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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