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1989-1942793L ORDINANCE NO 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 here y- 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 proposa tie 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 immee a-taEy -upon its passage and approval 1989 PASSED AND APPROVED this the 4& day of Cl~x.1a~1 , Y STEUHI~As, MA/ZUK A EST &V,4p~ zdm~ NI FE WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM DEBRA A {DR,AYOVITCI , CITY ATTORNEY I-V BY Q i RECEIVED J U N 4 ,goo 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 by Seller or Seller's Agent under this Contract on a monthly basis at the Delivery Point hereunder I Delivery Point. The Point of Delivery for all gas delivered hereunder shall be at the interconnection of Seller's Agent's meters located at Buyer's Spencer Generating Station in Denton Texas Title to all gas delivered hereunder shall pass from Seller to Buyer at said Point of Delivery 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's Agent delivers each day to Buyer for Seller's account at the Point of Delivery hereunder 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 In the event Buyer later desires to modify such nomination during such month, Buyer shall, to the extent reasonably possible give not less than twelve (12) hours' prior notice of (1) the revised quantity of gas Buyer desires to purchase and (ii) the effective time and duration of such revised quantity nomination Both parties recognize that the volumes delivered at the Point of Delivery hereunder may be commingled with volumes of gas delivered under agreements between Buyer 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 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 harmless from any damages or injury caused thereby until the same shall have been delivered to Buyer at the Point of Delivery, except for injuries and damages occasioned proximately by the negligence of Buyer Buyer shall be in control and possession of the gas sold and purchased hereunder and be responsible for and shall indemnify and hold Seller or Seller's Agent harmless from any damages or injury caused thereby once the same has been delivered to Buyer at the Point of Delivery, except for injuries and damages occasioned proximately by the negligence of Seller or Seller's Agent IV Price and Payment, For all of Seller's gas delivered to Buyer or Seller's Agent at the Point 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 Seller'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 1/28) 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 Seller'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 (18) 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 1/28) 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 (1008) 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 and/or Seller's Agent with respect to the sale transportation handling, and/or 3 delivery of gas sold hereunder VII Quality, Seller shall deliver for receipt by Buyer 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 (38) 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 (400) 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 4 under this paragraph 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 Seller's Agent to accept deliveries of gas from Seller or redeliver gas to the Point of Delivery cancellation by transporter of Seller's transportation agreement with transporter 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 5 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 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 rJ 4' V zu f IN WITNESS WHEREOF, the undersigned parties hereto have executed this Contract in duplicate originals as of the day and year first herein written BUYER CITY OF ETON By Title A TEST SELLER ENSERCH GAS COMPANY By A?TOR1VE -1 -FACT Title x9;11 I i I I 1 I' I I 1 i II I i li II I i I~ ~I I I' I' I I 1 f I I 1 I a f e r i i I i I t I t ~ t f t i 1 i I I I I I~ I~ 4 Y i C I 1{ I 3 i I i ; ~1 1 I I I I E Y I , Y r Y , 1 i 1 I i I t i i