f) "ERCOT" shall mean the Electric Reliability Council of Texas. (g) "Firm" shall mean continuous and without interruption (except for an event of Force Majeure as defined in Section 14.) (h) "Points of Delivery" shall mean the points on the System of, or available to, the Seller, as determined from time to time by the Seller and the Purchaser, at which Power and Energy are made available to the Purchaser pursuant 3 to this Contract. Such Points of Delivery shall be attached hereto as Exhibit "A", and a change therein, approved by the Seller and the Purchaser shall not be considered as an amendment to this Contract. (i) "Power" shall mean kilowatts (kW). (j) "Purchaser" shall mean the City of Bowie, Texas. (k) "Seller" shall mean each of Bryan, Denton, Garland, and Greenville acting on its own behalf, severally and not jointly. (1) "System" shall mean the Sellers' electric utility systems. (m) "TMPA" shall mean Texas Municipal Power Agency. (n) "Uniform System of Accounts" and all other accounting methods and terminology contained or referred to in this Section or elsewhere in this Contract means accounting principles, methods and terminology followed and construed, as nearly as practicable, in conformity with the Uniform System of Accounts for Class A and Class B Public Utilities and Licensees and accounting - rules and regulations thereunder prescribed by the Federal Energy Regulatory Commission for privately owned power companies which are subject to its jurisdiction and engaged in business comparable to the business of the Seller insofar as the System is concerned, as amended from time to time, or such other system as may be required by any regulatory agency. SECTION 3: Sale and Purchase of Firm Power and Energy. (a) The Seller agrees to sell and deliver Firm Power and Energy and the Purchaser agrees to purchase and receive the Purchaser's total requirements for the operation of the Purchaser's electric system in excess of (i) any amount generated from facilities which the Purchaser jointly owns with TMPA, (ii) any amount purchased from TMPA after re-creation of TMPA by the addition of one or more of cities including, but not limited to, the Purchaser, (iii) any amount 4 purchased from a joint powers agency created by the Purchaser and by one or more of Bryan, Denton, Garland, or Greenville, for the purpose of construction of future generating facilities, (iv) any amount generated by the Purchaser from a facility which is jointly owned by the Purchaser and by a joint powers agency created by one or more of Bryan, Denton, Garland and Greenville, (v) any amount purchased from a city other than the Seller which is a member-city of TMPA pursuant to a contract substantially identical to this contract, (vi) any amount supplied by renewable resources, provided that Purchaser is an owner of the supplying facility, (vii) any amount supplied from a facility certified by the Federal Energy Regulatory Commission as a Qualifying Facility, provided that the Qualifying Facility is located in the service area of the Purchaser and is electrically connected to the electric system of the Purchaser, (viii) any amount supplied by cogeneration or other "on-site" generation associated with economic development activities of the Purchaser, provided that the facility is located - in the service area of the Purchaser and is electrically connected to the electric system of the Purchaser, and (ix) any amount supplied by contracts with governmental agencies for supply of Capacity or Energy to Purchaser as a preference customer as defined by Section 5 of the Flood Control Act of 1944 (16USC Sec. 825s). The Purchaser shall provide written notice to the Seller when the Purchaser has taken formal action to accept a potential supply of Power and Energy under items (vi) through (ix) of this section. (b) It is the intent of this Contract that if any Seller, as that term is defined in Section 2 of this Contract, do not execute this Contract, then the remaining Sellers who do execute this Contract will be responsible for providing all of the Power and Energy requirements of the Purchaser, as required under subsections (a) and (c), for the term of this Contract. The formula which dictates how much power and energy each Seller is required to provide is contained in Section 3(c) of this Contract. 5 (c) The Seller's obligation to provide Firm Power and Energy under this contract is limited to a proportion of Purchaser's total requirements for Firm Power and Energy, calculated by multiplying Purchaser's total requirements by a fraction, the numerator of which is the difference between Seller's available capacity including its then current entitlement from Gibbons Creek, and 1.18 times the Seller's native peak load after excluding other firm or non-firm sales and the denominator of which is the sum of the numerators for all of the Sellers. Exhibit "B" reflects two examples of calculations of the above formula. (d) In association with the Power and Energy being sold to Purchaser, Seller will provide all of the operating and planning reserves required by applicable operating agreements with other members of ERCOT in proportion to its obligation to provide Firm Power and Energy under Section 3(c) above. (e) On January 1 of each year during the term of this Contract, the Purchaser shall provide to Seller (at the addresses set forth in Exhibit D) a forecast of its requirements for Power and Energy for the next five years and other information reasonably required by Seller to enable Seller to plan for the Power and Energy requirements of Purchaser. SECTION 4: Delivery of Firm Power and Energy. (a) The Firm Power and Energy to be furnished under this Contract shall be three (3) phase, alternating current, at a nominal standard voltage of 138,000 volts at the Points of Delivery, and a nominal frequency of sixty (60) Hertz, subject to conditions of delivery and measurement as hereinafter provided. 6 (b) The Points of Delivery and the conditions of service pertinent thereto shall be in accordance with Exhibit "A" attached to this contract, as may be modified by the Seller and the Purchaser from time to time. The location of the Points of Delivery, for service commencing on January 1, 1992, shall be mutually agreed upon between Purchaser and Seller. After commencement of service under this Contract, no delivery points will be added without permission of the Purchaser. The Seller at its expense will provide for the construction of all facilities on the supply side of the metering point and for the operation and maintenance of those facilities, except as noted on Exhibit "A". (c) The Seller will be responsible for Firm delivery of Firm Power and Energy under this Contract, to the Purchaser at the Points of Delivery, and any costs related to Firm delivery of Firm Power and Energy. - (d) Metering equipment shall be furnished, installed and maintained by the Seller at each Point of Delivery. If transforming equipment is located at the Point of Delivery, said metering equipment shall be located on the high voltage side of the transformer. (e) The Purchaser shall maintain its electric system such that the power factor at each metering point shall be between 0.90 lagging and 0.90 leading. In the event that the power factor at the time of monthly peak demand is less than 0.90 lagging, the demand for billing purposes will be adjusted by the following formula: Adjusted demand = Actual demand x 0.90 Power Factor 7 SECTION 5: Rates and Charges. (a) The rates and charges of the Seller to the Purchaser for Firm Power and Energy and for services supplied shall be: (i) non-discriminatory, (ii) fair and reasonable, and be calculated based upon the average costs of providing the Firm Power and Energy or providing the service with respect to which the rate or charge is based as shown in Exhibit E, and (iii) adjusted annually to reflect the average Energy cost as calculated on an annual basis in the manner described in this section. (b) Except with respect to adjustments expressly allowed by Section 5(c), the rates and charges set forth on Exhibit "C" are firm until the earlier of January 1, 1994 or such date as the Purchaser receives (i) any power or energy generated from facilities which the Purchaser jointly owns with TMPA, or (ii) any Power or Energy generated by the Purchaser from a facility which is jointly owned by the Purchaser and by a joint powers agency created by one or more of Bryan, Denton, Garland, and Greenville. After such date, the rates and charges in Exhibit "C" shall be amended. The amended rates and charges shall be based on the criteria in subsection 5(a). (c) On January 1 of each year during the term of this Contract, Seller's average Energy cost for the preceding year ending September 30 shall be compared with Purchaser's average Energy cost for the same time period under the rates charged in Exhibit "C", the Purchaser's average Energy cost adjusted to reflect Purchaser's average Energy cost at the system load factor. Seller's average Energy cost shall be calculated by dividing the sum of the total production costs of Seller by the combined Energy supplied to Firm load by Seller as shown in 8 Exhibit "E". The total production costs of Seller shall be calculated by summing the demand charge paid to TMPA, the Energy charge paid to TMPA, the operating and maintenance costs for Power generation incurred by Seller, debt service for generation paid by Seller, and other associated costs of generation and any cost of additional Power and Energy purchased by Seller pursuant to Section 10(a) of this Contract incurred by Seller and consented to by Purchaser, which consent shall not be unreasonably withheld, as shown in Exhibit "E". Purchaser's adjusted average Energy cost will be the actual average Energy cost paid under the rate in Exhibit "C", adjusted to reflect System load factor. An example calculation of the Purchaser's adjusted average Energy cost is shown in Exhibit "F". If Purchaser's adjusted average Energy cost under Exhibit "F" is less than Seller's average Energy cost, no rebate is required. If Purchaser's adjusted average Energy cost is greater than Seller's average Energy cost from Exhibit "E", Seller shall rebate to Purchaser on or before January 1 of each year the - difference, without interest, between Seller's average Energy cost and Purchaser's adjusted average Energy cost, multiplied by the Purchaser's Energy billing units of Exhibit "F". Under no circumstances will the Purchaser be required to reimburse monies to the Seller if Seller's average Energy cost is more than Purchaser's average Energy cost. From and after the date the Purchaser receives Power and Energy from one of the sources enumerated in subsection 3(a), if a reduction in the Purchaser's demand for Firm Power and Energy from the Seller occurs, the calculation of average Energy cost shall be changed to reflect the lower demand of Purchaser for Firm Power and Energy from the Seller and the Seller's costs at such time. The term "Seller" in this paragraph shall include Bryan, Denton, Garland and Greenville, whether or not each is a party to this Contract. 9 SECTION 6: Meter Readings and Seller's Billing. The Seller shall read meters or cause meters to be read and submit one combined bill and cause the Purchaser to be billed for firm Power and Energy furnished under this Contract at monthly intervals. If multiple Points of Delivery are provided by Seller, then the demand utilized for billing purposes shall be calculated on a coincident peak demand basis. Payment of the bill is due within fifteen (15) days after receipt by Purchaser. Payment of the bill shall be made to the person, at the address, in the manner, specified in the bill. Seller may cause billing services to be performed by TMPA or by some other legal entity, and Seller's bill may be aggregated with the bills to Purchaser of any other member city of TMPA. In such event, the Purchaser may pay a single amount to TMPA or to the other entity, as the case may be, for credit to the account of the Seller and the other cities as detailed on the bill. - SECTION 7: Meter Testing and Billing Adiustments. The Seller shall test and calibrate meters or cause meters to be tested and calibrated by comparison with accurate standards at intervals of twelve (12) months, or such other intervals as the parties agree. The Seller shall also make or cause to be made special meter tests at any time at the Purchaser's request. The costs of all tests shall be borne by the Seller; provided, however, that if any special meter test made at the Purchaser's request shall disclose that the meters are recording accurately, the Purchaser shall reimburse the Seller for the cost of such test. Meters registering not more than 112 of 1% above or below normal shall be deemed to be accurate. The readings on any meter which shall have been disclosed by test to be inaccurate shall be corrected from the beginning of the monthly billing period immediately preceding the billing period 10 during which the test was made in accordance with the percentage of inaccuracy found by such test, provided, that no correction shall be made for a longer period unless the Seller and the Purchaser mutually agree thereto. Should any meter fail to register, the Power and Energy delivered during such period of failure shall, for billing purposes, be estimated by the Seller and the Purchaser from the best information available. The Seller shall notify the Purchaser or cause the Purchaser to be notified in advance of the time of any meter test so that the Purchaser's representative may be present at such meter test. For the purpose of notifying the Purchaser in advance of a meter test, the Seller is not required to provide written notification as required by section 21. SECTION 8: Payments to Constitute Operating Expenses of Purchaser's System. The Purchaser reserves the right to pay operating expenses of its electric system from any funds legally available for the purpose, but the Purchaser's obligation to make payments under this Contract shall constitute an operating expense of its electric system payable solely from the gross revenues of such system. SECTION 9: Covenants of the Purchaser. (a) The Purchaser covenants to establish, maintain and collect rates and charges for the electric service of its electric system which shall produce revenues at least sufficient, together with other revenues available to such electric system and available electric system reserves, to enable it to pay to the Seller, when due, all amounts payable by the Purchaser under this Contract. 11 M The Purchaser covenants that Firm Power and Energy supplied under this Contract will be used only to supply Purchaser's retail customers as members of the general public and will not be resold to other utilities at wholesale or resold to any person or business pursuant to a written contractual arrangement or other understanding which differs in any respect from sales to the public generally. For purposes of this section 9(b), purchases of Firm Power and Energy by industrial or business customers pursuant to a rate structure published by the Purchaser and available to any customer meeting the established criteria (size of load, load factor, etc.) are treated as sales to the public generally and are not prohibited by this section. SECTION 10: Covenants of the Seller. (a) The Seller covenants to use the same degree of diligence it would use for its native load to provide Firm Power and Energy hereunder. If by reason of Force Majeure, the supply of Firm Power and Energy shall fail, or be interrupted, or become defective as hereinafter provided, the Seller shall not be liable therefor or for damages caused thereby. Pursuant to the Power Sales Contract, as amended, between Seller and TMPA, Seller is obligated to take all of its requirements from TMPA and is prohibited (except in certain limited circumstances) from constructing additional generating facilities. Therefore, no provision of this Contract requires Seller to construct capacity to provide Firm Power and Energy to Purchaser. If Seller does not have sufficient capacity to provide to Purchaser the Firm Power and Energy required under this Contract, Seller shall purchase the additional Power and Energy that is required. 12 (b) The Seller covenants that it will operate, maintain and manage its System or cause the same to be operated, maintained and managed in an efficient and economical manner, consistent with prudent utility practice and in accordance with standards normally used by ERCOT utilities owning and operating like properties. SECTION 11: Remedies in Event of Default. (a) If the Purchaser fails or defaults in meeting the terms, conditions and covenants of this Contract, the Seller shall give notice to the Purchaser. The Purchaser shall from the date of the mailing of such notice, have a period of thirty (30) days to cure the default; provided, however, in the event the failure or default is a failure to make payment within fifteen (15) days after receipt of the bill, the Purchaser shall, from the date of mailing of such notice, have a period of fifteen (15) days to cure the default. (b) If the Purchaser does not cure its default within the period specified in subsection (a), then, so long as the Purchaser remains in default, and in addition to any other rights which the Seller has under this Contract and at law and in equity, the Seller may terminate all service to the Purchaser; provided, however, that Seller shall provide written notice to Purchaser prior to the date of termination. In the event the default is a failure to pay a bill for Power and Energy within fifteen (15) days after receipt of the bill, the Seller shall provide notice of termination at least fifteen (15) days prior to the date of termination. In the event of a default by Purchaser which does not include a failure to pay a bill within fifteen (15) days of receipt of the bill, the Seller shall provide notice of termination of least thirty (30) days prior 13 co the date of termination. The notice of termination may be included in the notice required under subsection (a) and, in such a case, the period of time in which the Purchaser may cure the default may also serve as the notice period prior to termination of service. Termination of service hereunder shall not reduce or change the obligation of the Purchaser or Seller under the other provisions of this Contract. (c) If the Seller fails or defaults in meeting the terms, conditions and covenants of this Contract, the Purchaser shall give notice to the Seller. Following such notice, the Seller shall have a period of fifteen (15) days to cure the default. If the default is not cured in the fifteen (15) day period, then the Purchaser shall have all of the rights and remedies provided at law and in equity, including the right to offset any obligations otherwise due Seller and the right for mandatory injunction. _ SECTION 12: Payment Due Dates and Delinauencv. In the event that the Purchaser fails to make any payment within fifteen (15) days after receipt of the bill, interest on the delinquent amount shall accrue at the rate of ten percent (10%) per annum from such date until paid in full. Following the fifteen (15) day period in which Purchaser may cure such default as provided in Section 11, the Seller may, in addition to any other remedy in this Contract including termination of service and including any other remedy available at law or in equity, institute a proceeding for a mandatory injunction requiring the payment of the amount due and interest thereon, such action to be instituted in a court of competent jurisdiction. 14 SECTION 13: Term of Contract. (a) The Seller's duty to commence Firm Power and Energy under this Contract shall commence on January 1, 1992. In the event Seller is unable to deliver Firm Power and Energy to Purchaser on said commencement date, and the inability to perform is not an event of "Force Majeure", the Seller shall (consistent with its contract with TMPA) make arrangements with another utility to deliver Firm Power and Energy to Purchaser at no additional cost to Purchaser until such time as Seller is able to deliver Firm Power and Energy under this Contract. Prior to January 1, 1992, the Seller shall energize the 138,000 volt portion of the substation at the Point of Delivery in order to allow Purchaser to test its facilities. Seller will endeavor to energize the 138,000 volt portion of the substation by not later than December 1, 1991. (b) If Seller does not request Purchaser to enter into a contract as specified in subsection (c) hereunder, then this contract shall terminate on January 1, 2002. (c) During the term of this Contract, Seller may in writing, request Purchaser to enter into a contract (i) with TMPA, for the joint ownership of a generating unit with TMPA, (ii) with TMPA, for the purchase of Firm Power and Energy from TMPA, following the re-creation of TMPA by the addition of one or more cities, including Purchaser, (iii) with a joint powers agency, created by Purchaser and by one or more of Bryan, Denton, Garland or Greenville, for the purchase of Firm Power and Energy from the joint powers agency, (iv) with a 15 joint powers agency created by one or more of Bryan, Denton, Garland or Greenville, for the joint ownership of a generating unit with the joint powers agency, or (v) with TMPA for the construction of electric generating facilities for the Purchaser utilizing the proceeds of special contract revenue bonds to be issued by TMPA. Hereinafter, such a contract shall be referred to as a "contract of participation". (d) Within one year after the receipt by Purchaser of a request under subsection (c), Purchaser shall (i) enter into the contract of participation and elect to have this Contract terminate on the date of termination agreed upon by the parties specified in the contract of participation, (ii) deny the request and elect to terminate this Contract, effective two years after receipt of the request, or (iii) deny the request and elect to have this Contract continue on a "rolling" five year term. If, during the "rolling" five year term, no notice - terminating the Contract is received before any January 1, then the Purchaser and the Seller will be deemed to have continued the Contract for another five year term commencing on January 1. If, however, during the "rolling" five year term, the Purchaser or the Seller provides written notice to the other before any January 1 terminating the Contract, then the Contract will terminate at the end of the five year period commencing on January 1. (e) If the Purchaser fails to respond to a request under subsection (c) within one year after the receipt of the request, the request will be deemed automatically denied and this Contract shall continue on a "rolling" five year term as more specifically described in subsection (d). 16 SECTION 14: Force Majeure. (a) If for any reason of "Force Majeure" any of the parties hereto shall be rendered unable, wholly or in part, to carry out its obligations under this Contract, then if such party shall give immediate notice and follow with the full particulars of such reasons in writing to the other party as soon as possible after the occurrence of the event or cause relied on: the obligation of the party giving such notice, so far as it is affected by such "Force Majeure", shall be suspended during the continuance of the inability then claimed, but for no longer period, and such party shall use the same degree of diligence it would use for its native load to remove or overcome such inability with all reasonable dispatch. The term "Force Majeure" as employed herein shall mean acts of God, strikes, lockouts, or other industrial disturbances, acts of the public enemy, orders or actions of any kind of the government of the United States or of the State of Texas or any civil or military authority, regulatory or other - litigation, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, hurricanes, storms, floods, washouts, droughts, arrests, restraints of government and people, civil disturbances, explosions, breakage or accident to dams, machinery, pipelines, or canals or other structures or machinery, on account of any other cause not reasonably within the control of the party claiming such inability. It is understood and agreed that the settlement of strikes and lockouts shall be entirely within the discretion of the party having the difficulty, and that the above requirement that any "Force Majeure" shall be remedied with all reasonable dispatch shall not require the settlement of strikes and lockouts by acceding to the demand of the opposing parties when such settlement is unfavorable to it in the judgment of the party having the difficulty. (b) No damages shall be recoverable from the Seller or from the Purchaser by reason of Force Majeure. 17 (c) Upon an event of Force Majeure which interrupts the supply of Firm Power and Energy, Seller will use the same degree of diligence it would use for its native load to secure an alternative temporary source of Power and Energy in the event of an interruption of the supply of Power and Energy. SECTION 15: Records and Accounts. The Seller will keep accurate records and accounts of the System and of the transactions relating to each facility constituting the System as well as of the operations of the Seller in accordance with the Uniform System of Accounts, which shall include depreciation. Within one hundred twenty (120) days after the close of each fiscal year of the Seller, the Seller shall cause such - records and accounts with respect to such fiscal year of the Seller to be subject to an annual audit by an independent certified public accountant. A copy of each such annual audit shall be sent by the Seller to the Purchaser. The Purchaser shall have reasonable access to examine any and all books and records of the Seller which are public records under the Open Records Act and to examine any facility of the System. SECTION 16: Access. The Seller and the Purchaser will give the other access to the facilities and (when permitted by existing easement) to the easements, rights-of-way and property of each other at all reasonable times for the purpose of constructing, maintaining, repairing or removing facilities, reading meters and performing work necessary or incidental to delivery and receipt of Firm Power and Energy 18 furnished hereunder. To the extent it is necessary to authorize the delivery of the Firm Power and Energy required under this Contract to Purchaser (and not to others), Purchaser will cooperate with Seller for the extension of Seller's electric lines inside the incorporated boundaries of Purchaser, which cooperation will include the routing of lines and the acquisition of rights of way and easements which Purchaser will acquire at Seller's cost. SECTION 17: Assignment. This Contract shall not be assignable without the written consent of the Purchaser and each Seller. Such consent shall not be unreasonably withheld. It shall not be deemed unreasonable for a Seller to withhold consent to (among other assignments) an assignment of this Contract to an entity other than a political subdivision of this State. The Sellers' obligations to provide Firm Power and Energy to any assignee of this Contract shall not exceed, in the aggregate, 20,000 W. SECTION 18: Successors and Assigns. This Contract will inure to and be binding upon the successors and assigns of the respective parties. SECTION 19: Governmental Rates Regulations and Laws. The Contract shall be subject to all valid rules, regulations and laws applicable thereto, as promulgated by the United States of America, the State of Texas, or any other governmental body or agency having lawful jurisdiction or any authorized representative or agency of any of them. 19 SECTION 20: Notices. Any notice, request, demand, statement or bill provided for in this contract shall be in writing and shall be considered to have been duly delivered and received when sent by registered or certified mail, addressed as provided in Exhibit "D", unless another address has been designated, in writing, by the party entitled to receive same. SECTION 21: Severability. The parties hereto agree that if any of the provisions of this contract should contravene or be held invalid under the laws of the State of Texas, such contravention or invalidity shall not invalidate the whole contract but it shall be construed as though not containing that particular provision, and the right and obligations of the parties shall be construed and in force accordingly. - SECTION 22: Entire Contract. This Contract shall constitute the entire understanding between the parties hereto, superseding any and all previous understandings, oral or written, pertaining to the subject matter contained herein. No party hereto shall have any relief, or be entitled to rely, upon any oral representation or oral information made or given to such party by any representative of the other party or anyone on its behalf. SECTION 23: No Waiver. The failure of a party to enforce at any time any of the provisions of this contract or to require at any time performance by the other party of any of the provisions of this contract shall not be construed as a waiver of such 20 (Seal) ATTEST: By: City Secretary (Seal) ATTEST: By: City Secretary (Seal) ATTEST: By: Board Secretary CITY OF DENTON, TEXAS By: Mayor Date of Execution: CITY OF GARLAND, TEXAS By: Mayor Date of Execution: CITY OF GREENVILLE, TEXAS By : Board Chairman Date of Execution: 22 EXHIBIT "A" POINT OF DELIVERY The Point of Delivery shall be at the Purchaser's proposed substation located near the intersection of Roach and Galia Streets in Bowie, Texas. The Seller shall own, provide and install, in a space provided by the Purchaser in the Purchaser's relay house, all necessary transmission line relaying and metering equipment for two 138 kV lines. Seller shall provide two 138 kV circuit breakers for physical installation by Purchaser. Seller will provide pre-operational check and will own and maintain, at its expense, these breakers. Purchaser shall reimburse Seller, as a contribution-in-aid-of construction, for the cost of one breaker. Seller will _ invoice Purchaser for the actual cost of this breaker after delivery to the substation site, and Purchaser will pay this invoice within 30 days. Seller will notify Purchaser of Seller's requirements for control and relaying cable for transmission line relaying and metering between both breakers and Purchaser's Relay House within 30 days of execution of the Contract. Purchaser will own, provide, install and maintain these cables. Seller will connect both ends of these cables. 23 EXHIBIT "B" Example Calculation of the Proportional Share of Firm Power and Energy to be Provided by each Seller to Purchaser Bryan Denton Garland Greenville Seller's Available Capacity - MW 310 258 616 144 Seller's Native Peak Load 153 176 367 83 1.15 times Peak Load 176.0 202.4 422.0 95.4 Difference - Numerator 134.1 55.6 194.0 48.6 Denominator - Sum of Numerators 432 432 432 432 Fraction 0.3102 0.1287 0.4488 0.1123 Purchaser's Load - 14083 KW Obligation 4369 1812 6320 1582 If, for example, only Bryan, Denton and Greenville executed this Contract, then their individual obligations would be calculated as follows: Bryan Denton Greenville Seller's available capacity - MW 310 258 144 Seller's Native Peak Load 153 176 83 1.15 times Peak Load 176.0 202.4 95.4 Difference - Numerator 134.1 55.6 48.6 Denominator - Sum of Numerators 238.3 238.3 238.3 Fraction 0.5627 0.2333 0.2039 Purchaser's Load - 14083 KW Obligation 7924 3286 2873 * The numbers appearing in this Exhibit are for illustrative purposes only and are not intended to specify exact obligations to provide Firm Power and Energy under this Contract. 24 EXHIBIT "C" RATES AND CHARGES Demand Charge ...............................$11.78/KW Energy Charge $ 2/M W H THE DEMAND CHARGE SHALL APPLY TO THE LARGER OF THE ACTUAL MONTHLY METERED DEMAND (AS ADJUSTED BY THE POWER FACTOR ADJUSTMENT, IF NECESSARY) OR 50% OF THE LARGEST MONTHLY METERED DEMAND (ADJUSTED FOR POWER FACTOR) IN THE LAST ELEVEN MONTHS. A MONTHLY FUEL CHARGE WILL BE MULTIPLIED BY THE METERED ENERGY. THE FUEL CHARGE WILL BE THE AVERAGE COST OF FUEL FOR BRYAN, DENTON, GARLAND, GREENVILLE AND PURCHASER. THE FUEL CHARGE WILL BE CALCULATED ON AN "ESTIMATE AND CORRECT" BASIS. 25 EXHIBIT "D" NOTICES All notices, requests, demands, statements or bills shall be mailed to the following: CITY OF BOWIE Attention: City Manager 304 Lindsey St. Bowie, Texas 76230 CITY OF BRYAN Attention: City Manager P.O. Box 1000 Bryan, Texas 77805 CITY OF DENTON Attention: City Manager 215 E. McKinney Denton, Texas 76201 CITY OF GARLAND Attention: City Manager P.O. Box 469002 Garland, Texas 75046 CITY OF GREENVILLE Attention: Director of Electric Utilities P.O. Box 1049 Greenville, Texas 75401 26 Exhibit E Example Calculation of Sellers' Average Cost TMPA Capacity Charge TMPA Coverage Refund Purchased Capacity (Sec 10(a)) City Generation Debt Service Bryan Denton Garland Greenville City Generation Operation & Maintainanoe Bryan Denton Garland Greenville TOTAL FIXED COST TMPA Energy Cost Purchased Energy (Sec 10(a)) Cities Gas Cost Bryan Denton Garland Greenville Economy Purchases Lignite Gas Economy Sales Lignite Gas TOTAL ENERGY COSTS TOTAL COST AVERAGE ENERGY COST SYSTEM PEAK SYSTEM LOAD FACTOR $132,483,600.00 TMPA Billings to Cities ($27,836,713.16) TMPA Billings to Cities $0.00 $4,175,000.00 City Records $1,990,000.00 City Records $5,285,000.00 City Records $1,835,000.00 City Records $2,000,000.00 City Records $1,200,000.00 City Records $3,200,000.00 City Records $800,000.00 City Records $124,931,886.84 MWh cost 2,800,000 $34,748,000.00 0 $0.00 650,000 200,000 860,000 80,000 2,600 200,000 $11,625,260.00 City Records $4,200,000.00 City Records $15,202,250.00 City Records $1,680,000.00 City Records $35,000.00 City Records $4,000,000.00 City Records (180,000) ($1,985,600.00) City Records (450,000) ($9,000,000.00) City Records 4,172,500 $80,504,900.00 $185,436,786.84 $44.44 980,000 kW 48.80% Th Exhibit F 1 Example Calculation of Purchaser's Adjusted Average Energy Cost 2 System Average Load Factor 48.60% 3 Peak Demand 14,083 KW From Peak Month's Bill 4 Demand Billing Units 112,839 KW-MO from Billings 6 Energy Billing Units 47,270,000 KWH from Billings 6 Demand Rate $11.78 per KW 7 Less Dist Charge $0.00 per KW 8 Equivalent Transmission Rate $11.78 per KW (Line 6 minus line 7) 9 Demand Bill at Trans Level $1,329,243.42 Line 8 times Line 4 10 Actual Bill for Fuel & Energy $779,966.00 From Billings 11 Average Cost for Fuel & Energy $0.01650 Line 10 divided by Line 6 12 Energy Required to Produce System Load Factor 59,960,628 Line 3 times Line 2 times 8760 13 Energy Bill at System L. F. $989,348.71 Line 11 times Line 12 14 Total Bill at System L. F. $2,318,692.13 Line 9 plus Line 13 16 Adjusted Average Energy Cost $0.03867 Line 14 divided by Line 12 • The numbers in this Exhibit are for illustrative purposes only Serving the cities of Bryan. Denton, Garland & Greenville Ed L. Wagoner General Manager May 30, 1991 Mr. Bob Nelson, Executive Director Department of Utilities City of Denton 215 E. McKinney Denton, TX 76201 JUN 3 ; a RE: Contract for Sale and Purchase of Firm Power and Energy, City of Bowie, Texas Dear Bob: It is my understanding that the attorney for the City of Bowie insisted that this contract be executed "in counterparts", whereby each party individually executed a contract and then exchanged copies. In this case Bowie executed four contracts and supplied one to each City. Each City then executed a contract which was supplied to Bowie. A single contract, signed by all five parties, does not exist under this arrangement. If I can be of further assistance on this matter, please let me know. Sincerely yours, Ed Wa ner Executive Director/General Manager ELW/wmc Texas Municipal Power Agency P.O. Box 7000 Bryan, Texas 77805 )409) 873-2013 provisions or of the right of such party thereafter to enforce each and every provision of this contract. SECTION 24: Venue. Venue for any cause of action instituted by reason of the existence of this contract shall lie in Travis County, Texas. IN WITNESS WHEREOF, the parties hereto have caused this Contract to be executed in their corporate names and their corporate seals affixed, all by the proper officer duly authorized thereunto, as of the day and year first hereinabove written. CITY OF BOWIE, TEXAS r (Seal By: ATTEST: BY~ll-Pti~i ~.vG~lz City Secretary (Seal) ATTEST: By : City Secretary Date of Execution:~.2U CITY OF BRYAN, TEXAS By: Mayor Date of Execution: 21