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HomeMy WebLinkAboutResolution - 5827 - Operation Management Agreement - WTMPA - Power Project - 04_23_1998RESOLUTION NO. 5827 Item #26 April 23, 1998 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock an Operation Management Agreement, attached herewith, by and between the City of Lubbock and West Texas Municipal Power Agency, and any associated documents, which Agreement shall be spread upon the minutes of the Council and as spread upon the minutes of this Council shall constitute and be a part of this Resolution as if fully copied herein in detail. Passed by the City Council this 23rd day of April , 1998. `LF1 01 .vl 1 X11011, avivilelp •' ATTEST: i Ift"'d bV " 5Z� Kayt e Darnell, City Secretary APPROVED AS TO CONTENT: aov-- Paul Thompson, Managing Director of Electric Utilities APPROVED AS TO FORM: Richard K. Casner, Natural Resources Attorney da/ccdocs/opermgmtagr-wtrapa. res April 15, 1998 RESOLUTION NO. 5827 Item #26 April 23, 1998 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock an Operation Management Agreement, attached herewith, by and between the City of Lubbock and West Texas Municipal Power Agency, and any associated documents, which Agreement shall be spread upon the minutes of the Council and as spread upon the minutes of this Council shall constitute and be a part of this Resolution as if fully copied herein in detail. Passed by the City Council this 23rd day of ATTEST: Kay ie Darnell, City Secretary APPROVED AS TO CONTENT: Paul Thompson, Managing Director of Electric Utilities APPROVED AS TO FORM: Richard K. Casner, Natural Resources Attorney da/ccdocs/opertngmtagr-wtrnpa. res April 15, 1998 April , 1998. PAINDY rO14, MAYOR RESOLUTION NO. 5827 Item # 26 April 23, 1998 OPERATION MANAGEMENT AGREEMENT THIS AGREEMENT ("the Agreement") by and between WEST TEXAS MUNICIPAL POWER AGENCY, hereinafter referred to as "Owner," a municipal corporation and political subdivision of the State of Texas, composed of the Cities of Lubbock, Brownfield, Floydada and Tulia, Texas (hereinafter referred to as "Member Cities"), and the City of Lubbock, a municipal corporation and home rule city, hereinafter referred to as "Operation Manager." (Collectively, Owner and Operation Manager may be referred to as the "Parties" or individually as "Party.") WITNESSETH: WHEREAS, Owner proposes to acquire an electric generating Facility ("the Facility') the Facility being the "Initial Project" as defined in the Power Sales Agreement, as amended, dated April 1, 1998, and to purchase or otherwise obtain capacity, power and energy for the purpose of supplying power and energy to each of its Member Cities; and WHEREAS, Owner currently employs no full-time staff, and it has determined that it will be more economical by contract to delegate to a central operating entity the responsibility of scheduling, operating and maintaining the Facility of Owner and performing other operational and management duties related to capacity, power and energy otherwise acquired by Owner; and WHEREAS, Operation Manager has offered to provide an experienced operating organization capable of maintaining, operating and repairing the Facility of Owner and scheduling capacity, power and energy otherwise acquired by Owner in a safe, reliable, economic and efficient manner and performing management duties associated therewith, and Owner has determined it to be ,in the best interests of its Member Cities to accept Operation Manager's offer under the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements herein contained, the Parties hereto agree as follows: ARTICLE I General Responsibilities of Operation Manager and Owner 1.1 Standard of Performance. -Owner and Operation Manager shall perform their services hereunder in accordance with provisions contained in this Agreement and in accordance with Good Utility Practice, as defined below. 1.2 Availability of Records. Owner hereby agrees to make its Facility, its contracts and records available at all times to Operation Manager. This availability shall entitle Owner and Operation Manager to use the Facility and capacity in Unit 6 or Unit 7 to either directly supply power to the Member Cities or use the Facility to meet reserve requirements of any outside power supplier from which Owner may be purchasing power. 1.3 Owner Assistance. Owner hereby agrees to provide all requested information and assistance to Operation Manager in order to facilitate efforts by Operation Manager to operate Owner's Facility in the most economical manner. This includes load data, maintenance records, billing data, and any other reasonably available data requested by Operation Manager from Owner and its Member Cities to perform its functions. 1.4 Maintenance. Operation Manager agrees to perform maintenance on the Facility of Owner in accordance with Good Utility Practice to reasonably provide that its 2 Facility will be capable of operation at all times (except for scheduled maintenance) and capable of meeting existing or anticipated reserve requirements. Operation Manager shall utilize reasonable efforts to provide protection and security of the Facility of Owner. 1.5 Routine Services. Operation Manager shall furnish all material, equipment, services. supplies, labor and supervision necessary for the operation, inspection and monitoring of Owner's Facility, and unit 6 or 7, including, but not limited to: a. Starting, operating and shutting down the Facility and Unit 6 or Unit 7. b. Acquiring, delivering, storing and using appropriate fuels to operate the Facility and Unit 6 or Unit 7. C. Testing and calibration periodically of meters (not more often than once each ninety (90) days). d. Changing, checking, adjusting and storing meter charts. e. Checking for proper inking on all meter chart recorders. f. Adjusting meters as needed when done in conjunction with routine changing of charts. g. Scheduling and synchronization with Operation Manager's electrical system and coordination with external transmission -owning utilities and control areas. h. Maintenance of books and records, preparing required reports, and communications with Owner and Member Cities. 1.6 Special Services - If Required. In addition to Routine Services, Operation Manager shall perform, or arrange for the performance of, such other operating, maintenance, repair and management services in accordance with Good Utility Practice, which are not included in Routine Services. 3 1.7 Non -Routine Maintenance. Operation Manager shall notify Owner's President by telephone of any needed maintenance or repairs to the Facility which under industry standards would not be considered routine. Such repairs or replacements shall be jointly agreed upon by Operation Manager and Owner and are to be paid out of the Owner's Maintenance Reserve Fund, if it contains sufficient funds, or if not, by assessment to the Member Cities. 1.8 Emergency Services. In case of explosion, fire, storm or other emergency, Operation Manager shall take such steps and incur such expenses as in its opinion are required to deal with such emergency and to safeguard life and property, but shall, as promptly as reasonably possible, report such emergency to Owner and thereafter act in accordance with Good Utility Practice. 1.9 Transmission Service. Operation Manager shall provide transmission service of Owner's power and energy through City's transmission system to City's interconnections with Southwestern Public Service Company. 1.10. Ancillary Services. Operation Manager shall provide such ancillary services as are available at such time to Operation Manager to support Owner's Facility and output from Unit 6 or Unit 7 within the Operation Manager's capabilities. 1.11 Insurance. Owner shall secure and maintain comprehensive general liability, owner's protective or contingent public liability, fire and casualty, boiler and machinery, business interruption and other customary insurance for similar electric utility units on the Facility and Units 6 and 7 during the term of the Agreement covering all aspects and operations in connection with this Agreement and the Facilities, including without limitation, all aspects, operations and occurrences to which Owner has 4 indemnified Operation Manager, as provided in Section 7.1. hereof, in amounts and type mutually agreed upon between Owner and Operation Manager. In the event Owner and Operation Manager cannot agree on the amounts and type of such insurance, the Operation Manager shall designate such amount and type, which shall be binding, for all purposes, on Owner. 1.12 Personnel. Operation Manager shall employ and shall supervise persons required by Operation Manager to perform its duties and responsibilities. 1.13 Communications. Owner and its Member Cities shall establish communications acceptable to Operation Manager and shall provide Operation Manager the following: A. Projected daily usage (KWH and KW) of Member Cities B. Actual daily usage (KWH and KW) of Member Cities C. Schedule of expected maintenance of Member Cities' generation D. Outage information (cause and duration) of Member Cities' generation E. Projected monthly and yearly usage (KWH and KW) of Member Cities' systems 1.14 Duties of Operation Manager. Operation Manager shall perform such other duties in accordance with Good Utility Practice, associated with Owner's Facility, its capacity in Operation Manager's Units 6 or 7 and Owner's power and energy purchase agreements. ARTICLE II General Terms and Conditions 2.1 Scone. This Agreement covers all work or services described herein and that Owner may request of Operation Manager by written or oral request. 5 2.2 Supervision. Operation Manager shall furnish all supervision, labor. material, and equipment as necessary to perform the described services, except as may be furnished by Owner, in coordination with Operation Manager, and shall perform the services, in accordance with Good Utility Practice. 2.3 Independent Contractor. Operation Manager is an independent contractor as to all work performed hereunder. The detailed manner and method of performing the work is under the control of Operation Manager, Owner having interest only in the results obtained. All persons engaged in the performance of said work shall be solely the servants or employees of Operation Manager, but Owner or its authorized agents shall have the right to such inspection of the work as necessary to ensure compliance by Operation Manager with the obligations assumed hereunder. 2.4 Assignment. Operation Manager may assign part of this Agreement or sublet the same or any part thereof to a qualified contractor to perform specific requested duties that fall outside. Operation Manager's capability without the consent of Owner. Except as provided otherwise herein, the assignment of this Agreement or the subletting of any work to be performed hereunder shall not relieve Operation Manager of its obligations hereunder. 2.5 Applicable Laws. All work shall be performed in compliance with all applicable laws, ordinances or regulations of any governmental authority having jurisdiction. G ARTICLE III Billing and Payment 3.1 Billin of f Owner. Owner shall pay Operation Manager monthly for all Routine Services, Special Services, Emergency Services and Ancillary Services, as shown by an invoice listing labor hours, materials, supplies (including fuel) and overhead to operate the Facility and Unit 6 or Unit 7 at the Operation Manager's reasonable actual cost thereof. Overhead costs include the Operation Manager's reasonable direct and indirect administrative and general charges charged directly or allocated to its duties under this Agreement. In no event will the Owner be obligated for overhead costs exceeding five per cent (5%) annually of the total actual costs of operation, excluding overhead costs, without the consent of Owner. 3.2 Invoice Submittal. On or before the tenth (loth) day of each month, the authorized Operation Manager representative shall submit to Owner's authorized representative, as designated by Owner's President, for review and approval an invoice in writing covering the previous month's work. The invoice amounts shall reflect the actual cost of the Operation Manager which shall be reasonable for the Lubbock area for equivalent services. Owner shall pay Operation Manager amounts due on or before the twentieth (20th) day of each month. 3.3 Disputed Charges. In the event Owner disputes the charges reflected in an invoice, Owner shall, nevertheless, pay the charges in the time required by paragraph 3.2 above. Owner shall notify Operation Manager as soon as practicable of the dispute, and 7 Owner and Operation Manager shall proceed in good faith to resolve the dispute. If the dispute cannot be resolved, either Party may pursue any remedy in law or in equity. 3.4 Inspection of Supporting Documents. Owner, or its agent., upon reasonable notice to Operation Manager, may inspect Operation Manager's records of accounting supporting invoices delivered to Owner at any time during the Operation Manager's normal business hours, and the Operation Manager shall fully cooperate with Owner to facilitate the inspection. ARTICLE IV Term of Agreement 4.1 Term. Subject to the terms hereof, this Agreement shall be of equal duration with any outstanding "West Texas Municipal Power Agency Revenue Bonds, Series 1998" (the "Bonds") and shall continue thereafter unless either Owner or Operation Manager gives one (1) year's advance notice of termination. In the event Operation Manager shall dispose or abandon substantially all of the electric generating facilities owned by it or electric generation facilities related to the Facility and/or Unit 6 or Unit 7, and the Bonds have been paid, or provision for their payment has been made, pursuant to the terms of the Resolution authorizing the issuance of the Bonds, Operation Manager may, at its election, terminate this Agreement as of the effective date of such disposal or abandonment. Upon such termination, Operation Manager shall be released and relieved of all of its obligations and liabilities under this Agreement, occurring or accruing from and after the effective date of such disposal or abandonment. 8 ARTICLE V Default 5.1 Events of Default. As used in this Article V. "default" shall mean the failure of Owner or Operation Manager to perform any obligation in the time and manner required by this Agreement. except where such failure to discharge obligations (other than the payment of money) is the result of Force Majeure as defined in Article IX, paragraph 9.8. 5.2 Notice and Cure. Upon failure of a Party hereto to perform any obligation required hereunder, the other Party shall give written notice of such default to the Party in default. The Party in default shall have thirty (30) days within which to cure such default, and, if cured within such time, the default specified in such notice shall cease to exist. 5.3 Remedies Cumulative. If a default is not cured as provided in paragraph 5.2 above, the Party not in default may resort to all remedies available at law or equity, including recovery of reasonable expenses and reasonable attorneys' fees incurred in connection therewith. ARTICLE VI Notices 6.1 Notice. Any notice, request, demand, statement, bill or payment provided for in this Agreement, or any notice which any Party may desire to give to the other, shall be in writing and shall be considered as duly delivered when mailed by registered mail to the post office address of the Parties hereto, as the case may be, as follows: 0 If to Owner: West Texas Municipal Power Agency P. O. Box 2000 Lubbock, Texas 79457 If to Operation Manager: Lubbock Power & Light P. O. Box 2000 Lubbock, Texas 79457 Attn: Director of Electric Utilities 6.2 Time of Notice. For purposes of this Agreement, the date on which any notice, request, statement, payment or other communication shall be deemed to have been given shall be the date on which it is received by the recipient, provided any such notice, request, statement, payment or other communications transmitted by registered or certified mail, return receipt requested, postage prepaid, shall be deemed to have been given on the third day following the date on which same was deposited in the United States mail, addressed in accordance with this Article VI. Either Party hereto may designate a further or different address to which subsequent notices, requests, statements, payments or other communication shall be sent. ARTICLE VII INDEMNIFICATION 7.1 INDEMNITY. OWNER, TO THE EXTENT PROVIDED BY LAW, SHALL PROTECT, INDEMNIFY AND SAVE OPERATION MANAGER, ELECTED OFFICIALS, AND ITS EMPLOYEES, ACTING WITHIN THE SCOPE OF THEIR DUTIES AND/OR EMPLOYMENT, HARMLESS AGAINST ANY AND ALL 10 CLAIMS, DEMANDS AND CAUSES OF ACTION OF EVERY KIND AND CHARACTER ARISING IN FAVOR OF ANY PERSON, CORPORATION OR GOVERNMENTAL ENTITY, BECAUSE OF PERSONAL INJURIES OR DEATH OR DAMAGE TO PROPERTY OCCURRING, GROWING OUT OF, INCIDENT TO, RELATED TO OR RESULTING DIRECTLY OR INDIRECTLY FROM THE OCCURRENCE OF ACTIVITIES OR OMISSION OF ACTIVITIES CONTEMPLATED BY THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, SUCH CLAIMS, DEMANDS AND CAUSES OF ACTION CAUSED, BY ANY DEGREE, BY THE NEGLIGENCE OF OPERATION MANAGER, PROVIDED OPERATION MANAGER AND ITS EMPLOYEES ACTED IN ACCORDANCE WITH GOOD UTILITY PRACTICE. THIS INDEMNITY DOES NOT APPLY TO INJURIES TO OR DEATH OF OPERATION MANAGER'S EMPLOYEES ACTING WITHIN THE SCOPE OF THEIR EMPLOYMENT. ARTICLE VIII Good Utility Practice 8.1 Definition. The term "Good Utility Practice" shall mean any of the engineering and operating practices, methods and acts engaged in or accepted by a significant portion of the electric utility industry in the United States of America at the time the decision was made or any of the practices, methods and acts that, in the exercise of reasonable judgment in the light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at the lowest reasonable costs consistent with reliability, safety and expedition. Good Utility Practice is not intended to 11 be limited to the optimum practice, method or act to the exclusion of all others, but rather includes a spectrum of possible practices, methods or acts. ARTICLE IX Miscellaneous 9.1 Modification. This Agreement may not be modified, varied or amended, except by written agreement. 9.2 Assessments. Neither Party shall be responsible or liable for any taxes, fines, penalties or other statutory charges levied or assessed against any other Party. 9.3 Assignment. Subject to the terms hereof and of Section 2.4, above, neither Party hereto shall assign this Agreement or any of its rights or obligations hereunder without the consent in writing of the other Party. Notwithstanding the foregoing, a Party may assign its right, title and interest in, to and by virtue of this Agreement, including any and all extensions, renewals, amendments and supplements thereto, to a trustee or trustees, individual or corporate, as security for bonds or other obligations or securities, without such trustee or trustees assuming or becoming in any respect obligated to perform any of the obligations of the assignor, and if such trustee be a corporation, without its being required by the Parties hereto to qualify to do business in the state in which the performance of this Agreement may occur. Nothing contained herein shall require consent to transfer this Agreement to any party by virtue of merger or consolidation of a Party hereto or a sale or abandonment of all or substantially all of the electric generation facilities of a Party hereto, or the electric generation facilities related to the Facility and/or Unit 6 or Unit 7, or any other corporate reorganization of a Party hereto. Upon assignment, if the Bonds have been paid, or provision for their payment has been made, 12 pursuant to the terms of the Resolution authorizing the issuance of the Bonds, Operation Manager shall be released and relieved of all of its obligations and liabilities under this Agreement, occurring or accruing from and after the effective date of such assignment. 9.4 Laws and Regulations. This Agreement is subject to applicable federal, state and local laws, ordinances, rules and regulations. Nothing herein contained shall be construed as a wavier of any right to question or contest any such law, ordinance, rule, regulation or asserted regulatory jurisdiction. 9.5 Governing Laws and Venue. This Agreement shall be governed by the laws of the State of Texas, and venue for litigation arising out of disputes between the Parties shall lie in Lubbock County, Texas. 9.6 Waiver. No waiver by either Party of any one or more defaults by the other in the performance of any provisions hereunder shall operate or be construed as a waiver of any future defaults, whether of a like or a different character. 9.7 Governmental Restraint. If at any time prior to and during the period in which this Agreement is in effect, any governmental authority having jurisdiction or control over the Parties or their Facility, this Agreement or any provision thereof, shall take any action as to Operation Manager or Owner whereby operation or maintenance of the Facility as contemplated hereunder shall be proscribed or subjected to conditions or restraints that in the sole judgment of the Operation Manager constitutes an undue burden to either Party hereto, the Operation Manager may terminate this Agreement without further liability hereunder other than the liability to discharge obligations incurred prior to the termination hereof. 13 9.8 Force Majeure. Neither Party shall be liable to the other Party for failure to perform its obligations under this Agreement when such failure is attributable solely to Force Majeure. Force Majeure shall mean any cause beyond the reasonable control of either Party, including, without limitation, failure, or imminent threat of failure, of facilities or equipment, flood, freeze, earthquake, storm, fire. lightning, other acts of God, epidemic, war, acts of a public enemy, riot. civil disturbance or disobedience, strike, lockout, work stoppages, other industrial disturbance or dispute, labor or material shortage, sabotage, restraint by court order or other public authority, and action or nonaction by, or failure or inability to obtain the necessary authorizations or approvals from, any governmental agency or authority, which by the exercise of due diligence it could not overcome. Nothing contained herein shall be construed so as to require the Parties to settle any strike, lockout, work stoppage or any industrial disturbance or dispute in which it may; be involved, or to seek review of or take an appeal from any administrative or judicial action. Failure of Owner to make payments to Operation Manager required by this Agreement shall not be construed as an event occasioned by Force Majeure. 9.9 Severability. In the event any material term, covenant or condition of this Agreement, or any amendment hereto, or the application of any such term, covenant or condition shall be held invalid, illegal or unenforceable as to any Party or circumstances by any court or regulatory authority having jurisdiction, Owner and Operation Manager shall conduct good faith negotiations for the purpose of reaching a mutually acceptable written agreement to replace the deleted provision(s) with provision(s) that will most nearly accomplish the purpose and intent of the deleted provision(s). 14 9.10 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be binding upon the successors and assigns of the Parties hereto, but, subject to the terms of Section 2.4 and Section 9.3,•above, neither Party shall assign its interest in the Agreement in whole or in part without the prior written consent of the other Party, which consent will not be unreasonably withheld. 9.11 Survivorship of Obligations. Except as otherwise provided herein, the termination or cancellation of this Agreement shall not discharge any Party from any obligation it owes to the other Party under this Agreement by reason of any transaction, loss, cost, damage, expense or liability that shall occur or arise prior to such termination. Unless provided otherwise, it is the intention of the Parties that any such obligation owed (whether the same shall be known or unknown as of the termination or cancellation of this Agreement) shall survive the termination or cancellation of this Agreement. 9.12 Amendment. This Agreement may only be amended by a writing signed by both Parties. 9.13 Computation of Time. In computing any period of time prescribed or allowed by this Agreement, the day of the act, event or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included unless it is a Saturday, Sunday or legal holiday, in which event the period shall run until the end of the next business day that is neither a Saturday, Sunday nor a legal holiday. 9.14 Limitation. This Agreement is not intended to and shall not create rights of any character whatsoever in favor of any person, corporation, association or entity other than the Parties to this Agreement and the member cities of WTMPA, and the 15 obligations herein assumed are solely for the use and benefit of the Parties to this Agreement and the member cities of WTMPA. their successors in interest, or assigns. 9.15 Section Headings Not to Affect Meaning. The descriptive headings of the various articles and sections of this Agreement have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms and provisions thereof. 9.16 Counterparts. This Agreement shall be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 9.17 Owner's Representative. Operation Manager shall be entitled for all purposes relative to this Agreement to rely solely and exclusively on the statements and representations of the person identified in writing as being the Owner's authorized representative. Owner may at any time appoint a new representative on thirty (30) days prior written notice to Operation Manager to such effect. 16 IN WITNESS WHEREOF, the Patties hereto have caused this Agreement to be signed in two counterparts by their respective representatives, hereunto duly authorized, on this 23 day of April 1998, but effective as of the day and year first hereinabove written. CITY OF LUBBOCK: WEST TEXAS MUNICIPA PO OPERATION MANAGER OWNER BY: _ 4kll WINDY SITTO , MAYOR President oard M Directors ATTEST: ATTEST: tic b )ol K %✓e!<� Kaythi Darnell, City Secretary Secretary APPROVED AS TO CONTENT: L4w( A01V>'. Paul Thompson; Managing Director of Electric Utilities APPROVED AS TO FORM: Richard K. Casn , Natural Resources Attorney final2-opentionmgmtagr-wtmpa.doc April22, 1998 17 AGENCY: . :i RESOLUTION NO. 5827 Item # 26 April 23, 1998 OPERATION MANAGEMENT AGREEMENT THIS AGREEMENT ("the Agreement") by and between WEST TEXAS MUNICIPAL POWER AGENCY, hereinafter referred to as "Owner," a municipal corporation and political subdivision of the State of Texas, composed of the Cities of Lubbock, Brownfield, Floydada and Tulia, Texas (hereinafter referred to as "Member Cities"). and the City of Lubbock, a municipal corporation and home rule city, hereinafter referred to as "Operation Manager." (Collectively, Owner and Operation Manager may be referred to as the "Parties" or individually as "Party.") WITNESSETH: WHEREAS, Owner proposes to acquire an electric generating Facility ("the Facility") the Facility being the "Initial Project" as defined in the Power Sales Agreement, as amended, dated April 1, 1998, and to purchase or otherwise obtain capacity, power and energy for the purpose of supplying power and energy to each of its Member Cities; and WHEREAS, Owner currently employs no full-time staff, and it has determined that it will be more economical by contract to delegate to a central operating entity the responsibility of scheduling, operating and maintaining the Facility of Owner and performing other operational and management duties related to capacity, power and energy otherwise acquired by Owner; and WHEREAS, Operation Manager has offered to provide an experienced operating organization capable of maintaining, operating and repairing the Facility of Owner and scheduling capacity, power and energy otherwise acquired by Owner in a safe, reliable, economic and efficient manner and performing management duties associated therewith, and Owner has determined it to be in the best interests of its Member Cities to accept Operation Manager's offer under the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements herein contained, the Parties hereto agree as follows: ARTICLE I General Responsibilities of Operation Manager and Owner 1.1 Standard of Performance. Owner and Operation Manager shall perform their services hereunder in accordance with provisions contained in this Agreement and in accordance with Good Utility Practice, as defined below. 1.2 Availability of Records. Owner hereby agrees to make its Facility, its contracts and records available at all times to Operation Manager. This availability shall entitle Owner and Operation Manager to use the Facility and capacity in Unit 6 or Unit 7 to either directly supply power to the Member Cities or use the Facility to meet reserve requirements of any outside power supplier from which Owner may purchasing power. 1.3 Owner Assistance. Owner hereby agrees to provide all requested information and assistance to Operation Manager in order to facilitate efforts by Operation Manager to operate Owner's Facility in the most economical manner. This includes load data, maintenance records, billing data, and any other reasonably available data requested by Operation Manager from Owner and its Member Cities to perform its functions. 1.4 Maintenance. Operation Manager agrees to perform maintenance on the Facility of Owner in accordance with Good Utility Practice to reasonably provide that its 2 a Facility will be capable of operation at all times (except for scheduled maintenance) and capable of meeting existing or anticipated reserve requirements. Operation Manager shall utilize reasonable efforts to provide protection and security of the Facility of Owner. 1.5 Routine Services. Operation Manager shall furnish all material, equipment, services, supplies, labor and supervision necessary for the operation, inspection and monitoring of Owner's Facility, and unit 6 or 7, including, but not limited to: a. Starting, operating and shutting down the Facility and Unit 6 or Unit 7. b. Acquiring, delivering, storing and using appropriate fuels to operate the Facility and Unit 6 or Unit 7. C. Testing and calibration periodically of meters (not more often than once each ninety (90) days). d. Changing, checking, adjusting and storing meter charts. e. Checking for proper inking on all meter chart recorders. f. Adjusting meters as needed when done in conjunction with routine changing of charts. g. Scheduling and synchronization with Operation Manager's electrical system and coordination with external transmission -owning utilities and control areas. h. Maintenance of books and records, preparing required reports, and communications with Owner and Member Cities. 1.6 SWcial Services - If Required. In addition to Routine Services, Operation Manager shall perform, or arrange for the performance of, such other operating, maintenance, repair and management services in accordance with Good Utility Practice, which are not included in Routine Services. 3 1.7 Non -Routine Maintenance. Operation Manager shall notify Owner's President by telephone of any needed maintenance or repairs to the Facility which under industry standards would not be considered routine. Such repairs or replacements shall be jointly agreed upon by Operation Manager and Owner and are to be paid out of the Owner's Maintenance Reserve Fund, if it contains sufficient funds, or if not, by assessment to the Member Cities. 1.8 Emergency Services. In case of explosion, fire, storm or other emergency, Operation Manager shall take such steps and incur such expenses as in its opinion are required to deal with such emergency and to safeguard life and property, but shall, as promptly as reasonably possible, report such emergency to Owner and thereafter act in accordance with Good Utility Practice. 1.9 Transmission Service. Operation Manager shall provide transmission service of Owner's power and energy through City's transmission system to City's interconnections with Southwestern Public Service Company. 1.10. Ancillary Services. Operation Manager shall provide such ancillary services as are available at such time to Operation Manager to support Owner's Facility and output from Unit 6 or Unit 7 within the Operation Manager's capabilities. 1.11 Insurance. Owner shall secure and maintain comprehensive general liability, owner's protective or contingent public liability, fire and casualty, boiler and machinery, business interruption and other customary insurance for similar electric utility units on the Facility and Units 6 and 7 during the term of the Agreement covering all aspects and operations in connection with this Agreement and the Facilities, including without limitation, all aspects, operations and occurrences to which Owner has 4 indemnified Operation Manager, as provided in Section 7.1. hereof, in amounts and type mutually agreed upon between Owner and Operation Manager. In the event Owner and Operation Manager cannot agree on the amounts and type of such insurance, the Operation Manager shall designate such amount and type, which shall be binding, for all purposes, on Owner. 1.12 Personnel. Operation Manager shall employ and shall supervise persons required by Operation Manager to perform its duties and responsibilities. 1.13 Communications. Owner and its Member Cities shall establish communications acceptable to Operation Manager and shall provide Operation Manager the following: A. Projected daily usage (KWH and KW) of Member Cities B. Actual daily usage (KWH and KW) of Member Cities C. Schedule of expected maintenance of Member Cities' generation D. Outage information (cause and duration) of Member Cities' generation E. Projected monthly and yearly usage (KWH and KW) of Member Cities' systems 1.14 Duties of Operation Manager. Operation Manager shall perform such other duties in accordance with Good Utility Practice, associated with Owner's Facility, its capacity in Operation Manager's Units 6 or 7 and Owner's power and energy purchase agreements. ARTICLE II General Terms and Conditions 2.1 Scove. This Agreement covers all work or services described herein and that Owner may request of Operation Manager by written or oral request. 5 2.2 SMrvision. Operation Manager shall furnish all supervision, labor, material, and equipment as necessary to perform the described services, except as may be furnished by Owner, in coordination with Operation Manager, and shall perform the services, in accordance with Good Utility Practice. 2.3 Independent Contractor. Operation Manager is an independent contractor as to all work performed hereunder. The detailed manner and method of performing the work is under the control of Operation Manager, Owner having interest only in the results obtained. All persons engaged in the performance of said work shall be solely the servants or employees of Operation Manager, but Owner or its authorized agents shall have the right to such inspection of the work as necessary to ensure compliance by Operation Manager with the obligations assumed hereunder. 2.4 Assignment. Operation Manager may assign part of this Agreement or sublet the same or any part thereof to a qualified contractor to perform specific requested duties that fall outside Operation Manager's capability without the consent of Owner. Except as provided otherwise herein, the assignment of this Agreement or the subletting of any work to be performed hereunder shall not relieve Operation Manager of its obligations hereunder. 2.5 Applicable Laws. All work shall be performed in compliance with all applicable laws. ordinances or regulations of any governmental authority having jurisdiction. 0 ARTICLE III Billing and Payment 3.1 Billing of Owner. Owner shall pay Operation Manager monthly for all Routine Services, Special Services, Emergency Services and Ancillary Services, as shown by an invoice listing labor hours, materials, supplies (including fuel) and overhead to operate the Facility and Unit 6 or Unit 7 at the Operation Manager's reasonable actual cost thereof. Overhead costs include the Operation Manager's reasonable direct and indirect administrative and general charges charged directly or allocated to its duties under this Agreement. In no event will the Owner be obligated for overhead costs exceeding five per cent (5%) annually of the total actual costs of operation, excluding overhead costs, without the consent of Owner. 3.2 Invoice Submittal. On or before the tenth (10th) day of each month, the authorized Operation Manager representative shall submit to Owner's authorized representative, as designated by Owner's President, for review and approval an invoice in writing covering the previous month's work. The invoice amounts shall reflect the actual cost of the Operation Manager which shall be reasonable for the Lubbock area for equivalent services. Owner shall pay Operation Manager amounts due on or before the twentieth (20th) day of each month. 3.3 Disputed Charges. In the event Owner disputes the charges reflected in an invoice, Owner shall, nevertheless, pay the charges in the time required by paragraph 3.2 above. Owner shall notify Operation Manager as soon as practicable of the dispute, and 7 Owner and Operation Manager shall proceed in good faith to resolve the dispute. If the dispute cannot be resolved, either Party may pursue any remedy in law or in equity. 3.4 Inspection of Supporting Documents. Owner, or its agent, upon reasonable notice to Operation Manager, may inspect Operation Manager's records of accounting supporting invoices delivered to Owner at any time during the Operation Manager's normal business hours, and the Operation Manager shall fully cooperate with Owner to facilitate the inspection. ARTICLE IV Term of Agreement 4.1 Term. Subject to the terms hereof, this Agreement shall be of equal duration with any outstanding "West Texas Municipal Power Agency Revenue Bonds, Series 1998" (the "Bonds") and shall continue thereafter unless either Owner or Operation Manager gives one (1) year's advance notice of termination. In the event Operation Manager shall dispose or abandon substantially all of the electric generating facilities owned by it or electric generation facilities related to the Facility and/or Unit 6 or Unit 7, and the Bonds have been paid, or provision for their payment has been made, pursuant to the terms of the Resolution authorizing the issuance I of the Bonds, Operation Manager may, at its election, terminate this Agreement as of the effective date of such disposal or abandonment. Upon such termination, Operation Manager shall be released and relieved of all of its obligations and liabilities under this Agreement, occurring or accruing from and after the effective date of such .disposal or abandonment. 8 ARTICLE V Default 5.1 Events of Default. As used in this Article V, "default" shall mean the failure of Owner or Operation Manager to perform any obligation in the time and manner required by this Agreement, except where such failure to discharge obligations (other than the payment of money) is the result of Force Majeure as defined in Article IX, paragraph 9.8. 5.2 Notice and Cure. Upon failure of a Party hereto to perform any obligation required hereunder, the other Party shall give written notice of such default to the Party in default. The Party in default shall have thirty (30) days within which to cure such default, and, if cured within such time, the default specified in such notice shall cease to exist. 5.3 Remedies Cumulative. If a default is not cured as provided in paragraph 5.2 above, the Party not in default may resort to all remedies available at law or equity, including recovery of reasonable expenses and reasonable attorneys' fees incurred in connection therewith. ARTICLE VI Notices 6.1 Notice. Any notice, request, demand, statement, bill or payment provided for in this Agreement, or any notice which any Party may desire to give to the other, shall be in writing and shall be considered as duly delivered when mailed by registered mail to the post office address of the Parties hereto, as the case may be, as follows: . • a If to Owner: West Texas Municipal Power Agency P. O. Box 2000 Lubbock, Texas 79457 If to Operation Manager: Lubbock Power & Light P. O. Box 2000 Lubbock, Texas 79457 Attn: Director of Electric Utilities 6.2 Time of Notice. For purposes of this Agreement, the date on which any notice, request, statement, payment or other communication shall be deemed to have been given shall be the date on which it is received by the recipient, provided any such notice, request, statement, payment or other communications transmitted by registered or certified mail, return receipt requested, postage prepaid, shall be deemed to have been given on the third day following the date on which same was deposited in the United States mail, addressed in accordance with this Article VI. Either Party hereto may designate a further or different address to which subsequent notices, requests, statements, payments or other communication shall be sent. ARTICLE VII INDEMNIFICATION 7.1 INDEMNITY. OWNER, TO THE EXTENT PROVIDED BY LAW, SHALL PROTECT, INDEMNIFY AND SAVE OPERATION MANAGER, ELECTED OFFICIALS, AND ITS EMPLOYEES, ACTING WITHIN THE SCOPE OF THEIR DUTIES AND/OR EMPLOYMENT, HARMLESS AGAINST ANY AND ALL 10 CLAIMS, DEMANDS AND CAUSES OF ACTION OF EVERY KIND AND CHARACTER ARISING IN FAVOR OF ANY PERSON, CORPORATION OR GOVERNMENTAL ENTITY, BECAUSE OF PERSONAL INJURIES OR DEATH OR DAMAGE TO PROPERTY OCCURRING, GROWING OUT OF, INCIDENT TO, RELATED TO OR RESULTING DIRECTLY OR INDIRECTLY FROM THE OCCURRENCE OF ACTIVITIES OR OMISSION OF ACTIVITIES CONTEMPLATED BY THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, SUCH CLAIMS, DEMANDS AND CAUSES OF ACTION CAUSED, BY ANY DEGREE, BY THE NEGLIGENCE OF OPERATION MANAGER. PROVIDED OPERATION MANAGER AND ITS EMPLOYEES ACTED IN ACCORDANCE WITH GOOD UTILITY PRACTICE. THIS INDEMNITY DOES NOT APPLY TO INJURIES TO OR DEATH OF OPERATION MANAGER'S EMPLOYEES ACTING WITHIN THE SCOPE OF THEIR EMPLOYMENT. ARTICLE VIII Good Utility Practice 8.1 Definition. The term "Good Utility Practice" shall mean any of the engineering and operating practices, methods and acts engaged in or accepted by a significant portion of the electric utility industry in the United States of America at the time the decision was made or any of the practices, methods and acts that, in the exercise of reasonable judgment in the light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at the lowest reasonable costs consistent with 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 a spectrum of possible practices, methods or acts. ARTICLE IX Miscellaneous 9.1 Modification. This Agreement may not be modified, varied or amended. except by written agreement. 9.2 Assessments. Neither Party shall be responsible or liable for any taxes. fines, penalties or other statutory charges levied or assessed against any other Party. 9.3 Assignment. Subject to the terms hereof and of Section 2.4, above, neither Party hereto shall assign this Agreement or any of its rights or obligations hereunder without the consent in writing of the other Party. Notwithstanding the foregoing, a Party may assign its right, title and interest in, to and by virtue of this Agreement, including any and all extensions, renewals, amendments and supplements thereto, to a trustee or trustees, individual or corporate, as security for bonds or other obligations or securities. without such trustee or trustees assuming or becoming in any respect obligated to perform any of the obligations of the assignor, and if such trustee be a corporation, without its being required by the Parties hereto to qualify to do business in the state in which the performance of this Agreement may occur. Nothing contained herein shall require consent to transfer this Agreement to any party by virtue of merger or consolidation of a Party hereto or a sale or abandonment of all or substantially all of the electric generation facilities of a Party hereto, or the electric generation facilities related to the Facility and/or Unit 6 or Unit 7, or any other corporate reorganization of a Party hereto. Upon assignment, if the Bonds have been paid, or provision for their payment has been made, l2 pursuant to the terms of the Resolution authorizing the issuance of the Bonds, Operation Manager shall be released and relieved of all of its obligations and liabilities under this Agreement, occurring or accruing from and after the effective date of such assignment. 9.4 Laws and Regulations. This Agreement is subject to applicable federal, state and local laws, ordinances, rules and regulations. Nothing herein contained shall be construed as a wavier of any right to question or contest any such law, ordinance, rule, regulation or asserted regulatory jurisdiction. 9.5 GoverninQ Laws and Venue. This Agreement shall be governed by the laws of the State of Texas, and venue for litigation arising out of disputes between the Parties shall lie in Lubbock County, Texas. 9.6 Waiver. No waiver by either Party of any one or more defaults by the other in the performance of any provisions hereunder shall operate or be construed as a waiver of any future defaults, whether of a like or a different character. 9.7 Governmental Restraint. If at any time prior to and during the period in which this Agreement is in effect, any governmental authority having jurisdiction or control over the Parties or their Facility, this Agreement or any provision thereof, shall take any action as to Operation Manager or Owner whereby operation or maintenance of the Facility as contemplated hereunder shall be proscribed or subjected to conditions or restraints that in the sole judgment of the Operation Manager constitutes an undue burden to either Party hereto, the Operation Manager may terminate this Agreement without further liability hereunder other than the liability to discharge obligations incurred prior to the termination hereof. 13 9.8 Force Majeure. Neither Party shall be liable to the other Party for failure to perform its obligations under this Agreement when such failure is attributable solely to Force Majeure. Force Majeure shall mean any cause beyond the reasonable control of either Party, including, without limitation, failure, or imminent threat of failure, of facilities or equipment, flood, freeze, earthquake, storm, fire. lightning, other acts of God, epidemic, war, acts of a public enemy, riot, civil disturbance or disobedience, strike, lockout, work stoppages, other industrial disturbance or dispute, labor or material shortage, sabotage, restraint by court order or other public authority, and action or nonaction by, or failure or inability to obtain the necessary authorizations or approvals from, any governmental agency or authority, which by the exercise of due diligence it could not overcome. Nothing contained herein shall be construed so as to require the Parties to settle any strike, lockout, work stoppage or any industrial disturbance or dispute in which it may be involved, or to seek review of or take an appeal from any administrative or judicial action. Failure of Owner to make payments to Operation Manager required by this Agreement shall not be construed as an event occasioned by Force Majeure. 9.9 Severability. In the event any material term, covenant or condition of this Agreement, or any amendment hereto, or the application of any such term, covenant or condition shall be held invalid, illegal or unenforceable as to any Party or circumstances by any court or regulatory authority having jurisdiction, Owner and Operation Manager shall conduct good faith negotiations for the purpose of reaching a mutually acceptable written agreement to replace the deleted provision(s) with provision(s) that will most nearly accomplish the purpose and intent of the deleted provision(s). 14 9.10 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be binding upon the successors and assigns of the Parties hereto, but, subject to the terms of Section 2.4 and Section 9.3, above, neither Party shall assign its interest in the Agreement in whole or in part without the prior written consent of the other Party, which consent will not be unreasonably withheld. 9.11 Survivorship of Obligations. Except as otherwise provided herein. the termination or cancellation of this Agreement shall not discharge any Party from any obligation it owes to the other Party under this Agreement by reason of any transaction, loss, cost, damage, expense or liability that shall occur or arise prior to such termination. Unless provided otherwise, it is the intention of the Parties that any such obligation owed (whether the same shall be known or unknown as of the termination or cancellation of this Agreement) shall survive the termination or cancellation of this Agreement. 9.12 Amendment. This Agreement may only be amended by a writing signed by both Parties. 9.13 Computation of Time. In computing any period of time prescribed or allowed by this Agreement, the day of the act, event or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included unless it is a Saturday, Sunday or legal holiday, in which event the period shall run until the end of the next business day that is neither a Saturday, Sunday nor a legal holiday. 9.14 Limitation. This Agreement is not intended to and shall not create rights of any character whatsoever in favor of any person, corporation, association or entity other than the Parties to this Agreement and the member cities of WTMPA, and the 15 t obligations herein assumed are solely for the use and benefit of the Parties to this Agreement and the member cities of WTMPA, their successors in interest, or assigns. 9.15 Section Headings Not to Affect Meaning. The descriptive headings of the various articles and sections of this Agreement have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms and provisions thereof. 9.16 Counterparts. This Agreement shall be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 9.17 Owner's Representative. Operation Manager shall be entitled for all purposes relative to this Agreement to rely solely and exclusively on the statements and Y representations of the person identified in writing as being the Owner's authorized representative. Owner may at any time appoint a new representative on thirty (30) days prior written notice to Operation Manager to such effect. 16 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed in two counterparts by their respective representatives, hereunto duly authorized. on this 23 day of April 1998. but effective as of the day and year first hereinabove written. CITY OF LUBBOCK: WEST TEXAS MUNICIPAL POWER AGENCY: OP TION MANAG OWNER t A 'j ff WINDY S ON,E��vIAYOR President, Board of Directors ATTEST: ✓ ATTEST: �*Aaa )2" ?6+ac - fvw Kaythie Darnell, City Secretary Secretary APPROVED AS TO CONTENT: Paul Thompson, Managing Director of Electric Utilities APPROVED AS TO FORM: c Richard K. Casn , Natural Resources Attorney final2-operationmgmta_er-wtmpa.doc April 22. 1998 17