2015-258ORDINANCE NO. 2015 -258
AN ORDINANCE AUTHORIZING THE CITY MANAGER, OR HIS DESIGNEE, TO
EXECUTE AN AGREEMENT OR AGREEMENTS BETWEEN THE CITY OF DENTON
( "CITY ") AND THE TEXAS MUNICIPAL POWER AGENCY ( "TMPA ") THAT PROVIDES
FOR THE TERMS AND CONDITIONS UNDER WHICH THE CITY, THROUGH DENTON
MUNICIPAL ELECTRIC, WILL BE RESPONSIBLE FOR THE OPERATION,
MAINTENANCE AND CONSTRUCTION OF ALL TMPA TRANSMISSION ASSETS IN
DENTON COUNTY, TEXAS; AUTHORIZING THE EXPENDITURE OF FUNDS; AND
PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City of Denton operates a municipally -owned electric company and is a
founding member of the Texas Municipal Power Agency;
WHEREAS, TMPA owns transmission assets that deliver electric power to the City and
TMPA uses the City of Garland, also a member of TMPA, to operate, maintain and construct the
majority of its electric transmission infrastructure;
WHEREAS, in 2013 TMPA authorized the City to construct, operate, maintain and own
parts of the Denton 138kV electric transmission infrastructure;
WHEREAS, the City has been operating for years as a first responder to repair TMPA
electric transmission infrastructure in Denton County;
WHEREAS, TMPA and the City have agreed that it would be more efficient and
mutually beneficial for the City to operate, maintain and construct TMPA electric transmission
assets in Denton County;
WHEREAS, the City's plans for the operation, maintenance and construction of TMPA
electric transmission assets have been reviewed and favorably received by both the Electric
Reliability Council of Texas and the Texas Reliability Council;
WHEREAS, the Public Utility Board has considered this matter and unanimously
recommended that the City Council approve and authorize the execution of the requisite
agreement or agreements necessary for the City to operate, maintain and construct TMPA
electric transmission assets in Denton County
WHEREAS, the City Council finds that this ordinance is in the best interest of both the
citizens and ratepayers; NOW THEREFORE
THE COUNCIL OF THE CITY OF DENTON ORDAINS:
SECTION 1. The recitations contained in the Preamble to this ordinance are
incorporated by reference into this Ordinance.
SECTION 2. The City Manager, or his designee, is authorized (a) to execute on behalf of
the City (i) the agreement, or agreements, substantially in the form of the attached Exhibit "A ";
and, (ii) any other documents necessary for fulfilling the terms and conditions of the agreement
or agreements; and (b) to make expenditures in accordance with the terms of the agreement and
agreements.
SECTION 3. If any section, article, paragraph, sentence, phrase, clause or word in this
ordinance, or application thereof to any persons or circumstances, is held invalid or
unconstitutional by a court of competent jurisdiction, such holding shall not affect the validity of
the remaining portions of this ordinance; the City Council declares that it would have ordained
such remaining portion despite such invalidity, and such remaining portion shall remain in full
force and effect.
SECTION 4. This ordinance shall become effective immediately upon its passage and
approval.
PASSED AND AI'PRO E' this the _ play o f ......... `" :.......�* 2015,
(1 111, Il 1 �..�
WATTS, MAYOR........ .. �........
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APP "VN�I AS I'O LEGAL FORM:
AN 'A BURGESS, CITY ATTORNEY
By�
TRANSMISSION OPERATOR, MAINTENANCE, AND CONSTRUCTION SERVICES
AGREEMENT
This Transmission Operator, Maintenance, and Construction Services Agreement (the
"Agreement ") is entered into on the day of "�.... _ 2015 (the
"Effective Date ") between Texas Municipal Power Agency ( "TMPA ") and the City of
Denton, Texas (the "City" or "Denton ").
Recitals
TMPA is the owner of an electric transmission system that has been constructed,
operated, and maintained for the purpose of delivering power to the cities of Bryan,
Garland, Denton, and Greenville (the "Member Cities ") and providing transmission
service to wholesale transmission customers in ERCOT including any additions or
modifications to the "TMPA Transmission System ". Exhibit A of this Agreement lists the
TMPA assets in Denton County that are subject to this Agreement. This Agreement
defines the operation, maintenance, and construction services for those TMPA assets
which will be performed by Denton.
Definitions
Wherever used in this Agreement, the following terms shall have the meanings
specified or referred to in this section.
Agreement means this TRANSMISSION OPERATOR, MAINTENANCE, AND
CONSTRUCTION SERVICES AGREEMENT between Denton and TMPA, including all
exhibits or attachments, as the same may be amended, supplemented, or modified in
accordance with its terms.
EXHIBIT 1
Annual System Budget shall mean the fiscal year budget approved by the TMPA Board
of Directors for the planned operation and maintenance of the TMPA Transmission
System. The Annual System Budget will not be funded from bonds or other debt.
Annual Capital Budget shall mean the fiscal year budget comprised of the transmission
capital projects approved by the TMPA Board of Directors.
ERCOT shall mean the Electric Reliability Council of Texas or its successor.
FERC shall mean the Federal Energy Regulatory Commission or its successor federal
agency.
Field Operations refers to the operation of the TMPA Transmission System and shall
mean either the manual or automatic process of switching, operating, clearing, and
tagging TMPA Transmission System equipment for the purposes of maintaining, testing,
servicing, removing, or installing equipment from transmission lines or stations.
Good Utility Practice shall mean any of the practices, methods, and acts engaged in or
approved by a significant portion of the electric utility industry during the relevant time
period, or any of the practices, methods, and acts that, in the exercise of reasonable
judgment in light of the facts known at the time the decision was made, could have been
expected to accomplish the desired result at a reasonable cost consistent with good
business practices, reliability, safety, and expedition. Good Utility Practice is not
intended to be limited to the optimum practice, method, or act to the exclusion of all
others, but rather includes all acceptable practices, methods, or acts generally accepted
in the region.
NERC shall mean the North American Electric Reliability Corporation or its successor.
Operating Costs shall mean the total actual costs (without mark -up) properly and
reasonably incurred by Denton on behalf of TMPA in the ordinary course of business
solely for the administration, operation, and maintenance of the TMPA Transmission
►a
System, including without duplication: (i) wages and overhead costs for employees of
Denton, including overtime, retirement plans, medical and life insurance, disability and
occupational hazard insurance, employee benefits, employee savings plan, and
employee taxes; (ii) employee recruitment and relocation costs; (iii) employee training,
including tuition, travel, meals, and lodging; (iv) maintenance costs and expenses,
including scheduled, routine, preventative, and unscheduled maintenance; (v) the cost
of consumables, new and replacement spare parts, unloading, handling, and taking
inventory of same; (vi) office expenses; (vii) capital expenditures or replacement of
equipment approved in writing in advance by TMPA; (viii) care and handling of any
hazardous waste; (ix) rolling stock expenses; (x) cost of compliance and permits; (xi)
payments for leases of real or personal property or easements needed or used by or in
connection with the TMPA Transmission System; (xii) payments due and payable to
suppliers under subcontracts entered into by Denton in accordance with the terms of
this Agreement, (xii) reasonable and customary employee transition expenses payable
upon termination of the Term, and (xiv) costs of insurance. "Operating Costs" does not
include the costs of improvements, expansions, and extensions of the TMPA
Transmission System; such costs shall be for transmission capital projects and included
in the Annual Capital Budget.
Party shall mean either Denton or TMPA, and "Parties" shall mean Denton and TMPA,
collectively.
Protective Relay shall mean a device that detects abnormal power system conditions
and, in response, initiates automatic control action.
Protective Relay System shall mean a group of protective relays and associated
sensing devices and communications equipment that detects system abnormalities and
performs automatic control action to mitigate or reduce adverse effects of such
abnormalities.
PUCT shall mean the Public Utility Commission of Texas or its successor,
Qualified Personnel shall mean individuals trained for their positions in accordance with
Good Utility Practice.
3
Rolling Stock shall mean any motorized vehicle (personnel truck, crane, bucket truck,
all- terrain vehicle, etc.) or any non - motorized trailers used for transporting equipment or
supplies.
Services shall mean all work, services, and other functions to be provided and
performed by Denton for the operation, maintenance, and construction of the TMPA
Transmission System as set forth in this Agreement.
Supervisory Control and Data Acquisition (SCADA) shall mean a system that provides
data acquisition, supervisory control and alarm display and control from remote field
locations to control centers.
Transmission Operator shall mean the entity registered with NERC as the transmission
operator for all or portions of the TMPA Transmission System.
THE shall mean the Texas Reliability Entity, Inc. or its successor.
Agreement
In consideration of the mutual obligations of the Parties as set forth below, TMPA and
Denton agree as follows:
Section 1.0 Transmission Operator, Maintenance, and Construction Services
Functions
1.1 Denton, as Transmission Operator, shall perform the Transmission Operator,
Maintenance, Construction Services, and other functions associated with the TMPA
Transmission System that are described in this Agreement (the "Transmission
Functions "). The transmission assets that are subject to this Agreement are described in
Exhibit A.
1.2 In performing the Transmission Functions, Denton shall discharge the duties
relevant to those functions under applicable Federal and State laws and regulations,
including applicable rules and regulations of FERC, the PUCT, NERC, and ERCOT,
including those enforced by the TRE. TMPA shall provide to Denton any and all
information, documents, and access to facilities in its possession or control that are
necessary to enable Denton to discharge its duties under this Agreement, including
access to TMPA information systems, substations, and other property reasonably
necessary to enable Denton to discharge its duties under this Agreement. For the
TMPA Transmission System, TMPA and Denton will each make commercially
reasonable efforts to utilize information and work management systems that are
compatible with those of the other Party while ensuring such systems are on par with
industry standards. TMPA shall cooperate with Denton's efforts to perform the
Transmission Functions in accordance with any applicable NERC Standards and
ERCOT Operating Guides and Protocols. Denton shall be responsible for creating and
maintaining all necessary policies and procedures required for Denton to perform the
Transmission Functions.
1.3 In performing its duties under this Agreement, Denton shall act in the capacity of
an independent contractor to TMPA, and not as an agent except in those cases in which
this Agreement expressly describes Denton's role as that of an agent.
5
Section 2.0 Transmission Functions
2.1 System Operation and Maintenance (O &M)
In relation to the operation and maintenance of TMPA Transmission System assets
listed in Exhibit A, Denton shall discharge the duties imposed on transmission owners in
ERCOT by applicable Federal and State laws and regulations, including applicable rules
and regulations of FERC, PUCT, NERC, and ERCOT. All operation and maintenance
activities for the TMPA Transmission System listed in Exhibit A will be the responsibility
of Denton. Denton shall control and direct maintenance activities in accordance with
Good Utility Practice to maintain the service life of equipment and ensure systems
remain in good working order during the term of this Agreement for all TMPA assets
listed in Exhibit A, as well as additional TMPA Transmission System assets placed in-
service in Denton County during the term of this Agreement. Furthermore, Denton shall
also test, calibrate, set, and maintain all applicable TMPA -owned Protective Relay and
SCADA Equipment in accordance with Good Utility Practice. The inventory of TMPA-
owned Protective Relay and SCADA Equipment shall be listed for each station and
maintained by applicable DME maintenance personnel.
Denton shall be responsible for producing and maintaining all required documentation
associated with the testing, commissioning, maintenance, and repair of TMPA
transmission assets in Denton County. Ownership of such documentation shall be
maintained within TMPA until a TMPA asset is replaced by a Denton -owned asset, in
which case Denton will own the documentation.
2.2 Capital Construction
In relation to the construction of TMPA Transmission System assets, Denton shall
discharge the duties imposed on transmission owners in ERCOT by applicable Federal
and State laws and regulations, including applicable rules and regulations of FERC, the
PUCT, NERC, and ERCOT. All capital construction activities approved by the TMPA
Board of Directors will be performed by Denton according to the terms of this
Agreement. A status report for active TMPA Transmission System projects will be
6
submitted by Denton to the agent of the TMPA Board of Directors on a quarterly basis
or within 30 days of a request.
2.3 Metering
Denton shall be responsible for maintaining, testing, calibrating, repairing, replacing,
and certifying ERCOT settlement meters for TMPA locations in Denton County. Denton
will also maintain the communication paths and equipment necessary for ERCOT and
other approved entities to poll the meters as required per ERCOT protocols or any other
preexisting arrangements with TMPA for the assets in Denton County.
Metering data required for generation settlements and Annual Load Data Reporting
(ALDR) shall be collected and processed by Denton for the assets in Denton County on
behalf of TMPA.
2.4 Security
Denton shall be responsible for maintaining, monitoring, repairing, and installing when
necessary, any security equipment used in substations listed in Exhibit A on or before
the Projected Date for DME Operation. Where remote surveillance capabilities exist,
Denton shall manage video surveillance services and store information as required by
any applicable regulatory requirements. Denton shall also provide user -level access
control management for any critical TMPA stations where such equipment is installed
and those services are required.
2.5 Environmental Documentation
For stations listed in Exhibit A, Denton shall maintain, update, and develop, when
necessary, environmental compliance documentation for TMPA including Storm Water
Pollution Prevention Plans (SWPPP). If regulatory reporting is required as the result of
regulation or an incident, Denton will complete the reporting on behalf of TMPA for
stations listed in Exhibit A.
2.6 Right -of -Way Maintenance
For the transmission assets in Denton County, Denton shall maintain all existing and
any new TMPA transmission right -of -way or transmission related real property owned
by TMPA in accordance with Good Utility Practice and all applicable regulations from
FERC, NERC, ERCOT, and PUCT.
2.7 Rate Filings
Denton agrees to provide assistance to TMPA staff, attorneys, and consultants as
needed for any interim or full rate case filing for TMPA assets in Denton County.
2.8 Regulatory Compliance
Denton shall be responsible for all regulatory compliance on behalf of TMPA for the
transmission function for assets in Denton County. This obligation includes any
standards, requirements, or protocols that may now or at any time during the term of
this Agreement be imposed on TMPA through Federal and State laws and regulations,
or applicable rules or regulations by FERC, NERC, ERCOT, TRE, or PUCT. Denton
shall administer regulatory compliance for TMPA according to applicable TMPA
procedures and /or any Denton procedure as deemed necessary by Denton through the
performance of this service.
All TMPA regulatory audits, data submittals, or reports that are either scheduled or yet
to be scheduled for the Denton County TMPA assets during the term of this Agreement
shall be the responsibility of Denton.
2.9 Planning
Denton shall perform the transmission planning function for the TMPA Transmission
System assets in Denton County according to Good Utility Practice. Denton shall
comply with any and all ERCOT protocols pertaining to transmission planning on behalf
of TMPA for the Denton County TMPA assets. Routine planning studies, data
submittals, and reports for the Denton County TMPA assets will be the responsibility of
Denton during the term of this Agreement. Denton shall also represent the planning
interests of TMPA for the Denton County TMPA assets through participation in ERCOT
technical working groups when required or as deemed prudent through the provision of
these services.
2.10 Work Scheduling and Outage Planning
Denton shall perform work scheduling and outage planning for the Denton County
TMPA assets according to Good Utility Practice. Denton shall comply with any and all
ERCOT protocols pertaining to work scheduling and outage planning on behalf of TMPA
for the Denton County TMPA assets.
2.11 Communications
Denton shall be responsible for maintaining voice, data, and relay communications
systems for the Denton County TMPA assets. This includes all phone lines, fiber,
microwave, leased lines, power line carrier, and public network interfaces.
2.12 Fleet Maintenance
Denton shall operate, maintain, and repair any rolling stock owned or leased by TMPA
and used by Denton for the performance of Transmission Functions. TMPA rolling stock
assets that, as determined by Denton, have become obsolete, surplus property, or
otherwise require replacement may be conveyed or disposed of by Denton with the
consent of TMPA. The manner of such conveyance or disposal shall be as mutually
agreed between Denton and TMPA.
2.13 Inventory Control and Purchasing
Denton shall manage the TMPA Transmission System inventory and purchasing
functions for the Denton County TMPA assets according to Good Utility Practice..
2.14 Contract Services
Contract services for the TMPA transmission function shall be administered per
Subsection 4.3 of this Agreement.
2.15 Legal Services (to the extent authorized in Subsection 4.4)
Legal services for the Denton County TMPA assets shall be administered per
Subsection 4.4 of this Agreement.
2.16 Field Operations
Denton shall perform Field Operations for the Denton County TMPA assets using
qualified personnel according to Good Utility Practice. Denton shall comply with any and
all ERCOT protocols and National Electric Safety Code (NESC) requirements pertaining
to Field Operation activities on behalf of TMPA.
2.17 Budgeting
Budgeting for the TMPA transmission business function shall be administered per
Section 3.0 of this Agreement.
2.18 Insurance
10
During the term of this Agreement, TMPA shall maintain insurance of the kind and in the
amounts indicated in Section 11.0 of the Agreement.
2.19 TMPA's Responsibilities:
a. Financing (O &M and Capital- see Section 3.0)
b. Administration of Funds
TMPA shall discharge its payment obligations under this Agreement in accordance with
Section 3.0.
C. Auditing (see Section 7.0 Audits)
Section 3.0 Cost Reimbursement and Budgeting
3.1 Annual System Budget and Annual Capital Budget
Costs shall be incurred in accordance with an annual system budget and a separate
annual capital budget prepared by Denton and submitted to the agent of TMPA's Board
of Directors for approval. Such budgets shall be prepared and submitted to the agent of
TMPA by June 1 of each year. The TMPA Board of Directors will, with such changes as
it considers advisable, approve annual system and capital budgets prior to October 1 of
each fiscal year, to be effective on October 1. If for any reason a budget is not approved
by October 1, the previous year's budget will be followed until the new budget is
adopted.
3.2 Annual System Budget
11
A status report on the Annual System Budget will be provided by Denton on a quarterly
basis and when requested by TMPA. Amounts in budget line items may be transferred
by Denton to other line items without amending the Annual System Budget but the total
amount budgeted in the Annual System Budget may not be exceeded without a budget
amendment being adopted by the TMPA Board of Directors. On an annual basis,
Denton shall perform an overhead cost allocation study relating to its overhead costs in
the Annual System Budget and shall provide to TMPA the results of the study to ensure
that Denton's overhead costs are determined in an appropriate manner.
3.3 Annual Capital Budget
Denton shall be responsible for identifying system needs through sound planning
practices. The TMPA capitalization policy will be used to determine if a system need
warrants the consideration of a capital project. Denton shall submit capital project
proposals (i.e. annual capital budget amendments) to the agent of the TMPA Board of
Directors on an as- needed basis or as requested.
A status report on the Annual Capital Budget will be provided by Denton on a quarterly
basis and when requested by TMPA. Cost variances will be tracked by project and
individual projects will be allowed to exceed the project budget by up to ten percent as
long as the variance or sum of project cost variances do not exceed the approved
Annual Capital Budget amount. When Denton determines that an individual project will
exceed a ten percent variance, or that the total approved Annual Capital Budget amount
will be exceeded, Denton shall submit an annual capital budget amendment to the
agent of the TMPA Board of Directors for consideration. On an annual basis, Denton
shall perform an overhead cost allocation study relating to its overhead costs in the
Annual Capital Budget and shall provide to the agent of TMPA the results of the study to
ensure that Denton's overhead costs are determined in an appropriate manner.
3.4 Reports Given at Regular Bi- Monthly TMPA Board Meetings
Prior to the regular bi- monthly board meetings of the TMPA Board of Directors, Denton
shall forward budgetary reports to TMPA's agent for budgetary matters. Such a report
12
to contain the type of data customarily provided to the Board by TMPA's manager of
transmission.
3.5 Total Transmission Costs
TMPA shall pay Denton all of the costs incurred by Denton in performing Denton's
obligations under this Agreement based on actual cost of service, including all
operation, maintenance, and capital expenses plus benefit and overhead costs (the
"Total Transmission Costs ").
To the extent the Total Transmission Costs can be forecasted, they shall be included in
the annual system and capital budgets proposed by Denton. If at any time Denton
determines that the then effective Annual System Budget or Annual Capital Budget will
be exceeded, Denton shall submit to the agent for the TMPA Board of Directors for
approval, a budget amendment recommendation. Approval of any such amendment
shall not be unreasonably withheld.
3.6 Operating Costs
Denton shall invoice TMPA monthly for Operating Costs for the Denton County TMPA
assets.
Costs for metering support functions will be invoiced separately from other Operating
Costs and billed on a monthly basis when support is required.
Billings and payments for contracted services that are not included in the monthly
invoices shall be advance funded or reimbursed to Denton as mutually agreed.
3.7 Capital Expenditures
13
Billings and reimbursements for capital project expenditures will be made in accordance
with mutually agreed procedures, which may differ from project to project.
3.8 Payments
TMPA shall make payments to Denton within twenty (20) days of receipt of invoice. If
TMPA is late in the payment of any charge or reimbursement under this Agreement, late
payments shall bear per annual interest at a rate equal to the lesser of two percentage
points (2 %) above the Prime Interest Rate as published in the Wall Street Journal on
the day said statement becomes delinquent, or the maximum allowed by law to be
charged TMPA. If any charge or reimbursement remains unpaid at the expiration of
thirty (30) days after the receipt of the statement, TMPA shall be in default under this
Agreement, and Denton may invoke the remedies specified in this Agreement or
otherwise available by law.
3.9 Budgeted Funds as a Condition to Obligation to Perform Transmission Functions
Denton shall have no obligation under this Agreement to perform any Transmission
Function for which funds have not been included in either the Annual System Budget or
the Annual Capital Budget; provided, however, in the event performance of a
Transmission Function is necessary in order to respond to or prevent an emergency
situation, involving persons or equipment, Denton shall proceed to perform same and
TMPA shall amend the Annual System Budget, or Annual Capital Budget, as the case
may be, to ensure that Denton is reimbursed for the costs incurred.
Section 4.0 Equipment, Property, and Contracts
4.1 All SCADA and communications equipment acquired by Denton or TMPA to
perform the Transmission Functions shall be compatible with the Denton EMS /SCADA
Systems.
14
4.2 Ownership of equipment and property acquired by Denton to perform the
Transmission Functions after the date of this Agreement shall be determined as follows;
a. Each Party shall own equipment and property that it pays for.
b. If the same equipment and property are paid for by both Parties, each Party will
own an undivided interest in proportion to the percentage of the total costs paid by such
Party for such equipment or property.
C. To the extent TMPA owns property or equipment installed or incorporated into
real property owned by Denton, Denton waives the law of fixtures so that TMPA's title to
such property or equipment shall be preserved.
d. To the extent Denton owns property or equipment installed or incorporated into
real property owned by TMPA, TMPA waives the law of fixtures so that Denton's title to
such property or equipment shall be preserved.
e. The assignment of cost for additional property and /or equipment needed for
Denton to perform the Transmission Functions after the date of this Agreement shall be
determined through discussions and by mutual agreement between TMPA and Denton.
4.3 In performing the Transmission Functions, it may be necessary for Denton to
contract for goods, services, or other matters with suppliers, contractors, and other third
parties. Denton shall determine if a contract should be in the name of TMPA or in the
name of Denton on a case -by -case basis. Contracts in the name of Denton will require
no approval from TMPA but, to the extent practicable, should be assignable to TMPA.
On termination of this Agreement, and to the extent such contracts are assignable,
Denton shall assign such contracts to TMPA to the extent necessary to complete
performance of such contracts with respect to the Denton County TMPA assets and to
enforce warranties.
15
For a contract to be in the name of TMPA, TMPA's written consent shall be required.
TMPA Board of Directors action will not be required to give such written consent if
TMPA has a General Manager or other person functioning as a chief administrative
officer who can provide the consent. In such written consent, TMPA may consent to
Denton executing the contract as agent for TMPA, in which case Denton may sign the
contract, if it so desires. The award of contracts in the name of TMPA must comply with
the laws governing the award of such contracts.
4.4 Contracts with attorneys, including consultants working with such attorneys, who
provide legal services to TMPA in relation to the Denton County TMPA assets shall be
awarded only by TMPA. TMPA shall direct such attorneys to work with Denton on legal
matters involving the TMPA Transmission System to the extent such attorneys may do
so consistent with their professional obligations to TMPA. The defense of any litigation
against TMPA or the prosecution of any litigation by TMPA must be authorized by
TMPA.
Section 5.0 Indemnification
5.1 With the exception of claims brought by TMPA under Subsection 11.1(b), TMPA
agrees to indemnify and hold Denton and all of Denton's present, future, and former
agents, employees, officials, and representatives (each in their official, individual, and
representative capacities) harmless from any and all claims, demands, causes of action,
judgments, liens, expenses (including attorney's fees), costs, penalties, and damages
(whether common law or statutory; whether characterized as actual, punitive,
consequential, incidental; and whether based on strict liability or liability assessed
without fault) of any conceivable character, created by, arising from, or in any manner
relating to the performance of Denton's obligations under this Agreement. The
obligations of TMPA pursuant to this section shall survive any termination of this
Agreement.
5.2 TMPA acknowledges that, in performing transmission operator duties on behalf
of TMPA, Denton is exposed to significant regulatory liabilities in excess of the
consideration being received by Denton under this Agreement. TMPA further
acknowledges that the consideration to be received by Denton under this Agreement
does not reflect that regulatory exposure and thus does not adequately compensate
16
Denton for the risks involved. As an integral and inseparable part of the consideration
being given to Denton for undertaking the obligations of this Agreement, TMPA agrees
to assume all responsibility for the payment of any monetary fine, administrative
penalty, or civil penalty assessed by a regulatory authority (including NERC, ERCOT,
PUCT or THE or any successor agency or entity) against Denton arising from Denton's
performance as the transmission operator for TMPA REGARDLESS WHETHER THE
FINE OR PENALTY IS INCURRED AS A RESULT OF DENTON'S NEGLIGENCE. To
the extent allowed by law, each Party agrees to promptly notify the other Party in the
event it receives notice of any investigation or proceeding, pending or proposed, that
may result in the assessment of a fine or penalty against Denton, and each Party
agrees to fully cooperate in the defense of any proceedings taken to assess or contest
the fine or penalty.
5.3 The Parties agree that the rule requiring that an indemnity agreement be strictly
construed in favor of the indemnifying Party shall not apply to this agreement.
Section 6.0 Term of Agreement
6.1 This Agreement shall have a term commencing on the Effective Date and ending
on September 1, 2018 (the "Initial Term ").
a. For the first ninety (90) days of the Initial Term, Denton will not charge TMPA
under this Agreement except for labor and associated costs of TMPA
Transmission System employees transitioned to Denton or employees hired by
Denton during such period to carry out functions under this Agreement.
b. The Agreement shall not apply to assets that come under Denton ownership on
the date that ownership is established.
6.2 This Agreement may be terminated as follows:
a. In the event a Party (the "Defaulting Party ") is in breach of a material provision of
this Agreement, the Party not in default (the "Non- Defaulting Party ") may provide to the
Defaulting Party notice of the default and a reasonable opportunity, not less than sixty
(60) days, to cure the breach. If the Defaulting Party fails to cure the breach within the
17
time specified, or (in the event the breach cannot be cured within such time) the
Defaulting Party has failed to commence efforts necessary to cure the breach within
such time, the Non - Defaulting Party may, by sending notice, terminate the Agreement.
b. This Agreement may be terminated for convenience by the TMPA Board of
Directors or by Denton by providing to the other Party, notice of termination at least
eighteen (18) months in advance of the termination date stated in the notice.
6.3 Facility Condition at the End of Term. Upon expiration of the Term or termination
of this Agreement, Denton shall leave TMPA assets in substantially as good a condition
as at the Effective Date, normal wear and tear excepted. All special tools,
improvements, inventory of supplies, spare parts, safety equipment, O &M Manuals, and
drawings (in each case as provided to or obtained by or provided by Denton during the
term of this Agreement) and any other items furnished as Operating Costs (excluding
such items purchased as replacement of Denton property) under this Agreement that
were obtained to support TMPA assets will be left at the Facility and will become or
remain the property of TMPA subject to Subsection 4.2. If Denton has entered into any
subcontracts for performance of any portion of the Services in its own name and not as
agent for TMPA, then TMPA shall have the right, in its sole discretion, to directly
assume and become liable for any such subcontracts, and Denton shall execute all
documents and take all other reasonable steps requested by TMPA that may be
required to assign to and vest in TMPA all rights, benefits, interests, and title in
connection with such subcontracts; provided, however, that TMPA shall indemnify and
hold harmless Denton for all liabilities arising out of events and obligations thereunder
arising after the date of any such assumption. If requested by TMPA, Denton will
cooperate with TMPA's efforts to re- employ employees who have been reassigned to
Denton (if any) in conjunction with the execution of this Agreement.
Section 7.0 Audits
7.1 TMPA may conduct operating and financial audits relating to the Transmission
Functions performed under this Agreement. Denton will provide operating reports
addressing transmission issues as needed or requested to the TMPA Board of
Directors.
18
7.2 Denton shall keep records, desk logs, operating financial data, and supporting
data in conformity with generally accepted utility principles and practices. These books,
records, and supporting data shall be kept for at least three (3) years or in accordance
with regulatory requirements, whichever is longer.
7.3 Following any audit of Denton under this Agreement, Denton may provide to the
TMPA Board of Directors any comments regarding the audit results and audit
recommendations as it desires.
7.4 Denton will provide to the TMPA Planning and Operating Committee reports as
requested.
Section 8.0 No Debt Created
8.1 To the extent, if any, that this Agreement imposes an obligation on either Party to
make a payment or make an expenditure, such payment or expenditure shall be
payable solely from current revenues that may be available for such purpose, and no
debt is created under this Agreement within the meaning of Article XI, sections 5 or 7,
Texas Constitution.
8.2 Without limiting Subsection 8.1, no obligation of Denton to make payment or
expenditure under the Agreement shall be payable through funds raised by taxation.
Section 9.0 Delegation of Authority to Amend Exhibits
9.1 Because of continuing changes in the design and configuration of the TMPA
Transmission System as described in Exhibit A and because of the potential for
changes to the contact information in Exhibit B, the Parties may, by mutual agreement
through their staffs, without obtaining governing board approval from either Party, revise
Exhibits A and B from time to time as circumstances may warrant.
19
Section 10.0 Governing Law
This Agreement shall be governed by the laws of the State of Texas. The provisions
and obligations of this Agreement are performable in Denton County, Texas such that
exclusive venue for any action arising out of this Agreement shall be in Denton County,
Texas.
Section 11.0 Limitation of Liability; Covenant not to Sue; and Insurance
11.1 (a)
Except as provided in paragraph (b) of this Subsection, TMPA covenants and agrees
not to sue Denton, its directors, officers, employees, attorneys, servants, or agents, for
money damages relating to any act or omission of Denton under this Agreement.
Specifically, TMPA waives its right to bring any claims or causes of action against
Denton, its directors, officers, employees, attorneys, servants, or agents, in contract or
in tort or otherwise, including their negligence, in any way related to damages, costs or
expenses incurred by TMPA due to any act or omission of Denton under this
Agreement. TMPA acknowledges that there is no disparity of bargaining power between
Denton and TMPA and that TMPA is under no compulsion to agree to this covenant not
to sue as set out above. This covenant shall survive termination of this Agreement for
any reason.
(b) In the event, because of Denton's negligence or failure to perform the Transmission
Functions in accordance with Good Utility Practice, injury to or destruction of TMPA
property occurs, including to the TMPA Transmission System, TMPA may sue Denton
for property damages. Denton's liability for damages shall be limited to the amount, per
occurrence, that would be available to a Party seeking recovery or property damages
from Denton under the Texas Tort Claims Act, as such Act may be amended from time
to time in the future.
11.2 THE PARTIES AGREE THAT NEITHER PARTY SHALL BE LIABLE TO THE
OTHER FOR ANY SPECIAL, INCIDENTAL, INDIRECT, OR CONSEQUENTIAL
DAMAGES OR FOR THE LOSS OF PROFIT OR REVENUE ARISING FROM THE
PROVISION OF GOODS OR SERVICES UNDER THIS AGREEMENT EVEN IF
ADVISED OF SUCH POSSIBILITY.
all
11.3 For the purposes of protecting Denton from and against liability that may arise
under this Agreement, TMPA agrees to maintain the following types and amounts of
insurance during the term of the Agreement.
a. Commercial excess liability coverage to include but not limited to coverage for
products and completed operations, failure to supply, pollution liability, and wildfire
liability coverage. Insurance shall contain minimum limits of $35 million per occurrence
and $70 million aggregate with underlying limit or self- insured retention not to exceed $1
million per occurrence. Commercial excess insurance shall include Denton as an
additional insured.
b. Property insurance to include business interruption coverage with minimum limits
of $50 million. Insurance shall include Denton as loss payee as their interest may
appear.
C. Commercial auto liability insurance or self- insurance to include but not limited to
coverage for owned, non - owned, leased, and rented autos with minimum limits of $1
million per occurrence.
Section 12.0 Notices
12.1 A notice under this Agreement shall be deemed sufficient if it is in writing and
delivered personally or by nationally recognized courier service, or if sent by first class,
certified, or registered US mail. Written notice shall also be deemed sufficient if sent
electronically or by facsimile, confirmed by notice delivered or sent by one of the
methods stated in the preceding sentence. Written notice shall be deemed given on the
date when first received by one of the methods in this Subsection. Written notice shall
be delivered or sent to the addresses designated in Exhibit B for the receipt of written
notices.
Section 13.0 Force Majeure
21
Other than the obligation to pay money when due, the obligations of each Party shall be
subject to force majeure, including severe weather, floods, earthquakes and other
natural disasters, strikes, work stoppages and slowdowns, riots and other civil
disturbances, shortages, rationing or unavailability of supplies and raw materials,
terrorism, and other unforeseeable matters outside the control of the Party claiming
such intervention. The Party suffering from such force majeure shall notify the other
Party within thirty (30) days of the onset of the force majeure event. Upon any claim of
force majeure, the time for performance of the obligation interfered with shall be
extended without additional charges and the Parties will cooperate to mitigate the effect
of the force majeure event.
Section 14.0 Disclaimer of Warranties
Denton agrees that it shall pursue all of its obligations under this Agreement using Good
Utility Practice, and using the same diligence and care with which it would undertake
such matters regarding its own transmission system. DENTON EXPRESSLY
DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND OR
NATURE, EXPRESS OR IMPLIED, AS TO THE SERVICES TO BE PERFORMED OR
ANY GOODS TO BE PROVIDED UNDER THIS AGREEMENT. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, DENTON EXPRESSLY DISCLAIMS ALL
REPRESENTATIONS AND WARRANTIES REGARDING MERCHANTABILITY,
USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH
RESPECT TO THOSE SERVICES OR THOSE GOODS, OR ANY PART THEREOF.
THE LIMITED WARRANTIES CONTAINED IN THIS AGREEMENT ARE IN LIEU OF
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. EXCEPT AS PROVIDED IN THE FIRST SENTENCE OF THIS SECTION,
THE GOODS AND SERVICES BEING PROVIDED UNDER THIS AGREEMENT ARE
BEING OFFERED AND SOLD "AS IS ", "WHERE -IS ".
Section 15.0 Assignment
Neither Party shall have the right to assign that Party's interest in this Agreement
without the prior written consent of the other Party.
22
Section 16.0 Severability
If any term or provision of this Agreement is held to be illegal, invalid, or unenforceable,
the legality, validity, or enforceability of the remaining terms or provisions of this
Agreement shall not be affected thereby, and in lieu of each such illegal, invalid, or
unenforceable term or provision, there shall be added automatically to this Agreement a
legal valid, or enforceable term or provision as similar as possible to the term or
provision declared illegal, invalid, or unenforceable. Provided, however, that if the
illegality, invalidity, or unenforceability of any term or terms renders the basic purposes
of this Agreement illegal, invalid, or unenforceable or otherwise materially and adversely
affects the utility or financial parameters of this Agreement, then either Denton or TMPA
may, upon written notice to the other, terminate this Agreement and the Parties agree to
enter into good faith negotiations to replace this Agreement with a contract as similar to
the terms and conditions of this Agreement as legally permissible.
Section 17.0 Waiver
Both Denton and TMPA shall have the individual right to waive any requirement
contained in this Agreement, which is intended for the waiving Party's benefit, but,
except as otherwise provided herein, such waiver shall be effective only if in writing
executed by the Party for whose benefit such requirement is intended. No waiver of any
breach or violation of any term of this Agreement shall be deemed or construed to
constitute a waiver of any other breach or violation, whether concurrent or subsequent,
and whether of the same or of a different type of breach or violation. Any waiver may
only be authorized at the direction or with the consent of the governing body of the
waiving Party.
Section 18.0 Paragraph Headings; Mutual Authorship
The paragraph headings contained in this Agreement are for convenience only and
shall in no way enlarge or limit the scope or meaning of the various and several
paragraphs hereof. Both Parties have participated in the negotiation and preparation of
23
this Agreement and this Agreement shall not be construed either more or less strongly
against or for either Party.
Section 19.0 Binding Effect
Except as limited herein, the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of the Parties hereto and their respective successors and
assigns.
Section 20.0 Gender, Plurals, and Other Construction of Terms.
Within this Agreement, words of any gender shall be held and construed to include any
other gender, and words in the singular number shall be held and construed to include
the plural, unless the context otherwise requires. The terms "include" or "including" shall
be construed to be descriptive rather than limiting or restrictive, meaning the same as
"including, without limitation ..." and "including, but not limited to ...."
Section 21.0 Counterparts
This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, and all of which shall constitute but one and the same instrument.
Section 22.0 Exhibits
All exhibits to this Agreement are incorporated herein by reference for all purposes
wherever reference is made to the same.
Section 23.0 Computation of Deadlines
24
If any deadline contained herein ends on a Saturday, Sunday, or a legal holiday
recognized by the Texas Supreme Court, such deadline shall automatically be extended
to the next day that is not a Saturday, Sunday, or legal holiday.
Section 24.0 Entire Agreement
It is understood and agreed that this Agreement contains the entire agreement between
the Parties and supersedes any and all prior agreements, arrangements, or
understandings between the Parties relating to the subject matter. No oral
understandings, statements, promises, or inducements contrary to the terms of this
Agreement exist. This Agreement cannot be changed or terminated orally and no
written modification of this Agreement shall be effective unless executed by both
Parties. Nothing in this Agreement amends the Power Sales Contract between TMPA
and Denton, dated September 1, 1976, as amended, including Denton's obligation to
pay its percentage of Annual System Costs (as defined in said Contract) in Section 3 of
said Contract.
Section 25.0 Relationship of Parties; No Third -Party Beneficiaries
Nothing contained in this Agreement shall be deemed or construed by the Parties
hereto or by any third party to create the relationship of principal and agent or of
partnership, joint venture, or employment; it being expressly understood and agreed
that no provision contained in this Agreement nor any act or acts of the Parties hereto
shall be deemed to create any relationship between the Parties other than the
relationship of independent parties contracting with each other solely for the purpose of
effecting the provisions of this Agreement. Neither Party has the authority to enter into
contracts or to assume any obligation for the other, nor to make warranties or
representations on behalf of the other except in accordance with the express terms of
this Agreement or as otherwise authorized in writing by the other. Except for the
provisions of this Agreement relating to the indemnification of employees, agents, and
representatives of Denton, there are no third -party beneficiaries to this Agreement and
no third -party beneficiaries are intended by implication or otherwise.
25
Section 26.0 No Waiver of Immunity or Defense
No Party, by execution of this Agreement, waives nor shall be deemed to have waived
any immunity or defense that would otherwise be available to it including immunity from
liability or suit for damages to one another or to any third party except as expressly
provided in this Agreement or as otherwise provided by law.
IN WITNESS WHEREOF, the Parties have signed this Agreement as of the Effective
Date.
CITY OF DENTON, TEXAS
M
for -AIMS
IC919"
TEXAS MUNICIPAL POWER AGENCY
go
NAME:
26
TITLE:
ENCLOSURES
EXHIBIT A - Description of TMPA Transmission System
EXHIBIT B - Notice and Contact Information
27
E IN
-C
x
LLJ
c 0 u
E
51 E
�2 'o m ME
E
IC-)
U u ro
CS
o
< o
I
0
u
8 a
E
2 E Gb
co
m.
E o
E
C E
o
1 0
d E �i
.2 - I
0
so
ul
wx
E
co
u
d E
2
> E
ol 39 lu lu 1.
O
it
ol
k u E
0
E
�E 9 2
co
ml 10
2 u
J
A a
V.
E E- t;
U 0
u . ro
e T
o
b E
7� E
I
40
u E
E >
E
2
u
as
O
2 .2
al
I
9