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
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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.
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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
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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
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