1990-0362793L
ORDINANCE NO. qO - 00&
AN ORDINANCE AWARDING A CONTRACT FOR THE PURCHASE OF SPOT GAS
FROM ENSERCH GAS COMPANY; PROVIDING FOR THE EXPENDITURE OF FUNDS
THEREFORE; AND PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the City has solicited, received and tabulated com-
petitive sealed proposals for the purchase of spot gas in
accordance with the procedures of state law and City ordinances;
and
WHEREAS, the City Manager has reviewed and recommended that
the proposal of Enserch Gas Company is the lowest responsible
proposal services as shown in the "Bid Proposals" submitted
therefor; and
WHEREAS, the City Council has provided in the City Budget for
the appropriation of funds to be used for the purchase of spot
gas herein; NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION I. That the proposal of Enserch Gas Company is
hereby accepted and approved as being the lowest responsible
proposal for the items set forth in the proposal.
SECTION II. That the City Manager is hereby authorized to
execute a contract with Enserch Gas Company for the purchase of
spot gas under the conditions set forth therein, a copy of which
is attached hereto and incorporated by reference herein.
SECTION III. That by the acceptance and approval of the above
proposal, the City Council hereby authorizes the expenditure of
funds therefor in the amount and in accordance with the written
contract made pursuant thereto.
SECTION IV. That this ordinance shall become effective
immediately upon its passage and approval.
PASSED AND APPROVED this the ~h day of
~G
1990.
RAY STE S, M#YOR
ATTEST:
JENNIFER WALT S, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
DEBRA A. DRAYOVITC , CITY ATTORNEY
BY:
4.tFtiL:
GAS SALES CONTRACT
THIS CONTRACT is made and entered into as of the 1st day of January, 1990
by and between ENSERCH GAS COMPANY (Seller), whose mailing address is 1700
Commerce Place/8th Floor, Dallas, Texas 75201, and the CITY OF DENTON (Buyer),
whose address is Municipal Building, Denton, Texas 76701, and provides for the
sale and purchase of such quantities of gas which Seller has available and the
right to sell from various sources within the State of Texas under Seller's
existing agreements. Said gas production will be made available to Buyer or Lone
Star Gas Company (Buyer's Agent) under this Contract on a monthly basis at the
Delivery Point(s) hereunder.
I.
Delivery Point. The Point(s) of Delivery for all gas delivered hereunder shall
be at the inlet flange of Buyer's Agent's meters located at various points on
Buyer's Agent's pipeline within the State of Texas. Title to all gas delivered
hereunder shall pass from Seller to Buyer at said Point(s) of Delivery. Buyer
shall arrange and pay for the transportation of the gas covered hereunder from
the delivery point to its final destination.
II.
Term. The term of this Contract shall commence on January 1, 1990 and continue
through December 31, 1993, and month to month thereafter until cancelled by
either party giving thirty (30) days prior written notice to the other party.
Buyer affirms that it will suffer no irreparable injury by virtue of the
expiration of this Contract at the time and date such expiration occurs and
hereby authorizes the abandonment of service as set forth herein.
III.
Quantity. Subject to the terms and conditions herein, Buyer may purchase and
receive such quantities of gas that Seller has available for sale from various
sources hereunder on any given day not to exceed a maximum quantity of twenty-
five million cubic feet (25 MMcf) of gas per day. The quantities of gas which
Seller has available for sale to Buyer shall be determined solely by Seller and
shall be that quantity of gas which Seller delivers each day to Buyer's Agent
at the Point(s) of Delivery hereunder for delivery to Buyer. Nothing contained
herein, however, shall be construed as preventing the parties from mutually
agreeing in writing to the sale and purchase of quantities of gas in excess of
those provided in this paragraph.
1
Prior to the beginning of each month, Buyer shall notify Seller of the estimated
monthly volumes, if any, that Buyer in good faith estimates it will purchase
hereunder during such month. Buyer may assign, upon thirty (30) days prior
written notice to Buyer's Agent, any or all nomination obligations to Seller.
Upon such assignment, Seller shall inform Buyer's Agent of estimated monthly
volumes which Seller estimates Buyer's Agent will deliver to Buyer for such
month.
Both parties recognize that the volumes delivered at the Point(s) of Delivery
hereunder may be commingled with volumes of gas delivered under agreements
between Seller and other third-parties; therefore, for allocation and billing
purposes Buyer and Seller hereby agree that the procedure for allocation of all
volumes delivered at the Point(s) of Delivery shall be mutually agreed upon by
the involved parties.
In no event shall the volumes of gas that Seller sells and delivers to Buyer or
that Buyer purchases and receives from Seller under the terms of this Contract
ever exceed the volumes of gas which can be legally produced under the applicable
rules and regulations of the Railroad Commission of Texas in the course of
reasonably prudent operations.
Seller shall be in control and possession of the gas sold and purchased hereunder
and be responsible for and shall indemnify and hold Buyer or Buyer's Agent
harmless from any damages or injury caused thereby until the same shall have been
delivered to Buyer or Buyer's Agent at the Point(s) of Delivery, except for
injuries and damages occasioned proximately by the negligence of Buyer or Buyer's
Agent. Buyer shall be in control and possession of the gas sold and purchased
hereunder and be responsible for and shall indemnify and hold Seller harmless
from any damage or injury caused thereby once the same has been delivered to
Buyer or Buyer's Agent at the Point(s) of Delivery, except for injuries and
damages occasioned proximately by the negligence of Seller.
IV.
Price and Payment. For all of Seller's gas delivered to Buyer or Buyer's Agent
at the Point(s) of Delivery and purchased hereunder, the price to be paid by
Buyer for gas hereunder during the term hereof shall be negotiated by Buyer and
Seller for any mutually agreeable time period(s). In the event Buyer and Seller
cannot mutually agree upon a negotiated price prior to the beginning of any such
period, then neither party shall have any obligation to perform under this
Contract during such period, except for the requirement to make payment of any
amounts due hereunder.
In no event shall any price paid and collected hereunder exceed any maximum
lawful price established by the Natural Gas Policy Act of 1978 (NGPA) which is
applicable by vintage, character, and category to the gas sold hereunder. If
such contract price is reduced to such lesser maximum lawful price, Seller shall
be entitled to collect such allowances as are available under Section 110 of the
NGPA for gathering, treating, compression and tax reimbursement (as limited by
Article VI hereof), but the sum total of such maximum lawful price and Section
110 allowances shall not exceed an otherwise applicable contract price.
2
Seller shall render a statement to Buyer on approximately the 15th day of each
month for gas delivered the previous month. Said statement shall be based on
Buyer's Agent's sales meters and Buyer shall pay Seller the amount of the
statement within twelve (12) days from the date Seller's statement is deposited
postage prepaid in the United States mail or in case of hand delivery, within
ten (10) days from the date Seller's statement is delivered to a representative
of Buyer from a representative of Seller. If the total invoiced amount of any
payment due is not paid when due, interest on all unpaid amounts shall accrue
at the rate of one and one-half percent (1 1/2%) per month from the date such
amount is due Seller; provided, however, no interest shall accrue on unpaid
amounts when failure to make payment is the result of a bona fide dispute between
the parties hereto regarding such amounts and Buyer timely pays all amounts not
in dispute. Should litigation on any of these amounts be required, Buyer agrees
to reimburse Seller for its reasonable attorneys fees.
Bills rendered for gas delivered hereunder shall be payable at Seller's office
located at P. 0. Box 910264, Dallas, Texas 75391-0264, or such other address as
may from time to time be designated by Seller upon reasonable notice.
V.
Measurement. Heating value is to be calculated at a pressure of 14.65 psia on
a dry basis and temperature of 60°F. The unit of volume for purposes of
measurement shall be one thousand (1,000) cubic feet of gas at 14.65 psia and
60°F, as corrected pursuant to current industry standards, and Buyer's Agent's
meters and other measurements shall be conclusive except for when the meter is
found to be inaccurate by as much as one percent (1%) fast or slow, or to have
failed to register. 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.
VI.
Taxes. Buyer and Seller acknowledge that the present severance, production,
gathering or similar taxes amount to seven and one-half percent (7-1/2%) of the
purchase price and is included therein. In addition to the terms and provisions
of Article IV herein, Buyer agrees to reimburse Seller monthly for one hundred
percent (100%) of the aggregate amount of all severance, production, gathering,
or similar taxes levied, assessed or fixed by any taxing authority or authorities
and paid by Seller with respect to gas sold and delivered hereunder which exceeds
the aforesaid amount in effect on the date hereof. In addition to the
aforementioned taxes, Buyer also agrees to reimburse Seller for any and all taxes
(not including excess profits, capital stocks, franchise or general property
taxes) levied, assessed or fixed by any taxing authority or authorities,
including but not limited to gross receipts taxes, and paid by Seller with
respect to the sale, transportation, handling, and/or delivery of gas sold
hereunder.
3
VII.
Quality. Seller shall deliver for receipt by Buyer's Agent natural gas which
is of merchantable quality and free of water and other objectionable fluids and
solids. The gas shall contain no oxygen, and not more than five (5) grains of
total sulphur, consisting of no more than one-quarter (.25) grain of hydrogen
sulfide and one (1) grain of mercaptan sulphur per one hundred (100) cubic feet
of gas, not more than three percent (3%) by volume carbon dioxide, and not more
than seven pounds (7#) of water vapor per one million (1,000,000) cubic feet of
gas, and which has a heat content of not less than nine hundred fifty (950) nor
more than eleven hundred fifty (1,150) British Thermal Units per cubic foot under
the conditions of measurement contained herein. The gas delivered hereunder
shall be at temperatures not in excess of one hundred and twenty degrees (120°)
Fahrenheit, and not less than forty degrees (40°) Fahrenheit.
VIII.
Warranty. Seller hereby warrants to Buyer that at the time of delivery of gas
hereunder it will have good title or the right to deliver such gas, and that such
gas will be free and clear of all liens and adverse claims; and Seller agrees
with respect to the gas delivered by it, to indemnify Buyer against all suits,
actions, debts, accounts, damages, costs (including attorney's fees), losses and
expenses arising from or out of any adverse claims, relating to Seller's title,
of any and all persons to or against said gas.
Each party warrants to the other that its (and/or its agent's) facilities
utilized for the delivery and acceptance of gas hereunder are wholly intrastate
facilities and are not subject to the Natural Gas Act of 1938, as heretofore
amended. As a material representation, without which both parties would not have
been willing to execute this Contract, each party warrants to the other party
that it (and its agents) will take no action or commit an act of omission which
will subject its (or its agent's) facilities, this transaction, or the other
party's (or the other party's agent's) facilities, to jurisdiction of the Federal
Energy Regulatory Commission (FERC) or its successor governmental agency under
the terms of the Natural Gas Act of 1938, as amended. The gas delivered and
accepted hereunder shall not have been nor shall be sold, transported or
otherwise utilized in interstate commerce in a manner which will subject either
party (or their agents) to the terms of the Natural Gas Act of 1938, as amended.
In addition to and without excluding any remedy the aggrieved party may have at
law or in equity, the party who breached the above warranties and representations
shall be liable to the aggrieved party (and the aggrieved party's agent) for all
damages, injury and reasonable expense the aggrieved party (and the aggrieved
party's agent) may sustain by reason of any breach hereof. Further, should
either party (or their agents) perform any act, or cause any act to be performed,
at any time, that results in any gas covered hereunder becoming regulated by or
subject to the jurisdictional consequences of the FERC or successor governmental
authority contrary to this Contract, this Contract shall be deemed of its own
terms to terminate on the day before the date of such occurrence; provided,
however, such termination shall never be construed to impair any right arising
under this paragraph.
4
Buyer and Seller agree that this Contract will be construed according to the
laws of the State of Texas.
IX.
Force Majeure. In the event of either party hereto being rendered unable, wholly
or in part, by force majeure to carry out its obligations under this Contract,
other than to make payments due hereunder, it is agreed that on such party's
giving notice and full particulars of such force majeure by written notice or
by telegraph to the other party as soon as possible after the occurrence of the
cause relied on, then the obligations of the party giving such notice, so far
as they are affected by such force majeure, shall be suspended during the
continuance of any inability so caused but for no longer period, and such cause
shall as far as possible be remedied 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, wars, blockades,
insurrections, civil disturbances and riots, and epidemics; landslides,
lightning, earthquakes, fire, storms, floods, and washouts; arrests, orders,
directives, restraints and requirements of the government and government
agencies, either federal or state, civil and military; any application of
governmental conservation rules and regulations; explosions, breakage or accident
to machinery or lines of pipe; shutdowns of equipment or lines of pipe for
inspection, maintenance or repair; shortage of water, freezing of wells or lines
of pipe; partial or entire failure, depletion or loss of wells or sources of
supply of gas; inability or refusal of Buyer's Agent to accept deliveries of
gas from Seller or redeliver gas to the Point(s) of Delivery, cancellation by
Buyer's Agent of Buyer's transportation agreement with Buyer's Agent for any
reason whatsoever; and any other causes, whether of the kind enumerated or
otherwise, not reasonably within the control of the party claiming suspension.
It is understood and agreed that the settlement of strikes or 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 or lockouts by acceding to
the demand of the opposing party when such course is or is deemed to be
inadvisable or inappropriate in the discretion of the party having the
difficulty.
X.
Recitals and Covenants. The intent and purpose of this Contract is to enable
Buyer to purchase gas from a source other than its traditional utility source
of supply. Buyer is not relying on and will not rely on any expectation of sales
or service from Seller except as specifically provided in this Contract. It is
intended that Seller's furnishing of gas to Buyer be solely and strictly under
the quantity, terms, and other provisions of this Contract.
Buyer believes that it is in its best interest to purchase gas under the terms
and conditions of this Contract and without the benefit of the duties,
obligations, and conditions of sale and service which could apply to Seller were
Seller deemed to be a utility. Buyer recognizes and agrees that in purchasing
gas under these conditions it will not have available certain legal remedies
5
against Seller which it would have were Seller to be a utility or, even if Seller
were deemed to be a utility, were gas to be purchased from Seller under
circumstances and conditions other than under this Contract.
Buyer agrees and stipulates that, in making sales to Buyer under this Contract,
Seller is neither the sole nor exclusive source of supply of gas to Buyer nor
will Seller be engaged in the making of a city gate sale to Buyer.
Buyer hereby waives any and all rights to assert or claim that Seller has any
obligations whatsoever to provide natural gas sales or service to Buyer other
than under the terms and conditions of this Contract, or that any obligations
will accrue by virtue of sales or service under this Contract. This waiver
specifically includes, but is not limited to, any claim or assertion that any
cessation of sales or service provided by Seller to Buyer, provided such
cessation is in conformance with the provisions of this Contract, constitutes
abandonment of Buyer or that Seller must receive permission for such cessation
from any governmental authority.
Should, for any reason, Seller ever be deemed to require the permission of any
governmental authority for the cessation, whether of a permanent or temporary
nature, of service and sales to Buyer as provided for in this Contract, Buyer
agrees that such cessation is in the public interest and that such permission
should be granted and/or deemed granted at the time of execution of this
Contract.
XI.
Miscellaneous. Buyer's purchase of said gas under this Contract shall be subject
to all terms and conditions of any release(s) applicable to said gas from prior
contracts of other purchasers.
Waiver by Seller of a particular right or default hereunder shall not be deemed
a waiver of other rights or defaults whether similar or dissimilar.
This Contract supersedes and replaces all prior contracts between the parties
hereto, or their respective predecessors in interest, for gas at the location
and for the purposes herein designated, and constitutes the entire contract
between the parties.
This Contract constitutes the entire agreement between the parties covering
the subject matter hereof, and there are no agreements, modifications, conditions
or understandings, written or oral, expressed or implied, pertaining to the
subject matter hereof which are not referenced or contained herein.
6
RECEIVED J U N 4199x,
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Contract in duplicate originals as of the day and year first herein written.
RTTYF.R
ATTEST:
SELLER:
< ENSERCH GAS COMPANY -
f 1I By :
ATT®RN N.FAtT
Title:
7
Title: City Manager
RECEIVED JAN 2 6 9994
ENSERCH
GAS COMPANY
300 South St. Paul, Suite 260
Dallas, Texas 75201-5598
Mailing Address
PO. Box 31 January 21, 1994
Dallas. Texas 75221-0031
Dear Customer:
The letter serves as notification that, effective January 1, 1994, Enserch Gas Company, a Division of Lone
Star Energy Company, a Texas corporation has assigned its interest in, and rights and obligations under,
your Gas Sales Contract(s) to Enserch Gas Company, a Texas corporation, and, as of the same date,
Enserch Gas Company, as a separate and independent corporation chartered under the laws of the State
of Texas, assumes all rights and obligations thereunder and agrees to all terms and provisions of such
contract(s).
Should you have any questions, please contact your gas sales representative.
Sincerely,
r
G. Marc Lyons
Sr. Vice President