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