1986-1611465L
NO ,L_Zj~_L
AN ORDINANCE AUTHORIZING THE MAYOR TO ENTER INTO AN AGREEMENT
BETWEEN THE CITY OF DENTON, CITY OF BRYAN, CITY OF GARLAND, CITY
OF GREENVILLE AND ENSERCH GAS COMPANY FOR THE SALE OF NATURAL
GAS, AND PROVIDING FOR AN EFFECTIVE DATE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION I
That the City Council of the City of Denton, Texas, hereby
authorizes the Mayor to enter into an agreement between the City
of Denton, City of Bryan, City of Garland, City of Greenville and
Enserch Gas Company for the sale of natural gas under the terms
and conditions being contained in said agreement which is
attached hereto and made a part hereof
SECTION II
That this ordinance shall become effective immediately upon
its passage and approval
PASSED AND APPROVED this the day of , 1986
RAY T A OR
CITY 0 DENTON, TEXAS
ATTEST
CHARLOTTE-ALLEN, CITY SECRETARY
CITY OF DENTON, TEXAS
APPROVED AS TO LEGAL FORM
DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY
CITY OF DENTON, TEXAS
BY
//E~A N~~ERCH
M COMPANY June 30, 1986
301 S Harwood Street
Dallas Texas 75201
City of Bryan
Bryan, Texas 77801
City of Denton
Denton, Texas 76201
City of Garland
Garland, Texas 75040
City of Greenville
Greenville, Texas 75401
Subject Gas Sales Contract
Gentlemen
Enserch Gas Company (Seller) and City of Bryan, at al (collectively referred to
hereinafter as Buyer), desire to enter into a Gas Sales Contract (Contract)
effective the above date providing for the sale and purchase of such quantities
of gas which Seller has the right to sell from various sources within the State
of Texas under Seller's existing agreements, subject to other conditions and
provisions herein 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(s)
hereunder Both Buyer and Seller hereby mutually agree to the following
I
Delivery Point The Point(s) of Delivery for all gas delivered hereunder shall
be at the outlet flange of Seller's Agent's Meters located at Buyer's Power
Plants in Bryan, Denton, Garland and Greenville, Texas Title to all gas
delivered hereunder shall pass from Seller to Buyer at said Point(s) of Delivery
Buyer and Seller shall not allow this gas hereunder to become subject to the
provisions of the Natural Gas Act of 1938 (NGA), as amended, through anv action
or inaction while said gas is in their respective physical possession which would
subject either party to the terms of the NGA
II
Term The term of this Contract shall commence on July 1, 1986 and continue
through December 31, 1986 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, Seller shall sell and
deliver to Buyer a maximum quantity of thirteen million cubic feet (13 MMcf) of
gas per day The quantities of gas which Seller delivers for sale to Buyer shall
be that quantity of gas which Seller's Agent delivers each day to Buyer for
Seller's account at the Point(s) of Delivery hereunder
City of Bryan at al
June 30, 1986
Page 2
Buyer shall take under this Contract, or shall pay for if not taken, an average
daily quantity of 10 4 million cubic feet (10 4 MMcf) of gas per day during each
month of the term hereof Seller will render a notice to each individual City
which is a signatory party hereto of its proportionate share of any deficiency in
the take-or-pay obligation set forth herein following the month in which such
deficiency occurs The amount due for such deficiencies shall be computed by
multiplying $1 60 times the difference between (i) the number of days in the
deficient month multiplied by 10 4 million cubic feet (10 4 MMcf) and (ii)
Buyer's actual purchases from Seller during such month Such amount shall be due
and payable at the billing address stated herein, within ten (10) days of the
billing date for any deficiency
Buyer recognizes and agrees that the gas sold hereunder shall be utilized for the
sole purpose of generating power to sell to Texas - New Mexico Power Company
(TNMPC) under the Agreement dated between TNMPC and the City of
Bryan, Texas, unless Seller specifically agrees otherwise in writing In the
event the above referenced TNMPC contract is terminated, Seller shall thereafter
have the right to terminate this Contract at any time
Buyer and Seller recognize the existence of other prior contractual arrangements
between Seller's Agent and Buyer for the sale and delivery of gas at the Point(s)
of Delivery described herein Buyer and Seller hereby agree that such prior
arrangements shall have priority over the sale and delivery of gas hereunder,
however, it is the intent of the parties hereto that whenever possible the
volumes sold and delivered hereunder will be the first volumes delivered each
day
Each signatory City's proportionate share of monthly gas sales and/or
deficiencies under this Contract shall be based on the ratio that its Power
Plant(s)' consumption of Seller's gas for such month bears to the total
consumption of Seller's gas by the Power Plants of all the signatory Cities
(exclusive of the volumes taken at the City of Greenville for the City of
Weatherford's account) for such month In the event Buyer fails to purchase and
receive any volumes of gas hereunder during any month, the amount due for such
deficiency shall be prorated among the four Cities as follows fifty percent
(50/) to the City of Garland, twenty-five percent (25/) to the City of Bryan,
fifteen percent (15%) to the City of Denton and ten percent (107) to the City of
Greenville
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
Buyer agrees, for billing purposes, that the dispatcher for the City of Garland,
acting on behalf of Buyer, shall advise Seller or Seller's Agent from time to
time during each calendar month by telephone (to be confirmed in writing within
two (2) days of such advisement) of the daily quantities of gas Buyer wishes to
purchase hereunder at each Point of Delivery and the duration of such nomination
Such nomination shall remain in effect until Buyer gives Seller or Seller's Agent
notification of a change Subject to Article VIII herein, Buyer and Seller agree
that Buyer's nomination(s) shall govern the determination of gas sold hereunder,
however, in the event Buyer actually receives a volume of gas at the Points of
Delivery hereunder which is more or less than Buyer's nominated volumes for the
month, such actual volumes received shall govern for determining sales hereunder
City of Bryan at al
June 30, 1986
Page 3
Seller shall be in control an(
and be responsible for and
damage or injury caused theret
at the Point(s) of Deliver
proximately by the negligence
of the gas sold and purchi
indemnify Seller and Seller's
the same has been delivered
injuries and damages occasi
Seller's Agent
possession of the gas sold and purchased hereunder
shall indemnify and hold Buyer harmless from any
y until the same shall have been delivered to Buyer
y, except for injuries and damages occasioned
of Buyer Buyer shall be in control and possession
gad hereunder and be responsible for and shall
Agent from any damage or injury caused thereby once
to Buyer at the Point(s) of Delivery, except for
ned proximately by the negligence of Seller or
IV
Price & Payment For all of Seller's gas delivered to Buyer at the Point(s) of
Delivery and purchased hereunder, Buyer agrees to pay Seller and Seller agrees to
accept the lesser of $1 60 per MMBtu or the maximum lawful price under the
Natural Gas Policy Act (NGPA) for such gas, including Section 110 allowances for
tax reimbursement, gathering, compression, and treating, and including
transportation fees
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 o gas at 14 65 psia and 60°F, as corrected pursuant
to the American Gas Association's Report No 3, 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 on percent (17) 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
Seller shall invoice each in
its proportionate share of
month on approximately the I'
month Each City's propor
take-or-pay deficiencies she:
statements shall be based or
actual sales and deliveries
amount of Seller's statement
date Seller's statement is r
amount of any payment due is
shall accrue at the rate of i
date such amount is due Sal
required, Buyer agrees to rel
ividual City which is a signatory party hereto for
he total quantity of gas delivered hereunder each
:h day of each month for gas delivered the previous
ionate share of such monthly gas sales and/or
1 be determined as set forth in Article III Said
Seller's Agent's sales meters for each month that
occur hereunder Each City shall pay Seller the
by the 25th day of the month or ten (10) days from
ndered, whichever is later If the total invoiced
not paid when due, interest on all unpaid amounts
ne and one-half percent (1-1/27) per month from the
er Should litigation on any of these amounts be
aburse Seller for its reasonable attorneys' fees
Bills rendered for gas delivered hereunder shall be payable at Seller's office
located at P 0 Box 85751, Dallas, Texas 75285, or such other address as may
from time to time be designat d by Seller upon reasonable notice
V
Taxes Buyer and Seller acknowledge that all present severance, production,
gathering or similar taxes 1 vied, assessed or fixed by any taxing authority or
City of Bryan et al
June 30, 1986
Page 4
authorities and paid by Seller with respect to gas sold and delivered hereunder
are included in the price specified in Article IV herein
VI
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 not more than 0 1% oxygen, and not more than twenty (20)
grains of total sulphur, consisting of no more than one (1) grain of hydrogen
sulfide and one (1) grain of marcaptan 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 (7N) 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
VII
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 attorneys' 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
Buyer and Seller agree that this Contract will be construed according to the laws
of the State of Texas
VIII
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 washout9, arrests, orders,
directives, restraints and requirements of the government and governmental
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 Buyer, 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
City of Bryan at al
June 30, 1986
Page 5
lockouts shall be entirely within the discretion of the party having the
difficulty, and that the above 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
IX
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 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 my
governmental authority for the cessation of service and sales to Buyer as
provided herein, 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
X
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
The parties hereto agree that this Contract may be
copies, or counterparts, each of which, when executed
parties listed below, as Buyer, shall constitute and
agreement between such Seller and Buyer(s) executing
execution by Seller, whether or not this copy or any
all the parties named herein
executed in one or more
by Seller and any of the
be an original effective
same as of the date of
counterparts is signed by
City of Bryan at al
June 30, 1986
Page 6
If you are in agreement with the terms and conditions as stated herein, please
execute this Contract on behalf of Buyer and return two copies for our execution
A copy will then be returned for your files
Very truly yours,
l`- li.cY
David E Breish
BUYER
Agreed to and Accepted this
_ day of 1986
CITY OF BRYAN, TEXAS
By
Title
SELLER
Agreed to and Accepted this
3Ore' day of 1986
EN S E RICH GAS COMPANY
By Ty t / ~I/LFC
Title ACC F11 e">IC)E
Agreed to and Accepted this
day of , 1986
CITY OF GARLAND, TEXAS
By
Title
Agreed to and Accepted this
Z'Itay of , 1986
CITY OF DENTON
By
Title
Agreed to and Accepted this
day of , 1986
CITY OF GREENVILLE, TEXAS
By
Title