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1988-0361910L NO AN ORDINANCE APPROVING AN AGREEMENT BETWEEN THE CITIES OF DENTON, BRYAN, GARLAND, GREENVILLE AND TEXAS NEW MEXICO COMPANY FOR THE SALE OF POWER AND ENERGY, AND PROVIDING AN EFFECTIVE DATE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I That the City Council hereby approves and auth- orizes the Mayor and City Secretary to execute and attest, respectively, the agreement between the Cities of Denton, Bryan, Garland and Greenville and Texas New Mexico Company for the sale of power and energy, under the terms and conditions contained in said agreement as attached hereto SECTION II That this ordinance shall become effective imme lately upon its passage and approval PASSED AND APPROVED this the 11~414_)day of ~I 1988 RAY HENS, MAYOR ATTEST: JE IF W LTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY BY _ V V tJ TNP/TMPA AGREEMENT FOR SALE OF POWER AND ENERGY This Agreement is pursuant to and entered into this, the day of , 1987 by and between the Cities of Bryan, Denton, Garland, and Greenville, Texas (hereinafter Cities), all municipal corporations organized under the laws of the State of Texas, and Texas New Mexico Company, a Texas Corporation (hereinafter TNP) This agreement is entered into in compliance with and satisfaction of all terms and conditions either express or implied of that certain contract dated July 7, 1986 as amended December 19, 1986 WITNESSETH Whereas, Cities own and operate municipal electric systems which have generation in excess of that necessary to meet their load and reserve requirements and other contractual requirements for the period of this agreement and, Whereas, TNP operates an electric system which purchases for resale power and energy from other utilities and, Whereas, TNP desires to purchase from Cities power and energy and, Whereas, Cities can and do agree to provide such power and energy, -1- Now, therefore in consideration of the premises and the mutual covenants herein contained the parties hereto do hereby agree and bind themselves as follows DEFINITIONS Base Power - the firm power contracted for in any given year as shown in Schedule I, which when multiplied by the base price for that year establishes that annual contract fee Optional Power - additional power purchases which may be requested at TNP's option in addition to the base power contracted in amounts up to those as set forth on Schedule I Optional power is as set forth on Schedule I and shall be paid for by TNP in amounts as verified to TNP by the cities Request for Changes in Power - an indication by TNP to the Cities requesting an increase or decrease in scheduled power amounts by means of oral and/or written communication inclusive of telecommunication signals of telecommunication devices installed on TNP's Points of Delivery ARTICLE I 1 1 The Cities agree to provide and deliver and TNP agrees to accept during each year of the term of this contract amounts of base power as shown in the attached Schedule I The Cites further agree to provide and deliver such optional power as is set forth on Schedule I which optional power may be requested at TNP's sole discretion The base power and any optional power shall be provided and delivered at TNP's sole direction to one or both of TNP's metering points with Houston Lighting & Power in TNP's Southeast -2- Division at a level of firmness equal to Cities' native load and the Texas Municipal Power Pool load Cities agree to provide power and energy up to the levels as set forth on Schedule I to TNP during the term of this contract Requests for changes in power and energy may be made by TNP through oral or written communication from TNP to the Cities' dispatch center Oral requests shall be confirmed by written confirmation within 24 hours Actual use of power by TNP over and above base power amounts shall be scheduled orally or via written communication and shall be billed after the amount of power has been verif2ed by the cities with HL&P at the end of the month in which the power was taken Verification shall consist of documentation that reflects power delivered by Cities that is in an amount equal to the remainder of power in excess of all power delivered to TNP by it's other suppliers Requests for changes in power and energy by TNP shall be made at least 12 hours in advance Cities will make all necessary arrangements for wheeling of power from its generation source to TNP's metering points The cost of wheeling is included in the delivered price of base power and optional power as set forth on Schedule I, provided, however, that the price paid by TNP for base power and/or optional power shall not be affected or changed by actual costs of wheeling experienced by TMPA during the term of this agreement or any extension hereof under this Article 1 2 The cities agree to provide documentation to TNP prior to December 1, 1987, (a) that there is sufficient transmission line capability in the ERCOT facilities to accommodate the base power and optional power deliveries expected to occur under the terms of this agreement and (b) Cities are able -3- to negotiate satisfactory arrangements for the transmission services for the terms as contained on Schedule 1 by third parties contemplated in Paragraph 1 1 This contract shall become null and void if the Cities are unable to provide documentation to TNP's satisfaction that contractual arrangments have been made by the Cities and the necessary affected parties to insure delivery of the power energy provided for in this agreement If at anytime after December 1, 1987 the Cities cannot deliver power and energy as provided for in this agreement because of the failure of Cities to comply with either (a) or (b) above TNP shall have the option of cancelling as provided for in paragraph 6 2 Any determination by Cities that they will be unable to comply with either the requirements set forth in (a) or (b) above shall be transmitted in writing to TNP no later than three days after the determination is made 1 3 The Cities also agree to make available and TNP to purchase, at TNP's option, additional amounts of power up to the amounts shown in the optional column of the attached Schedule I TNP shall provide an initial nonbinding notice of intent to request optional amounts of power for each year on or before the dates indicated in Schedule I and shall make a firm request for optional power by the dates indicated in Schedule I 1 4 TNP may extend this contract one year beyond May 31, 1991 by submitting a written request for extension prior December 1, 1989 The base power and optional power prices for the extension year shall be the same as set forth in the contract year beginning May 31, 1990 as set forth in Schedule I -4- ARTICLE II TERM 2 1 This agreement shall become effective at 12 01 A M , December 1, 1987 and terminates at 11,59 P M May 31, 1991 unless extended in writing pursuant to Section 1 4 of Article I ARTICLE III IN FOR POWER AND ENERGY 3 1 In consideration for Cities providing and delivering this capacity, TNP agrees to pay for the amount of base power shown for that year in Schedule I at the price also shown in Schedule I This price is inclusive of all wheeling cost referred to in 1 2 above and as conditioned in 1 1 above 3 2 TNP also agrees to pay $10 00 per KW per year for any year of the contract term beginning June 1, 1989 for which TNP provides a firm request for optional power This payment shall be known as the reservation fee and shall be paid to the Cities at the time the firm request for optional power is made Any reservation fee paid for optional power for a contract year shall be subtracted from the price for optional power actually taken in the contract year Requests shall be made a minimum of 6 months prior to the Cities obligation to deliver In the event optional power that has been requested is not taken in the contract year for which it was reserved, the reservation fee shall be held by the cities as liquidated damages and the Cities agree that they will not be entitled to further damages In the event TNP elects to nominate an amount of optional power to be taken in one of, or any, or a combination of the preceding years, then that -5- amount of optional power cannot be displaced by purchases from alternate suppliers Nothing in this paragraph shall be construed to prohibit TNP from making the necessary purchases to fulfill its obligations to its customers 3 3 TNP agrees to pay $75/KWyr for all optional power actually taken which is greater than the base amount of power for that contact year The amount of optional power greater than the base amount shall be determined by the following formula A Total TNP Southeast Divisions Peak load Less B Total TNP suppliers load inclusive of base power from the cities at the time of peak period in A above and any standby purchases made by TNP Optional power actually taken and to be multiplied by optional power rates on Schedule I In any given contract year which the Cities provide and deliver, and TNP accepts, more power than the base amount set forth in Schedule I for that contract year, TNP agrees to pay the amount per KW as set forth for optional power in Schedule I for that contract year multiplied by the amount determined in the above formula The power accepted by TNP beyond the base amount for that contract year shall be considered optional power for that contract year whether or not a firm request for delivery of optional power has been received by the Cities 3 4 On or before the 15th of each month during the term of this contract, the Cities will supply TNP with a rate per KWH for fuel and energy (combined) which will apply for energy delivered in the subsequent calendar month TNP -6- may elect to purchase energy at this price in amounts ranging from zero up to a maximum of the base power plus any optional power requested for that calendar year ARTICLE IV PAYMENT TERMS 4 1 Cities will invoice TNP for all power and energy delivered by the 10th of the month following the month of usage under Article I of this contract with payment being due and payable by the 25th of that month The monthly rate for power shall be calculated as follows Monthly Rate = 1/12[(A x B) + (C x D)] where A = Base amount of power for that contract year B = Price per KW for base power in that contract year C = Optional amount of power for that contract year D = Price per KW for optional power for that contract year less Reservation Fee During the 12 months in the year 1989, the Cities shall apply a credit in the amount of $39,375 00 per month to the above formula in compliance with the amounts due pursuant to paragraph 3 4 of the contract between the parties dated July 7, 1986 as amended December 19, 1986 The formula as applied in 1989 shall be as follows Monthly rate = 1/12 [(A x B) + (C x D)] - $39,375 00 -7- The parties recognize that the amount of optional power in C may not be identified by the 10th of each month In such cases a separate bill for C power will be provided at a later date The monthly rate for power will be adjusted as indicated in 3 2 above optional power taken will be billed for the 12 month period following the month in which it was taken according to the price as set forth in Schedule I as applied in the above formula in Section 3 4 ARTICLE V CONTINUITY OF SERVICE, FORCE MAJEURE 5 1 Each party will exercise reasonable diligence and care to avoid interruptions of delivery of power and energy, hereunder, but will not be liable for any damage or loss that may be occasioned by any failure or interruption caused by fires, floods, lightning, storms, or other acts of God, or by strikes, riots, civil disturbance, action of public authority, litigations, breakdown, or other causes beyond its reasonable control ARTICLE VI REMEDIES FOR BREACH 6 1 In addition to and not excluding any remedy herein provided, it is agreed that if either party fails to perform any of its obligations hereunder, including the prompt payment of monthly bills or delivery of electric power, the injured party may suspend payment of bills or delivery of energy hereunder, and said party will not be liable in any manner for loss of damage arising from such nonpayment or suspension, provided that the injured -8- party shall specifically notify the other party of such failure in writing at least ten (10) days prior to such suspension or nonpayment No such suspension or nonpayment will interfere with the enforcement by either party of any other legal right or remedy No delay by either party in enforcing any of its rights hereunder, and no waiver of any right to enforce any breach hereof, will be deemed a waiver of such rights No waiver by either party or any delay by the other party shall be deemed a waiver of any other or subsequent default All rights and options herein are provided to the benefit of either party and are continuing such that a failure to exercise any such right or option shall not be construed as waiving the right or option upon any subsequent delay or breach whether of like or different character In no event shall this Article VI apply when the event of default is the failure to take reserved optional power as set forth in Article III with the exception of the 20 MW as set forth in paragraph 2 of Schedule I 6 2 Nothing in this agreement to the contrary withstanding, it is expressly agreed that should Cities fail to deliver base and/or optional power as contracted for by TNP, and it is the result of the Cities failure to perform and such failure occurs in a peak month as defined in that certain purchased power agreement between TNP and Houston Lighting and Power Company (HL&P), and such failure causes a new and higher demand to be placed by TNP on the HL&P system, then in such event, and in no other, TNP will have the sole and exclusive option to cancel the terms of this agreement and have no further obligations to the Cities hereunder In the alternative TNP may continue to take base and/or optional power from the Cities at a level to be determined -9- by TNP for the remaining terms of this agreement Also in such event, the Cities agree to reimburse TNP for prior billings from the Cities in an amount equal to any demand payment TNP incurred over and above monthly levels of demand payments incurred had the Cities not been a supplier during the particular contract year Such reimbursement of demand payments shall be limited to those incurred during the year in which the failure to deliver occurred A peak month is defined as being any month or a part thereof between May 15 and October 15 of a year Should Cites be unable to make delivery of power as described in this agreement for reasons not within their control, TNP shall have the same option of cancellation and base power adjustments as described above However, in such case the Cities shall not be obligated to make a refund or reimbursement This article shall in no way relieve TNP of the responsibility to properly schedule power to each of its metering points with HL&P to prevent a new demand ARTICLE VII Cities reserve the right to assign portions of this contract responsibility to another member of the Texas Municipal Power Pool, provided however that such assignment shall be subject to the same terms and conditions contained in this agreement unless modified by agreement in writing by TNP and the assignee Cites agree to notify TNP of the appropriate parties responsible for any requests in change of power on a regular basis ARTICLE VIII This contract and its terms and conditions shall be interpreted in accordance with Texas law, as applied and enforced by the PUCOT through their -10- regulations, and shall become null and void if any or all of the terms and conditions are not approved by order of appropriate regulatory authorities The parties recognize that each may have obligations to the other under Article 3 3 of the 1986 Agreement for Sale of Power and Energy by and between TNP and the City of Bryan In the event of regulatory disapproval of this contract, those obligations, to the extent they may exist, will continue In the event Municipally owned systems become regulated as to their contract terms and rates by an agency of the State of Texas, it is agreed that no tariff requested by the Cities will include a term that provides for payment for base or optional power beyond the term of the contract because of a minimum or ratcheted demand In the event such a term is included in the tariff by the regulatory agency, then this contract shall immediately become null and void at TNP's option In the event Municipally owned systems become regulated as to their contract terms and rates by an agency of the state of Texas or any government and such agency or regulatory authority imposes regulations that would modify this agreement, TNP shall have the sole right to terminate immediately upon effective date of such regulatory order TNP may, with the agreement of the Cities, modify the terms and conditions of this agreement to a form necessary to accommodate TNP's plans to make firm economy sales to its industrial customers The Cities also agree, subject to transmission access and arrangements with third parties, to deliver the firm power as described in this agreement and set forth on Schedule I, as attached, to alternate points of delivery as described by TNP The afore-referenced agreement by the Cities may not be unreasonably withheld -11- All notices and other communications required or permitted by this agreement except as otherwise specified shall be sufficiently given by certified mail, return receipt requested as follows To the City of Bryan City of Bryan P 0 Box 1000 Bryan, Texas 77805 Attn Mr Ernest Clark, City Manager To the City of Denton City of Denton 215 E McKinney St Denton, Texas 76201 Attn Mr Lloyd Harrell, City Manager To the City of Garland City of Garland P 0 Box 401889 Garland, Texas 75040 Attn Mr James Spore, City Manager To the City of Greenville City of Greenville P O Box 1049 Greenville, Texas 75401 To TNP Attn Mr Bill Cook, City Manager Texas New Mexico Power Company Attn -12- Signed by the parties hereto on the dates and year first written above by Approved as to Form City of Bryan, Texas City ttorney By Title Mavor Attested by - A XX g~L L City Secreta y City of Denton, Texas By /&r Title ko \j Attested by City of Garland, Texas By P Title G \ \ lMN>tJ{ Attested by City of Greenville, Texas By \7 Title -13- Texas-New Mexico Power Company By V Jack V Chambers Title Vice President Attested by AtL Michael D uBlanchar~ Corporate Secretary b General Counsel -14- SCHEDULE I (1) Term Beginning Base Power/NW Price/KW Jun 1, 1988 20 $75 00/Yr Jun 1, 1989 30 $75 00/Yr Jun 1, 1990 40 $75 00/Yr Jun 1, 1991 30 $75 00/Yr Option Year Jun 1, 1992 0 $75 00/Yr Optional Power/MW Price/KW 25 $75 00/Yr 30 $75 00/Yr 50 $75 00/Yr 60 $75 00/Yr Firm Request Reservation For Optional Fee KW Power $10 00/Yr Feb 1, 1988 $10 00/Yr Oct 1, 1988 $10 00/Yr Dec 31, 1988 $10 00/Yr Dec 31, 1989 Notice of Intent to Request Optional Power Feb 1, 1988 Feb 1, 1988 Oct 1, 1988 Oct 1, 1989 30 $75 00/Yr $10 00/Yr Dec 31, 1990 Oct 1, 1990