2008-202ORDINANCE NO.2008-
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS,
EXECUTED BY THE MAYOR AUTHORIZING THE CITY MANAGER TO EXECUTE
AND DELIVER AN INTERCONNECTION AGREEMENT BY AND BETWEEN THE CITY
OF DENTON, TEXAS AND DENTON POWER, LLC; AUTHORIZING THE CITY
MANAGER TO EXECUTE AND DELIVER A POWER PURCHASE AGREEMENT BY
AND BETWEEN THE CITY OF DENTON, TEXAS AND DENTON POWER, LLC; AND
APPROVING THE EXECUTION OF SUCH OTHER AGREEMENTS AND DOCUMENTS
WHICH ARE INCIDENT THERETO OR RELATED THERETO, AS SHALL REASONABLY
BE DETERMINED BY THE CITY ATTORNEY OR HIS DESIGNEE; CONFIRMING AND
RATIFYING THAT THE CITY OF DENTON, ITS MAYOR, AND ITS CITY MANAGER
SHALL BE AUTHORIZED AND EMPOWERED TO PERFORM SUCH ACTS AS ARE
REASONABLY REQUIRED TO CONSUMMATE THIS TRANSACTION; FINDING AND
DETERMINING THAT THE INTERCONNECTION AGREEMENT AND POWER
PURCHASE AGREEMENT PERTAIN TO A COMPETITIVE ELECTRIC MATTER AS SET
FORTH UNDER THE PROVISIONS OF §551.086 AND §552.133 OF THE TEXAS
GOVERNMENT CODE, AS AMENDED; ADOPTING SIGNIFICANT FINDINGS,
CONCLUSIONS, AND RECITATIONS AS ARE SET FORTH IN THE PREAMBLE OF THIS
ORDINANCE; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR AND THE
PERFORMANCE OF THE AGREEMENT BY THE CITY; AND PROVIDING AN
EFFECTIVE DATE.
WHEREAS, on the 15th day of April, 2008, the City of Denton, Texas ("Denton") passed
and approved an ordinance, being Ordinance No. 2008-087 wherein the City leased to Denton
Power, LLC ("Denton Power"), by an Amended and Restated Landfill and Digester Gas Rights
and Collection Facility Lease (the "Lease") that provided for the extraction, collection,
processing, use, sale, and delivery of landfill gas from the City's landfill and digester gas from
the City's Wastewater Plant, for which Denton participates by a royalty interest of the gas energy
produced and a percentage of certain Internal Revenue Service Credits, under Section 45 of the
Internal Revenue Code, if certain benchmarks are achieved; and
WHEREAS, the next step in the transaction was for the Denton and Denton Power to
enter into a written "Interconnection Agreement" which provides for Denton Municipal Electric
("DME") to interconnect the Denton Power's modest generation resource (maximum 1.6 MW)
to Denton's transmission and distribution (T&D) system, so that the generation facility to be
constructed by Denton Power, solely at Denton Power's expense, can function for its intended
purpose, to generate electric energy from Denton's methane gas emerging and emanating from
its landfill, which will be sold by Denton Power exclusively to Denton under the terms of the
Power Purchase Agreement, referred to hereinbelow; and
WHEREAS, Denton and Denton Power have negotiated the terms of said interconnection
and have reduced their agreement to a writing which is entitled "Interconnection Agreement;"
and which document is protected by law from public disclosure under the Public Power
Exception as provided for under Sec. 551.086 and 552.133 of the Texas Government Code; and
WHEREAS, staff has recommended to the City Council the terms contained in the
"Interconnection Agreement" which Agreement has been provided to the City Council under the
terms of the Public Power Exception, with its Closed Meeting materials, and which terms have
been negotiated by staff to its satisfaction; and
WHEREAS, the City of Denton, Texas as Purchaser, and Denton Power have negotiated
a sixteen (16) year Power Purchase Agreement ("PPA") providing, among other things, that
Denton purchase all of the electric power generated by Denton Power's generation facility
located at the City landfill, at the prices stated in the Power Purchase Agreement; and which PPA
provides that Denton acquires all of the Renewable Energy Credits regarding the production of
electric energy at the facility, together with the Compliance Premiums thereon; and
WHEREAS, as Denton owns the Renewable Energy Credits and Compliance Premiums,
together with the offset emissions associated with the generation of electric energy from the
facility, under the terms of the Power Purchase Agreement, Denton is entitled to represent that
the electricity produced at the landfill facility by Denton Power is "green" or "renewable;" and
WHEREAS, staff has recommended to the City Council the terms contained in the
"Power Purchase Agreement," which PPA has been provided to the City Council under the terms
of the Public Power Exception, with its Closed Meeting materials, and which terms have been
negotiated by staff to its satisfaction; and
WHEREAS, the City of Denton, Texas is a Home-Rule City governed by the constitution
and laws of the State of Texas; and
WHEREAS, the City Council has further determined that the Interconnection Agreement
as well as the Power Purchase Agreement, by and between Denton and Denton Power should be
exempted from any public disclosure, as permitted by the provisions of §552.133 of the Texas
Government Code, as well as any other document reasonably connected thereto, as documents
that are reasonably related to a competitive electric matter, the disclosure of which documents
would provide an advantage to the competitors or prospective competitors of Denton and its
municipally-owned electric utility, Denton Municipal Electric; and
WHEREAS, the City Council has further determined that it is in the public interest that it
should exercise its right under the Texas Government Code to lawfully safeguard and keep
certain of these documents sealed, as they are competitive documents and contain competitive
electric information; and
WHEREAS, the City Council desires to enter into such other agreements with Denton
Power and its affiliates, which are in addition to, incident to and related to the "Interconnection
Agreement" and the "Power Purchase Agreement" and the City Council hereby authorizes the
City Manager to take such additional actions as he shall determine is necessary and advisable to
effectuate the matters set forth herein; and
WHEREAS, in accordance with the provisions of §551.086 of the Texas Government
Code, after due notice being given, the City Council, a "Public Power Utility Governing Body"
under Senate Bill 7, has discussed, deliberated, and considered the matter, the subject of this
ordinance, in a Closed Meeting of the City Council on the 9th day of September, 2008, after
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determining by a preliminary majority vote of its members, that the consideration of this item,
which are the subject of this ordinance is related to the competitive activity of Denton Municipal
Electric ("DME"), including commercial information, which if disclosed, would give advantage
to its competitors or prospective competitors; and
WHEREAS, thereafter, after due public notice being given, the City Council, proceeded
to discuss, deliberate, and consider the matter of this transaction which is the subject of this
ordinance, and voted, in its Closed Meeting, on the 9`h day of September, 2008, in favor of
entering into the Interconnection Agreement and the Power Purchase Agreement, and approved
the following Ordinance; NOW THEREFORE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The above Preamble to this Ordinance be, and it is, hereby ratified and
confirmed as being the true and correct factual background underlying the passage of this
Ordinance.
SECTION 2. The City Manager, is hereby authorized to execute on behalf of the City of
Denton, an "Interconnection Agreement" by and between the City of Denton, Texas and Denton
Power, LLC. regarding the interconnection of the Denton Power generation facilities to Denton
transmission and distribution facilities for the fees and rates established by Denton Municipal
Electric, to be paid by Denton Power; said Agreement shall be in accordance with the form of
that Agreement which has been provided to the City Council in Closed Meeting on the 9th day of
September, 2008; the final form of which will be approved by the City Attorney or his designate.
SECTION 3. The City Manager, is hereby authorized to execute on behalf of the City of
Denton, a "Power Purchase Agreement" by and between the City of Denton, Texas and Denton
Power, LLC regarding Denton's purchase of all of the electric energy from the landfill facility of
Denton Power, upon the terms, conditions, and for the prices set forth in said agreement; said
PPA shall be in accordance with the form of the PPA which has been provided to the City
Council in Closed Meeting on the 9`h day of September, 2008; the final form of which will be
approved by the City Attorney or his designate.
SECTION 4. The City Council hereby approves and authorizes the City Manager, and
the City Secretary to execute and attest, respectively, any and all other documents incident and
related to the Interconnection Agreement and the Power Purchase Agreement described in
Sections 2 and 3 hereinabove; and to take such additional actions as the City Manager shall
determine to be necessary and advisable to effectuate the matters set forth above.
SECTION 5. The Mayor, the City Manager, the City Attorney, or their designates be,
and. each of them individually hereby is, authorized, empowered and directed to negotiate,
deliver and perform all such acts and things and to sign all such documents, certificates,
contracts, assignments, licenses, leases, agreements, directions, instruments and statements, each
together with such amendments, changes and additions thereto, if necessary, as the Mayor, the
City Manager, the City Attorney or their designees shall determine to be necessary or advisable
to effectuate the transaction set forth herein.
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SECTION 6. All prior actions taken by the Mayor, the City Manager, the City Attorney
or their designees in furtherance of the foregoing matters be and hereby are ratified, approved
and authorized in all respects as of the dates and times such actions were taken.
SECTION 7. Immediately following the execution and delivery of the documents
described as the "Interconnection Agreement" and the "Power Purchase Agreement" and such
other related documents which are provided for by this ordinance, the City Secretary is hereby
directed to seal and maintain said documents under her custody and control, as documents
excepted from public disclosure under the provisions of §552.133 of the Texas Government
Code (the "Public Power Exception"); unless otherwise lawfully ordered to disclose said
documents by the City Attorney or his designate, or by a court of competent jurisdiction.
SECTION 8. The expenditure of funds and the performance of the agreement as set
forth in the Ordinance is hereby authorized.
SECTION 9. This Ordinance shall become effective immediately upon its passage and
approval.
PASSED AND APPROVED this
9- day of September, 2008.
Qul~_e /
M A. G , AYOR
ATTEST:
JENNIFER WAL
By:
CITY SECRETARY
APPROVED AS TO LEGAL FORM:
JOHN M. KNIGHT, INTERIM CITY ATTORNEY
BY:
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