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2006-148 ORDINANCE NO. 2006- / If' b AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS PROVIDING FOR, AUTHORIZING, AND APPROVING THE EXECUTION BY THE INTERIM CITY MANAGER OF A POWER PURCHASE AGREEMENT BY AND BETWEEN CITY OF DENTON, TEXAS AND CONSTELLATION ENERGY COMMODITIES GROUP, INC., A DELAWARE CORPORATION; APPROVING AND AUTHORIZING THE ACCEPTANCE AND APPROVAL BY THE INTERIM CITY MANAGER AND CITY ATTORNEY OF A GUARANTEE ISSUED BY CONSTELLATION ENERGY GROUP, INC., A DELAWARE CORPORATION; AUTHORIZING AND APPROVING THE EXECUTION OF SUCH OTHER RELATED DOCUMENTS, INCLUDING, WITHOUT LIMITATION, CERTIFICATES, ASSIGNMENTS, LICENSES, DIRECTIONS, INSTRUMENTS, AND STATEMENTS BY THE INTERIM CITY MANAGER OR HIS DESIGNEE, WHICH ARE INCIDENT OR RELATED THERETO, AS SHALL BE REASONABLY DETERMINED BY THE CITY ATTORNEY OR HIS DESIGNEE; CONFIRMING AND RATIFYING THAT THE CITY OF DENTON, TEXAS, ITS MAYOR, ITS CITY COUNCIL MEMBERS, ITS INTERIM CITY MANAGER, AND ITS CITY ATTORNEY OR HIS DESIGNEE SHALL BE AUTHORIZED AND EMPOWERED TO PERFORM SUCH ACTS AND OBLIGATIONS AS ARE REASONABLY REQUIRED TO CONSUMMATE THIS TRANSACTION; RATIFYING ALL PRIOR ACTIONS TAKEN BY THE CITY COUNCIL IN FURTHERANCE OF THE FOREGOING TRANSACTIONS; AND DETERMINING THAT SEVERAL OF SAID AGREEMENTS PERTAIN TO A "COMPETITNE ELECTRIC MATTER" AS SET FORTH UNDER THE PROVISIONS OF 99551.086 AND 552.133 OF THE TEXAS GOVERNMENT CODE, AS AMENDED; FINDING AND DETERMINING THAT TEXAS GOVERNMENT CODE 9252.022(a)(l5) APPLIES; ADOPTING SIGNIFICANT RECITATIONS, FINDINGS AND CONCLUSIONS, AS ARE SET FORTH IN THE PREAMBLE OF THIS ORDINANCE; THAT THE PURCHASE OF CAPACITY AND ENERGY, AND OTHER RELATED ARRANGEMENTS MADE BY THE CITY UNDER THE TERMS OF THIS PURCHASE POWER AGREEMENT ARE IN THE PUBLIC WELFARE; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; PROVIDING AN EFFECTNE DATE. WHEREAS, the City of Denton, Texas ("Denton") is a Home-Rule City and a Texas municipal corporation governed by the constitution and laws of the State of Texas; and WHEREAS, in accordance with the provisions of 9551.086 of the Texas Government Code, after due notice of the public meeting was provided as required by law, this Power Purchase Agreement transaction ~'Transaction") was submitted for consideration to the Denton Public Utilities Board on the 15' day of May, 2006; a majority of the Public Utilities Board ("PUB"), a "Public Power Governing Body" as defined by State law, convened a Closed Meeting as permitted by law, and discussed, considered, and deliberated the Transaction; and thereafter in its Open Meeting on that date, discussed the Transaction and proceeded to recommend to the City Council that the Transaction by and between Denton and Constellation Energy Commodities Group, Inc., a Delaware corporation be recommended for approval by a vote of five (5) in favor to zero (0) opposed; a majority vote of the PUB members present; and WHEREAS, in accordance with the provisions of 9551.086 of the Texas Government Code, after due public notice being given, the City Council, a "Public Power Utility Governing Body" under Senate Bill 7, has discussed, deliberated, considered the Transaction, the subject of this ordinance, in a Closed Meeting of the City Council on the 16th day of May, 2006, after determining by a preliminary majority vote of its members, that the consideration of the item which is the subject of this ordinance, is related to competitive electric matters, including business and 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 consider the matter of the Transaction which is the subject of this ordinance, in its Open Meeting on the 16th day of May, 2006, and the City Council proceeded to take final action, and voted, by a majority of its members present, ~ for and ~ against, the City of Denton approving the Transaction; being approved by a majority of its members present and voting, in favor of the Transaction described in said ordinance, as set forth below; and WHEREAS, the City Council has further determined and finds that several of those documents to be entered into by and between Denton and Constellation Energy Commodities Group, Inc., a Delaware corporation ("Constellation"); and other affiliates of this entity, namely the Power Purchase Agreement ("Agreement") and the Guarantee related to said Agreement, and all other documents related thereto as from time to time may be executed by the City of Denton, Texas and/or Constellation, in connection therewith; should be excepted from public disclosure, as permitted by the provisions of 9552.133 of the Texas Government Code, 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 Municipal Electric ("DME"); 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 which contain competitive electric information; and WHEREAS, the City Council finds that there is no divestiture, sale or other disposition of the property of any utility of the Denton, and therefore, that no public election is required pursuant to the Charter ofthe City of Denton, Texas ("Charter"); and WHEREAS, the City Council finds that said Transaction involves Denton purchasing frorn Constellation a portion of its necessary replacement power and energy requirements for a contractual term of five (5) years, as provided by this ordinance; and that such Transaction involves Denton's acquisition of reliable, cost-effective replacement power and energy from Constellation; with no detriment to the ratepayers ofDME; and WHEREAS, the City Council finds that the transaction as provided by this ordinance, will not impair the ability of Denton to comply with the provisions of any of its utility revenue bonds, as amended, which are issued and outstanding; and 2 WHEREAS, the City Council finds that g252.022(a)(15) of the Texas Government Code is applicable to this Transaction and that competitive bidding law is not applicable to the purchase by the City of electricity; and WHEREAS, Denton and Constellation have also entered into this Transaction for Constellation's services, among other things, that provides for services related to energy capacity and energy management for Denton; and WHEREAS, Denton has considered all bids provided by other power providers in Denton's Request For Proposals and finds and concludes that Constellation, who presently serves Denton's needs in this area, should be selected by Denton to provide a portion of Denton's power and energy needs for the ensuing five years; and WHEREAS, Denton desires to enter into such other arrangements in support of the Agreement with Constellation (or its affiliates) which are incident and related to the Power Purchase Agreement, and to take such additional actions as the Interim City Manager or his designee, shall determine to be necessary and advisable to effectuate the matters set forth herein; NOW THERFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION I. That the City Council, hereby approves and authorizes the Interim City Manager and City Secretary, to execute and attest respectively, the Power Purchase Agreement, by and between the City of Denton, Texas and Constellation Energy Commodities Group, Inc., a Delaware corporation, under the terms and conditions being contained in substantially the form which is attached hereto as Exhibit A and made a part hereof, with such amendments, changes and additions as the Interim City Manager may approve, and the execution and delivery thereof on behalf of the City of Denton by or at the direction of the Interim City Manager shall constitute such approval. SECTION 2. That the City Council, hereby approves and authorizes the Interim City Manager and the City Secretary, to approve and accept the Guarantee, on behalf of Denton, and to attest respectively, the Guarantee, issued by Constellation Energy Group, Inc. for the benefit of Denton, as Buyer Credit Protection, under the terms and conditions being contained in substantially the form which is attached hereto as Exhibit B and made a part hereof, with such amendments, changes and additions as the Interim City Manager may approve, and the approval and acceptance thereof on behalf of the City of Denton by or at the direction of the Interim City Manager shall constitute such approval. 3 SECTION 3. That the City Council, hereby approves and authorizes the Interim City Manager and City Secretary to execute and attest respectively, all other documents which are incident and related to the Agreement referenced herein and to take such additional actions as the Interim City Manager shall determine to be necessary and advisable to effectuate the matters set forth above. SECTION 4. That the City of Denton, the Mayor, the Interim City Manager, the City Attorney or their designees be, and each of them individually hereby is, authorized and empowered to perform all such acts and obligations as required with respect to the Agreements and documents described herein. SECTION 5. That the Mayor, the City Manager, the City Attorney or their designees 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 as the Mayor, the Interim City Manager, the City Attorney or their designees shall determine to be necessary or advisable to effectuate the matter set forth herein, any such determination to be conclusively evidenced by the taking or causing to be taken of such action or the execution and delivery of any such document, certificate, agreement, license, lease, direction, instrument or statement by the Mayor, the Interim City Manager, the City Attorney or their designees. SECTION 6. That all prior actions taken by the Mayor, the Interim 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. That immediately following the execution and delivery of the documents described as Power Purchase Agreement and the Guarantee incident to such Agreement, as provided for in this ordinance, the City Secretary is hereby directed to seal and maintain said documents in her custody and control, as documents excepted from public disclosure under the provisions of !}552.131 of the Texas Government Code (the "Public Power Exception"); unless otherwise lawfully ordered to disclose said documents. SECTION 8 hereby authorized. That the expenditure of funds as provided for in this ordinance is SECTION 9. passage and approval. That this ordinance shall become effective immediately upon its 4 PASSED AND APPROVED on this the 16th day of May, 2006. ~~fmcIL EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY B,crurJJa I j-,," / APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY By: J\1lQl)~, CJj . 0. S:\Qur Documents\Ordinances\06\DME-Power Purchase Agreement-Constellation-Ordinance.doc 5