2005-171VVHEREAS, the City staff has reported to the City Council that there is a substantial need
for the above-described specialized professional services, and that limited City staff cannot
adequately perform the services and tasks with its own personnel; and
WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional
Services Procurement Act", generally provides that a City may not select a provider of
(!,rofessional services on the basis of competitive bids, but must select the provider on the basis of
demonstrated competence, knowledge, and qualifications, and for a fair and reasonable price;
and
WHEREAS, the City Council has provided in the City Budget for the appropriation of
funds to be used for the purchase of the professional services, as set forth in the Professional
Services Agreement; NOW, THEREFORE,
SECTION 1: That the City Manager is hereby authorized to execute a Professional
Services Agreement with R. J. Covington Consulting, LLC of Austin, Texas, for professional
consulting services relating to Task Order No. 05-D, to the City and to Denton Municipal
Electric, in an amount of not to exceed $48,000; in substantially the form of the Professional
Services Agreement attached hereto and incorporated herewith by reference as Exhibit "A."
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SECTION 2: That the award of this Agreement by the City is on the basis of the
demonstrated competence, knowledge, and qualifications of Covington and the ability of
Covington to perform the professional services needed by the City for a fair and reasonable
price.
SECTION 3: That the expenditure of funds as provided in the attached Professional
Services Agreement is hereby authorized.
SECTION 4: That this ordinance shall become effective immediately upon its passage
and approval.
PASSED AND APPROVED this the 0?/� day of 2005.
EULINE BROCK, MAYOR
By:
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SAOur Documents\Ordinances\05\R J Covington Consulting LLC--DME,-Ord.Apry TO 5-D 2005.doc
0)
IR I G I N AL
STATE OF TEXAS §
COUNTY OF DENTON §
PROFESSIONAL SERVICES AGREEMENT FOR CONSULTING SERVICES
PERTAINING TO DENTON MUNICIPAL ELECTRIC
THIS AGREEMENT is made and entered into on the a?/ 10 day of , 2005,
by and between the City of Denton, Texas, a Municipal Corporation, with its pr icipal office at 215
East McKinney Street, Denton, Texas 76201 ( "CITY "); and R. J. COVINGTON CONSULTING,
LLC, a Texas Limited Liability Corporation, with its principal office at 11044 Research Boulevard,
Suite A -325, Austin, Texas 78759, hereafter "COVINGTON "; acting herein by and through their
duly authorized representatives.
WITNESSETH, that in consideration of the covenants, promises and agreements herein
contained, the CITY and COVINGTON do hereby AGREE as follows:
ARTICLE T
EMPLOYMENT OF CONSULTANT
The CITY hereby contracts with COVINGTON, as an independent contractor, and
COVINGTON hereby agrees to perform the services herein in connection with the Scope of
Services as stated in the Articles to follow, with diligence and in accordance with the professional
standards customarily obtained for such services in the State of Texas.
ARTICLE it
SCOPE OF SERVICES
A. ( ",'OVINGTO N sliall provide to the CITY professional cOnsniti €Ig services pertaining to
assisting 'Denton Municipal 1 "lccti.ic in addressing issLaes associated w,vitli the Texas Nodal Team
process to in'iplennent, a nodal market redesign in the l exas electric market, This matter involves a
matter of particular importance to the City, to DME, and to DME's ratepayers; that is the nodal
market design, with its Locational Management Price settlement, involving a shifting of costs to the
Dallas/Ft. Worth area. COVINGTON agrees to perform those services and tasks more particularly
and specifically described in Task Order No. 05 -D attached hereto and incorporated herewith by
reference.
B. To consult with the City Manager, Assistant City Manager /Utilities, the Director of Electric
Utilities, the Utility Attorney, and any other designated administrative personnel regarding any and
all aspects of the services to be performed pursuant to this Agreement.
ARTICLE
PERIOD OF SERVICE
This Agreement shall become effective on the date this Agreement is approved and upon the
issuance of a notice to proceed by Denton Municipal Electric ( "DME "). The termination date of this
Agreement shall be upon the earliest to occur of the following events: completion of the work
described herein and in the attached Task Order No. 05 -1); or upon'the depletion and exhaustion of
the $48,000 not -to- exceed amount provided for herein; or upon fifteen (15) day's written notice to
terminate, issued by the Director of Electric Utilities, DME. This Agreement may be sooner
terminated in accordance with the provisions hereof. Time is of the essence in this Agreement.
COVINGTON shall make all reasonable efforts to complete the services set forth herein as
expeditiously as possible and to meet the schedule established by the CITY, acting through its
Director of Electric Utilities.
ARTICLE IV
COMPENSATION
A. COMPENSATION TERMS:
"Direct Non -Labor Expense" is defined as that expense for any assignment incurred hereunder
by COVINGTON for supplies, long- distance telephone, telecopier, reproduction expense,
overnight courier, photocopy expense, transportation, travel, communications, subsistence and
lodging away from home and similar incidental expenses reasonably incurred in connection
with that assignment.
B. BILLING AND PAYMENT:
I. For and in consideration of the professional services to be performed by COVINGTON
herein, the CITY agrees to pay COVINGTON, a total fee, including reimbursement for direct
non -labor expense, not to exceed $48,000 for those services described in Task Order No. 05-
D.
2. The fee for the services described in this Agreement to be performed by COVINGTON
are to be billed the rates as set forth in Exhibit "A" attached hereto and incorporated herewith
by reference. Billing shall be reported in minimum one - quarter (1/4) hour increments.
3. Payments to COVINGTON will be made by the CITY on the basis of detailed monthly
statements rendered to the CITY through its Director of Electric Utilities. The fee bills as
submitted, shall be allowed and approved by the Director of Electric Utilities. However,
under no circumstances shall any monthly statement for services exceed the value of the work
performed at the time a statement is rendered.
4. Nothing contained in this Article shall require the CITY to pay for any work which is
unsatisfactory as reasonably detennined by the City Manager or the Director of Electric
Utilities, or which is not submitted in compliance with the terms of this Agreement. The City
shall not be required to make any payments to COVINGTON when COVINGTON is in
default under this Agreement.
5. It is specifically understood and agreed that COVINGTON shall not be authorized to
undertake any work pursuant to this Agreement which would require additional payments
by the CITY for any charge, expense or reimbursement above the maximum not -to- exceed
fee as stated, without first having obtained written authorization from the CITY.
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C. PAYMENT
If the CITY fails to make payments due COVINGTON for services and expenses within forty
(40) days after receipt of COVINGTON'S undisputed statement thereof, the amounts due
COVINGTON will be increased by the rate of one percent (1 %) per month from the said forty
(40th) day, and in addition, COVINGTON may, after giving ten (10) days' written notice to
the CITY, suspend services under this Agreement until COVINGTON has been paid in full all
amounts due for services, expenses and charges provided. However, nothing herein shall
require the CITY to pay the late charge of one percent (1%) set forth herein if the CITY
reasonably determines that the work of COVINGTON is unsatisfactory, in accordance with
this Article IV, Compensation, and the CITY notifies COVINGTON in writing of any such
defect.
ARTICLE V
OBSERVATION AND REVIEW OF THE WORK
COVINGTON will exercise reasonable care and due diligence in discovering and promptly
reporting to the CITY any defects or deficiencies in his work or the work of any subconsultants
performed hereunder.
ARTICLE VI
OWNERSHIP OF DOCUMENTS
All documents, analyses and other data prepared by COVINGTON under this Agreement ( "Work
Products ") are instruments of service and are and shall remain the property of CITY. COVINGTON
shall have the right to make and retain copies and use all Work Products; provided, however, the use
shall be limited to the intended use for which the services and Work Products are provided under this
Agreement. COVINGTON may use and may copyright certain non - sensitive Work Products as
property of COVINGTON; provided that prior written approval is obtained from CITY, whose
approval shall not be unreasonably withheld, and providing that copywriting will not restrict
CITY'S right to retain or make copies of the Work Products for its information, reference and use on
the Project or services under the Agreement.
The Work Products shall not be changed or used for purposes other than those set forth in this
Agreement without the prior written approval of COVINGTON. If CITY releases the Work
Products to a third party without COVINGTON'S prior written consent, or changes or uses the
Work Products other than as intended hereunder, CITY does so at its sole risk and discretion and
COVINGTON shall not be liable for any claims or damages resulting from or connected with the
release or any third party's use of the Work Products.
ARTICLE Vii
INDEPENDENT CONTRACTOR
COVINGTON shall provide services to the CITY as an independent contractor, not as an
employee of the CITY. COVINGTON shall not have or claim any right arising from employee
status.
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ARTICLE. VIII
INDEMNITY AGREEMENT
COVINGTON shall indemnify and save and hold harmless the CITY and its officers, agents,
and employees from and against any and all liability, claims, demands, damages, losses and
expenses, including but not limited to court costs and reasonable attorney's fees incurred by the
CITY, and including without limitation, damages for bodily and personal injury, death and property
damage, and damage for professional malpractice resulting from the negligent acts or omissions of
COVINGTON or any subconsultants, in performance of this Agreement. COVINGTON'S liability
under this Article VIII is expressly limited to the amount of COVINGTON'S insurance coverage as
set forth in Article IX.
Nothing in this Agreement shall be construed to create a liability to any person who is not a
party to this Agreement and nothing herein shall waive any of the party's defenses, both at law or
equity, to any claim, cause of action or litigation filed by anyone not a party to this Agreement,
including the defense of governmental immunity, which defenses are hereby expressly reserved.
ARTICLE IX
INSURANCE
During the performance of the Services under this Agreement, COVINGTON shall maintain
the following insurance with an insurance company licensed to do business in the State of Texas by
the State Insurance Commission or any successor agency that has a rating with Best Rate Carriers of
at least an "A -" or above:
A. Comprehensive General Liability Insurance with bodily injury limits of not less than $500,000
for each occurrence and not less than $500,000 in the aggregate, and with property damage
limits of not less than $100,000 for each occurrence, and not less than $100,000 in the
aggregate.
B. Automobile Liability Insurance with bodily injury limits of not less than $500,000 for each
person and not less than $500,000 for each accident; and with property damage limits of not
less than $100,000 for each accident.
C. Professional Liability Insurance with policy limits of not less than $1,000,000 annual
aggregate.
D. COVINGTON shall furnish insurance certificates or insurance policies at the CITY's request
to evidence such coverages. The insurance policies shall name the CITY as an additional
insured on all such policies to the extent legally possible, and shall contain a provision that
such insurance shall not be canceled or modified without thirty (30) days prior written notice
to CITY and COVINGTON. In such event, COVINGTON shall, prior to the effective date of
the change or cancellation, deliver substitute policies furnishing the same coverage to the
CITY.
ARTICT .E X
ARBITRATION AND ALTERNATE DISPUTE RESOLUTION
The parties agree to settle any disputes under this Agreement by submitting the dispute to
arbitration or other means of alternate dispute resolution such as mediation. No arbitration or
alternate dispute resolution arising out of or relating to, this Agreement involving one party's
disagreement may include the other party to the disagreement without the other's approval.
ARTICLE. XT
LIMITATION OF LIABILITY
To the extent permitted by law, the total liability of COVINGTON to CITY for any and all
claims arising out of this Agreement, whether caused by negligence, errors, omissions, strict
liability, breach of contract or contribution, or indemnity claims based on third -party claims, shall
not exceed one million dollars ($1,000,000).
ARTICLE. XII
CONSEQUENTIAL DAMAGES
In no event and under no circumstances shall COVINGTON be liable to CITY for any
interest, loss of anticipated revenues, earnings, profits, or increased expense of operations, or for any
consequential, indirect or special damages.
ARTICLE XIII
PROFESSIONAL STANDARDS
COVINGTON will perform services under this Agreement with the degree of skill and
diligence normally practiced by professional engineers or consultants performing the same degree of
similar services. No other warranty or guarantee, expressed or implied, is made with respect to the
services furnished under this Agreement and all implied warranties are disclaimed.
ARTICLE XIV
TERMINATION OF AGREEMENT
A. Notwithstanding any other provision of this Agreement, either party may terminate this
Agreement by giving thirty (30) days advance written notice of termination to the other party.
B. This Agreement may be terminated in whole or in part in the event of either party substantially
failing to fulfill its obligations under this Agreement. No such termination will be effected
unless the other party is given: (1) written notice (delivered by certified mail, return receipt
requested) of intent to terminate and setting forth the reasons specifying the nonperformance,
and not less than ten (10) business days in which to cure the failure; and (2) an opportunity for
consultation with the terminating party prior to termination.
C. If this Agreement is terminated prior to completion of the services to be provided hereunder,
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COVINGTON shall immediately cease all services and shall render a final bill for services to
the CITY within thirty (30) days after the date of termination. The CITY shall pay
COVINGTON for all services properly rendered and satisfactorily performed and for
reimbursable expenses to termination incurred prior to the date of termination in accordance
with Article IV, Compensation. Should the CITY subsequently contract with a new
consultant for the continuation of services on the Project, COVINGTON shall cooperate in
providing information. COVINGTON shall turn over all documents prepared or furnished by
COVINGTON pursuant to this Agreement to the CITY on or before the date of termination,
but may maintain copies of such documents for its use.
ARTICI E XV
RESPONSIBILITY FOR CLAIMS AND LIABILITIES
Approval by the CITY shall not constitute nor be deemed a release of the responsibility and
liability of COVINGTON, or any subconsultants of COVINGTON, for the accuracy and
competency of their designs or other work product.
ARTICLE XVI
NOTICES
All notices, communications, and reports required or permitted under this Agreement shall be
personally delivered or mailed to the respective parties by depositing same in the United States mail
at the address shown below, certified mail, return receipt requested unless otherwise specified
herein. Mailed notices shall be sent to the parties at the following addresses:
To COVINGTON:
R.J. Covington Consulting, LLC
Attn: Richard J. Covington, President
11044 Research Blvd., Suite A -325
Austin, Texas 78759
To CITY:
City of Denton, Texas
Attn: City Manager
215 East McKinney Street
Denton, Texas 76201
and to
City of Denton, Texas
Attn: Director of Electric Utilities
901 -A Texas Street
Denton, Texas 76205
All notices shall be deemed effective upon receipt by the party to whom such notice is given
or within three days after the date of mailing.
ARTICLE IT
ENTIRE AGREEMENT
This Agreement consisting of nine (9) pages, and three (3) additional pages consisting of Task
Order No. 05 -D, constitutes the complete and final expression of the agreement of the parties and is
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intended as a complete and exclusive statement of the terms of their agreements and supersedes all
prior contemporaneous offers, promises, representations, negotiations, discussions, communications
and agreements which may have been made in connection with the subject matter hereof.
ARTICLE XVIII
SEVERABILITY
If any provision of this Agreement is found or deemed by a court of competent jurisdiction to
be invalid or unenforceable, it shall be considered severable from the remainder of this Agreement
and shall not cause the remainder to be invalid or unenforceable. In such event, the party shall
reform this Agreement to replace such stricken provision with a valid and enforceable provision
which comes as close as possible to expressing the intention of the stricken provision.
ARTICLE XIX
COMPLIANCE WITH LAWS
COVINGTON shall comply with all federal, state, local laws, rules, regulations, and
ordinances applicable to the work covered hereunder as they may now read or hereinafter be
amended.
ARTICLE. XX
DISCRIMINATION PROHIBITED
In performing the services required hereunder, COVINGTON shall not discriminate against
any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical
handicap.
F111 Elm N • D ..f
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A. COVINGTON represents that he has secured, or will secure at his own expense any additional
personnel required to perform all the services required under this Agreement. Such personnel
shall be subconsultants of COVINGTON, and shall not be employees or officers of, nor have
any contractual relations with the CITY. COVINGTON shall inform the CITY of any conflict
of interest or potential conflict of interest that may arise during the term of this Agreement.
B, All services required hereunder will be performed by COVINGTON or under his supervision.
All personnel engaged in work shall be qualified and shall be authorized and permitted under
state and local laws to perform such services.
ARTICLE XXII
ASSIGNABILITY
COVINGTON shall not assign any interest in this Agreement and shall not transfer any
interest in this Agreement (whether by assignment, novation or otherwise) without the prior written
consent of the CITY.
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ARTICLE XXIIi
MODIFICATION
No waiver or modification of this Agreement or of any covenant, condition, limitation herein
contained shall be valid unless in writing and duly executed by the party to be charged therewith and
no evidence of any waiver or modification shall be offered or received in evidence in any proceeding
arising between the parties hereto out of or affecting this Agreement, or the rights or obligations of
the parties hereunder, and unless such waiver or modification is in writing, duly executed; and, the
parties further agree that the provisions of this section will not be waived unless as herein set forth.
ARTICLE XXIV
MISCELLANEOUS
A. COVINGTON agrees that CITY shall, until the expiration of three (3) years after the final
payment under this Agreement, have access to and the right to examine any directly pertinent
books, documents, papers and records of COVINGTON involving transactions relating to this
Agreement. COVINGTON agrees that the CITY shall have access during normal working
hours to all necessary COVINGTON facilities and shall be provided adequate and appropriate
working space in order to conduct audits in compliance with this section. The CITY shall
give COVINGTON reasonable advance notice of any intended audits.
B, Venue of any suit or cause of action under this Agreement shall lie exclusively in Denton
County, Texas. This Agreement shall be governed by, and construed in accordance with the
laws of the State of Texas.
C. COVINGTON shall commence, carry on, and complete the work required by this engagement
with all applicable dispatch, in a sound, economical, efficient manner and in accordance with
the provisions hereof. In accomplishing the work, COVINGTON shall take such steps as are
appropriate to ensure that the work involved is properly coordinated with related work being
carried on by the CITY.
D, The CITY shall assist COVINGTON by placing at COVINGTON's disposal all available
information pertinent to the work required by this engagement, including previous reports, any
other data relative to the project and arranging for the access to, and make all provisions for
COVINGTON to enter in or upon, public and private property as required for COVINGTON
to perform services under this Agreement.
E. The captions of this Agreement are for informational purposes only and shall not in any way
affect the substantive terms or conditions of this Agreement.
IN WITNESS WHEREOF, the City of Denton, Texas has caused this Agreement to be
executed in four (4) original counterparts, by its duly authorized City Manager; and R.J. Co,>on
i "�r,ltir LLC has executed this Agreement by its duly authorized officer on this the, - day of
2005.
"CITY"
CITY OF DENTON, TEXAS
A Municipal- Corporation
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
By.� .... . --
AE' "R FID AS TO LEGAL FORM:
EDWIN M. SNYDER, INTERIM CITY ATTORNEY
� 1
" COVINGTON"
R. J. COVINGTON CONSULTING, LLC
A Texas Limited Liability Corporation
Richard J. W iri fi President
SAOur Documents \Contracts \05 \11J Covington Consulting LLC- PSA -TO 05 -D Nodal Market Design- DME.doc
ATTACHMENT
PROFESSIONAL SERVICES AGREEMENT
BETWEEN THE CITY OF DENTON, TEXAS AND
R.J. COVINGTON CONSULTING, LLC
TASK ORDER NO. 05-D
Market Design
Work provided for in this Task Order is directed at continuing assistance to Denton Municipal
Electric staff ("Staff") in addressing issues associated with the Texas Nodal Team ( "TNT ")
process to implement a nodal market redesign in the Texas electric market. Because the nodal
market design, with its Locational Marginal Price ( "LMP ") settlement, can shift significant costs
to the Dallas /Ft. Worth area ( "DFW "), this process is of particular importance to the City of
Denton, Denton Municipal Electric ( "DME "), and DME's ratepayers.
At this time the legislative session is coming to a close and the legislative related work will end.
The effort will be refocusing on the workshops and dockets at the Public Utility Commission of
Texas ( "PUC ") as it deals with any legislated changes and as it continues to evaluate the market
design and other market related issues. R. J. Covington Consulting ( "RJC ") will assist DME
staff in staying up to speed on market restructuring activities at the PUC and at the Electric
Reliability Council of Texas ( "ERCOT "). The scope of services includes continuing
participation at the PUC in Project 28500, "Activities Related to Implementation of a Nodal
Market," and other dockets and projects related to market restructuring. RJC will also participate
at ERCOT on TNT committees and task forces, developing rules for implementing the nodal
system, as requested by staff from time to time.
The schedule for implementing a nodal market design is still uncertain. There will be continuing
stakeholder meetings to review and fine -tune the new protocols, as well as issues of cost
assignments have yet to be fully settled. These are important issues for DME. RJC will assist
DME staff as directed to provide coverage of these issues and promote the interests of DME and
its ratepayers.
RJC will continue to coordinate these activities with Garland Power and Light and the Greenville
Electric Utility System to make the most efficient use of our time as possible. Because the
schedule for implementing a nodal market design extends through 2006 and possibly beyond,
additional work orders may be required to complete this work. RJC will keep the Director of
Electric Utilities informed of the status of the budget, and work may be stopped at any time by
notification by the Director of Electric Utilities to RJC to cease work.
Task Order 05 -D
Market Design
Scope of Services
Task A PUC Activities
Task A -1 Attending Workshops and Hearings at PUC
1. RJC will stay informed on activities related to market design Project 28500 and related
dockets and projects at the PUC and will attend workshops and hearings as needed.
2. When appropriate, RJC will participate in workshops and hearings to represent interests of
DME based on directions of Staff.
3. RJC will work with Staff in developing positions that should be taken and strategies for
working with parties involved.
4. RJC will prepare or assist in preparing comments to be filed with the PUC representing
DME's positions on proposed rules, projects and dockets related to market design.
5. RJC will meet with the Coalition of Concerned Cities and other parties as appropriate to
discuss the proposed zonal market changes and support DME staff.
Task B Assistance With ERCOT
Task B -1 Attend TNT Committee Meetings
1. RJC will stay informed on activities at the ERCOT Independent System Operator ( "ISO ")
and will attend meetings as directed by Staff that are related to implementing the nodal
market design.
2. RJC will participate in TNT meetings to represent the interests of DME and to promote the
COCL Proposal.
3. RJC will work with Staff in developing positions which should be taken and strategies for
working with other ERCOT stakeholders.
Task B -2 Analyze Proposed Policies and Protocols
1. RJC will review the new market design protocols proposed by the ISO and identify concerns.
2. RJC will meet with ERCOT staff and other stakeholders as requested by DME staff to discuss
proposed market design issues and negotiate to mitigate the impact on DFW loads.
T.,isls (7, Workin �?t leer Affected Parties
Task C -1 Coordination With Other Market Participates
1. RJC will continue to work with other affected municipalities, organizations, cooperatives,
and associations where appropriate to promote the COCL and to otherwise mitigate the
impacts of the nodal market on certain areas of the state.
2. RJC will participate in meetings with other market participates as requested by Staff to
discuss strategy and positions.
3. RJC will continue to develop issues papers and statistics to assist in educating legislators,
media and other market participates on the current market design and proposed changes.
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Task Order 05 -D
Market Design
Task C -2 Work With Lobbyists and Publicists
1. RJC will continue work with the City's lobbyists to educate legislators on the issues.
2. RJC will work with DME staff to inform the public of the impact on them of the
Commission's push to a nodal market design.
Budget
A budget of $48,000 for labor and expenses is agreed upon. Because of the uncertainty
regarding the level of activity required, this budget is an estimate. Additional work orders may
be required to complete this work. This budget will not be exceeded without prior written
approval of the City. RJC will bill this Task Order monthly, with supporting documentation of
activities performed. The work being performed will be under the supervision of the Director of
Electric Utilities, and may be modified at any time upon appropriate notice to RJC.
EXECUTED this the A/, day of 4&AZ-1 2005.
AUTHORIZED BY:
CITY OF DENTON, TEXAS
A Texas Moni Mpal Corporation
ley: ,M
Michael A. CondLitf
City Manager
Dated: _... - ..
ACCEPTED BY:
R.J. COVINGTON CONSULTING, LLC
By....� —... _ �� ..._— .�._
R. J �ovk Vii, President
Dated:
ATTEST: APPROVED AS TO LEGAL FORM:
JENNIFER WALTERS, CITY SECRETARY EDWIN M. SNYDER, INTERIM CITY ATTORNEY
By
Dated �, . ti ;� _ ....... Date
SAOur Documents \Contracts \05 \RJC TO 05 -D Nodal Market Design- DME.doc
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