HomeMy WebLinkAboutResolution - 2009-R0464 - Amended & Restated Contract- Southwestern Public Service- Sale & Purchase, Water - 11_05_2009Resolution No. 2009—R0464
November 5, 2009
Item No. 5.10
RESOLUTION
BE IT RESOLVED BY THE CITY COUNCIL Oh 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 Amended and Restated
Contract for Sale and Purchase of Treated Sewage Effluent Water, by and between the
City of Lubbock and Southwestern Public Service Company, and any other related
documents. Said Contract is attached hereto and incorporated in this Resolution as of
fully set forth herein and shall be included in the minutes of the Council.
Passed by the City Council this 5th day of November 2009.
TOM MARTIN, MAYOR
ATTEST:
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Rebec a Garza, City Secretary QS
APPROVED AS TO CONTENT:
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Lee KAn Dumbauld, City Manager
amended&restated Contract-1'reated Sewage L•ffluent Watcr_res
] 1 /04/09
Execution Copy
Resolution No. 2009—RO464
AMENDED AND RESTATED
CONTRACT FOR SALE AND PURCHASE
OF TREATED SEWAGE EFFLUENT WATER
This amended and restated contract ("Contract") is made this 12th day of November 2009
between the City of Lubbock, a home -rule municipal corporation of Lubbock County, Texas
("City"), and Southwestern Public Service Company, a New Mexico utility corporation, having
its principal operating office in Amarillo, Potter County, Texas ("Company"), each acting by and
through its respective duly authorized officers. City and Company are sometimes referred to
separately as a "Party" and together as the "Parties."
RECITALS
WHEREAS, Company owns and operates an electricity generating station ("Generating
Station") located in Section 21, Block S, Lubbock County, Texas; and
WHEREAS, City owns and operates an activated sludge sewage treatment plant
("Treatment Plant") as a part of its sewage disposal system, which produces sewage effluent
water that is suitable and useable by Company as condensing water in the Generating Station;
and
WHEREAS, City and Company are parties to the Contract for Sale and Purchase of
Treated Sewage Effluent dated May 1, 1968, as amended by the Amendment dated October 1,
1992 (as so amended, "Original Contract"), whereby Company purchases treated sewage effluent
water from City; and
WHEREAS, City is in the process of reconstructing and improving the Treatment Plant
(as so reconstructed and improved, "New Treatment Plant"), which will discharge treated sewage
effluent water in greater quantities and quality than the Treatment Plant; and
WHEREAS, the term of the Original Contract was for a period of 35 years from June 1,
1971, and continuing thereafter until either City or Company gives the other three years' written
notice of its intention to terminate the Original Contract; and
WHEREAS, City desires to continue to sell to Company, and Company desires to
continue to purchase from City, treated sewage effluent water; and
WHEREAS, Company and City, through its municipally -owned public power utility,
Lubbock Power & Light ("LP&L"), are entering into an Asset Purchase Agreement dated as of
even date herewith ("APA"), whereby City will purchase certain electricity distribution assets
from Company;
NOW THEREFORE, in consideration of the mutual covenants herein contained, City and
Company hereby mutually agree to amend and restate the Original Contract in its entirety as
follows:
CHI-1722850Y12
ARTICLE I - QUANTITY
1.1 Initial Quantity. Beginning on the date of this Contract and continuing until
June 1, 2019, City shall sell and deliver, and Company shall purchase and accept delivery of, up
to seven million (7,000,000) gallons of treated sewage effluent water per calendar day at the
Delivery Point (as defined in Section 3.1).
1.2 Increased Quantity. If and when the "Closing" (as defined in the APA) occurs
under the APA, City shall thereafter sell and deliver, and Company shall thereafter purchase and
accept delivery of, up to nine million (9,000,000) gallons of treated sewage effluent water per
calendar day at the Delivery Point, or if the Closing does not occur but this Contract shall
nevertheless have been renewed or otherwise remains in effect after June 1, 2019, in accordance
with the terms of Article IX, City shall thereafter sell and deliver, and Company shall thereafter
purchase and accept delivery of, up to nine million (9,000,000) gallons of treated sewage effluent
water per calendar day at the Delivery Point.
ARTICLE II - RATE AND PAYMENT
2.1 Base Rate. Company shall pay City sixty cents ($0.60) per one thousand (1,000)
gallons of treated sewage effluent water ("Base Rate") delivered by City under the terms of this
Contract.
2.2 Annual Increase. Beginning with the contract year 2011 and continuing for the
term of this Contract, the Base Rate shall be adjusted annually by an amount equal to one percent
(1%) of the prior contract year's adjusted Base Rate (as so adjusted, "Adjusted Base Rate").
2.3 Substandard -Quality Rates and Penalties — Treatment Plant. If City delivers
treated sewage effluent water that fails to meet the quality standards set forth in Article VI, the
following rates and penalties shall apply:
(a) For all treated sewage effluent water delivered by City that has a pH lower
than 6.0 or higher than 9.0 as determined by grab sample or continuous
monitoring by Company at the Delivery Point, Company shall pay City a
total price of only one cent ($0.01) per one thousand (1,000) gallons.
(b) For all treated sewage effluent water delivered by City that fails to
conform to the quality standard for suspended solids (SS) or biochemical
oxygen demand (BOD) set forth in Sections 6.1(b) and 6.1(d), based on
samples to be taken at the Treatment Plant's effluent sump or the New
Treatment Plant's effluent sump, as the case may be, by 24-hour
composite sampling, analyzed by standard methods in City's laboratory,
and as reported to the Texas Commission on Environmental Quality, the
following percentage penalties shall apply to reduce the Base Rate or
Adjusted Base Rate then in effect:
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C H V 1722850v 12
SS or BOD Penalty
25-30 ppm 10%
31-35 ppm 20%
36-40 ppm 30%
41-50 ppm 50%
50 + ppm 100%
(c) For all treated sewage effluent water delivered by City that fails to
conform to the quality standards for residual chlorine set forth in Section
6.1(c), a 50% penalty shall apply.
(d) if treated sewage effluent water delivered by City fails to conform to more
than one of the quality standards set forth in Section 6.1, the penalty that
reduces the price the greatest amount shall apply, provided that the amount
of such penalty shall not exceed 100%.
ARTICLE III - DELIVERY POINT
3.1 Location. The "Delivery Point" of the treated sewage effluent water to be sold
and purchased under this Contract shall be the point at the Generating Station that is currently
connected to the Treatment Plant by the pipeline that is owned, operated and maintained by City
at no cost or expense to Company ("Pipeline") and is more specifically depicted in Attachment
"A" hereto, which is incorporated herein for all purposes.
3.2 Water Pressure. The water pressure at the Delivery Point shall be not less than 3
ARTICLE IV - MINIMUM CHARGE
4.1 Minimum Annual Requirement. The quantity of treated sewage effluent water
delivered and accepted under this Contract shall at all times be within the control of Company,
provided, however, that Company shall take and pay for, or pay for if not taken, a minimum of
one billion two hundred fifty million (1,250,000,000) gallons ("Annual Minimum Quantity") of
treated sewage effluent water each contract year after the date of this Contract, except that the
Annual Minimum Quantity and associated payment shall be pro rated for the remainder of the
current contract year.
4.2 Reduction of Annual Minimum Quantity.
(a) If Company demands, and City is unable to deliver due to Force Majeure
(as defined in Section 8.1), at least seven million (7,000,000) gallons of
treated sewage effluent water (or substitute water that meets or exceeds
the minimum quality specifications set forth in Article VI) per calendar
day pursuant to Section 1.1, or at least nine million (9,000,000) gallons of
treated sewage effluent water (or substitute water that meets or exceeds
the minimum quality specifications set forth in Article Vl) per calendar
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CHI-1722ssov12
day pursuant to Section 1.2, as the case may be, the Annual Minimum
Quantity for the applicable contract year shall be reduced for each
calendar day that City is unable to meet such Company demand by the
amount equal to the remainder of (i) seven million (7,000,000) or nine
million (9,000,000), as the case may be, minus (ii) the number of gallons
of such water actually delivered for each such day.
(b) if Company demands, and City fails to deliver for any reason other than
Force Majeure, at least seven million (7,000,000) gallons of treated
sewage effluent water (or substitute water that meets or exceeds the
minimum quality specifications set forth in Article VI) per calendar day
pursuant to Section 1.1, or at least nine million (9,000,000) gallons of
treated sewage effluent water (or substitute water that meets or exceeds
the minimum quality specifications set forth in Article VI) per calendar
day pursuant to Section 1.2, as the case may be, the Annual Minimum
Quantity for the applicable contract year shall be reduced by seven million
(7,000,000) or nine million (9,000,000), as the case may be, for each
calendar day that City fails to meet such Company demand; provided
however, that such reduction shall be in addition to any and all remedies
available to Company at law or in equity for City's failure to satisfy such
Company demand.
ARTICLE V - SALE OF SURPLUS
City shall have the right to supply and sell sewage effluent water to other users so long as
it is capable of meeting its obligations to Company under this Contract.
ARTICLE VI - QUALITY
6.1 Treatment Plant Water Quality Specifications. Until such time as the New
Treatment Plant comes online and is fully functional and operational, as determined solely by
City, the water delivered directly from the Treatment Plant to Company under this Contract will
be treated sewage effluent water and shall meet the following specifications:
(a) The water shall have a pH value of 6.0 to 9.0 by the standard method of
the American Public Health Association ("APHA") (or another method
mutually acceptable to the Parties), as determined on an average sample
obtained hourly over a 24-hour period prior to injection of chlorine.
(b) The water shall not contain in excess of 25 ppm suspended solids (SS), as
deten-nined by the standard method of the APHA (or another method
mutually acceptable to the Parties) at the Delivery Point.
(c) The water shall be treated with chlorine in such quantities that a free
residual chlorine of not less than one -tenth (0.10) ppm can be detected in a
sample from the water being delivered at the Delivery Point when it is
tested 15 minutes after the sample is taken, provided that this requirement
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CHI-1722850v12
may be altered at the option of Company to not less than a treatment
sufficient to prevent the formation of slime or algae in the Pipeline.
(d) The water shall not have a biochemical oxygen demand (BOD) in excess
of 25 ppm, as determined by the Winkler five-day 20' C method (or
another method mutually acceptable to the Parties) at the Delivery Point.
6.2 New Treatment Plant Water Quality Specifications. At such time as the New
Treatment Plant is online and fully functional and operational, as determined solely by City, the
water delivered directly from the New Treatment Plant to Company under this Contract will be
treated sewage effluent water of "stream quality" (as defined by the appropriate governmental
authority in the permit issued to City in connection with discharge from the New Treatment Plant
and as such definition may be changed from time to time thereafter by such governmental
authority when such permit is subsequently renewed or extended or by applicable law, rule or
regulation), which shall meet or exceed the specifications set forth in Sections 6.1(a), 6.1(b), and
6.1(d).
ARTICLE VII - MEASURING EQUIPMENT
7.1 Meters and Meter Readings. The water delivered under this Contract shall be
metered at the Delivery Point. City shall furnish, install, operate and maintain at the Delivery
Point a master meter of standard type for properly measuring the quantity of such water
delivered under this Contract. City shall install and maintain a control system, the type and
design of which will be determined solely by City, for the purpose of making satisfactory
delivery of such water. Company shall reimburse City for the cost of the meter and control
system and any subsequent maintenance thereof. If Company requests additional points of
delivery, City shall furnish, install, operate and maintain an equivalent number of additional
meters, provided that the cost of such additional meters and the cost of installing the same shall
be paid by Company. At its option and expense, Company may furnish, install, operate and
maintain check meters or other standard -type meters at any and all points of delivery. Company
shall have access to all such metering equipment at all reasonable times, but the reading,
calibration and adjustment of City's master meter shall be done only by employees or agents of
City. City shall keep a true record of all meter readings as transcribed from the reports of its
employees or agents with respect thereto. Upon written request of Company, City shall provide
Company with such information as Company may so request from City's records or permit
Company to have access to the same in the appropriate office of City during business hours.
7.2 Meter Calibration and Testing. City shall calibrate its metering equipment as
often as it considers necessary and at such times as Company may show reasonable evidence of
error, but at least every 12 months. If any test of City's metering equipment finds any
inaccuracy thereof to be in excess of two percent, registration thereof shall be corrected for a
period extending back to the time when such inaccuracy began, if such time is ascertainable, and
if such time is not ascertainable, then for a period extending back one-half of the time elapsed
since the last date of calibration, but in no event more than six months back. In the event
Company has not provided a check meter with respect to a City master meter that is for any
reason out of service or out of repair, so that the amount of water delivered under this Contract
cannot be ascertained or computed from the reading thereof, the amount of such water delivered
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CH 1-172285Qv 12
during the period such meter is out of service or out of repair shall be mutually determined by the
Parties by correcting the error, if the percentage of the error is ascertainable by calibration tests
or mathematical calculations, or by estimating the amount of such water delivered during such
period based on the amounts delivered during preceding periods under similar conditions when
such meter was registering accurately.
ARTICLE VIII - FORCE MAJEIJRE
8.1 Definition of Force Majeure. Neither Party shall be liable for any delay or
default in performance hereunder due to any cause beyond its control ("Force Majeure"),
including but not limited to acts of God or the public enemy, acts or orders of any court or other
federal, state or local goverrunental authority or any duly authorized officer, agent or agency
thereof, wars, riots, fires, floods, storms and other natural disasters, strikes, lock -outs and other
labor disturbances, transportation interruptions, freight or trade embargos, delays, exhaustion,
failure or open -market unavailability of necessary equipment, materials or services, or the
occurrence of other casualty or misfortune that delays or prevents a Party's performance of its
obligations under this Contract; provided, however, that the Party whose performance is so
delayed or prevented shall use its best efforts to remedy the situation.
8.2 Alternate Source of Supply. If City's inability to deliver treated sewage effluent
water for any reason (including but not limited to Force Majeure) shall continue for 24 hours,
City shall make every reasonable effort to obtain from any other available source and deliver to
Company substitute water that meets or exceeds the minimum quality specifications set forth in
Article Vl.
ARTICLE IX - TERM AND TERMINATION
9.1 Initial Term and Automatic Renewals. Subject to Section 9.2, unless earlier
terminated pursuant to Section 9.3, this Contract shall continue in full force and effect until
June 1, 2019, and, subject to Section 9.4, shalI renew automatically thereafter for additional one
(l) year term(s) on an annual basis until either Party gives the other Party five years' written
notice of its intention to terminate.
9.2 Automatic Extension of Initial. Term. If the Closing is consummated under the
APA, or if the APA is terminated by Company pursuant to Section 10.1(e), 10.1(g)(ii) or 10.1(h)
of the APA, the term of this Contract shall be extended automatically upon such consummation
or termination, as the case may be, until June 1, 2045, and shall renew automatically thereafter,
until terminated, in accordance with Section 9.1.
9.3 Termination for Breach of Representations and Warranties. If a breach of
any of the representations and warranties of either Party in Article 10 shall occur and have a
materially adverse effect on the nonbreaching Party, the nonbreaching Party may terminate this
Contract if such breach is not cured by the breaching Party within 30 days after the breaching
Party's receipt of written notice of such breach from the nonbreaching Party-
9.4 Termination for Seller Breach of APA. Notwithstanding anything herein to the
contrary, if the APA is terminated by City pursuant to Section 10.1(d)(i) of the APA, this
Q
CHI-17228500 2
Contract shall automatically terminate on June 1, 2019, without further action being taken by
City.
ARTICLE X - REPRESENTATIONS AND WARRANTIES
10.1 Representations and Warranties of Company. Company represents and
warrants to City that:
(a) Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Mexico and is qualified to do
business in each other jurisdiction where the failure to so qualify would
have a material adverse effect upon the business or financial condition of
Company, and Company has all requisite power and authority to conduct
its business, as currently conducted and as contemplated by this Contract,
to own its properties, and to execute, deliver and perform its obligations
under this Contract.
(b) The execution, delivery and performance of this Contract will not conflict
with or constitute a breach or default under any contract or agreement of
any kind to which Company is a party or any judgment, order, statute or
regulation that is applicable to Company.
(c) To the knowledge of Company, all approvals, authorizations, consents, or
other action(s) required by any governmental authority to authorize
Company's execution, delivery and performance of this Contract have
been duly obtained and are in full force and effect.
(d) Except as may be set forth on Schedule 10. l (d) to this Contract, there are
no legal proceedings pending or, to the knowledge of Company,
threatened in writing that would prohibit or otherwise adversely affect the
transactions contemplated in this Contract.
10.2 Representations and Warranties of City. City represents and warrants to
Company that:
(a) City is a home -rule municipal corporation and political subdivision of the
State of Texas, duly organized, validly existing and in good standing
under the laws of the State of Texas and is qualified to do business in the
State of Texas, and City has all requisite power and authority to conduct
its business, as currently conducted and as contemplated by this Contract,
to own its properties, and to execute, deliver and perform its obligations
under this Contract.
(b) The execution, delivery and performance of this Contract will not conflict
with or constitute a breach or default under any contract or agreement of
any kind to which City is a party or any judgment, order, statute or
regulation that is applicable to City.
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CHI- 1722850v 12
(c) To the knowledge of City, all approvals, authorizations, consents, or other
action(s) required by any governmental authority to authorize City's
execution, delivery and performance of this Contract have been duly
obtained and are in full force and effect.
(d) Except as may be set forth on Schedule 10.2(d) to this Contract, there are
no legal proceedings pending or, to the knowledge of City, threatened in
writing that would prohibit or otherwise adversely affect the transactions
contemplated in this Contract.
ARTICLE XI - GENERAL
11.1 Unit of Measurement. The unit of measurement for water delivery hereunder
shall be one thousand (1,000) gallons of water US standard liquid measure.
11.2 No Carry -Over Rights. If Company does not use the total amount of treated
sewage effluent water to which it is entitled in any particular year, it shall not retain any carry-
over rights into succeeding years.
11.3 Water Not for Resale. This Contract has been authorized and is being entered
into by City for the purpose of providing Company with a sufficient supply of condensing water
for the operation of the Generating Station and not for the resale of treated sewage effluent water
by Company.
11.4 No Arbitrary, Capricious or Unreasonable Exercise of Discretion. No
provision of this Contract that allows or provides for any action to be taken or not taken, or any
determination to be made, in the discretion or with the consent or concurrence of either Party
shall be construed as allowing such consent or nonconsent, concurrence or nonconcurrence, or
other exercise of discretion to be arbitrary, capricious or otherwise manifestly unreasonable,
regardless of whether such exercise of discretion is to be final and conclusive.
11.5 Remedies and Waivers. All rights of action for breach of this Contract are
reserved to City and Company, and nothing contained in this Contract shall be construed as
abridging, limiting or depriving City or Company of any means of enforcing any remedy either
at law or in equity for the breach of any provision hereof that either Party would otherwise have.
The waiver of a breach of any one of the provisions of this Contract shall not be deemed to be a
waiver of any other provision hereof or any other or subsequent breach of the same or any other
provision hereof.
11.6 Notices. Any notice authorized or required by this Contract shall be deemed
properly given if delivered personally or by facsimile transmission (if followed by overnight
courier or registered or certified mail in the manner described in this Section 11.3) or by
overnight courier or registered or certified mail (with postage prepaid and return receipt
requested) to the Parties at the following addresses (or at such other address for a Party as shall
be specified by like notice, provided that any notice of a change of address shall be effective only
upon receipt thereof):
CH F 172285Qv 12
(a) If to Company, to:
Southwestern Public Service Company
414 Nicollet Mall, 71h Floor
Minneapolis, MN 55401-1927
Facsimile: (612) 215-4575
Attention: Paras Shah, Director,
Business Development
with a copy to.
Southwestern Public Service Company
414 Nicollet Mall
Minneapolis, MN 55401-1927
Facsimile: (612) 215-9025
Attention: Michael C. Connelly, Vice
President and General Counsel
(b) If to City, to:
City of Lubbock
Mail: P.O. Box 2000
Lubbock, Texas 79457
Office: 1625 13th
Lubbock, Texas 79401
Facsimile: 806-775-2051
Attention: City Manager
with copies to:
City of Lubbock
P.O. Box 2000
Lubbock, Texas 79457
Facsimile: 806-775-3 074
Attention: Marsha Reed, Chief
Operational Officer
All such notices and other communications hereunder shall be deemed to have been received (i)
if by personal delivery, on the day delivered, (ii) if by facsimile, on the day such facsimile is
confirmed as received by the receiving facsimile machine (provided that a copy is also sent by
overnight courier or registered or certified mail in the manner prescribed in this Section 11.6),
(iii) if by overnight courier, on the first business day following the day on which the notice or
other communication was sent, and (iv) if by registered or certified mail, on the third day after
registration or certification of such notice or other communication.
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CHI-172285Ov 12
11.7 Blue Pencilling. If any provision of this Contract shall be held by any court of
competent jurisdiction to be invalid under existing law or would operate under existing law to
render this Contract unenforceable, then such provision shall be deemed to be deleted here from
insofar as shall be necessary to render this Contract enforceable under existing law, and this
Contract shall remain in full force and effect in all other respects.
11.8 City Permits. City shall take, at its sole cost and expense, all necessary actions to
acquire and maintain any discharge permits, approvals or licenses required to perform the
obligations undertaken by it under this Contract, and to the extent permitted by law, Company
shall assist City, at City's sole cost and expense, with any efforts by City to acquire said permits,
approvals or licenses.
11.9 Company Permits. Company shall take, at its sole cost and expense, all actions
necessary to acquire and maintain any permits, approvals or licenses required to permit
Company's disposition of water delivered by City pursuant to this Contract, and to the extent
permitted by law, City shall assist Company, at Company's sole cost and expense, with any
efforts by Company to acquire said permits, approvals or licenses.
11.10 Company Liable for Disposition of Water. Company is solely responsible for
all water received by it in accordance with this Contract at the Delivery Point, including but not
limited to the disposal thereof and any costs or expenses associated therewith. City shall not be
liable for any claims or damages resulting from any act or omission of Company in connection
with such water after delivery to Company at the Delivery Point.
(Signature Page Follows]
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CHI-1722850v12
Executed the date first written above.
CITY OF LUBBOCK: SOUTHWESTERN PUBLIC SERVICE COMPANY:
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Tom Martin, Mayor Name: o�vid M. 5� b
Title: VIGC. Pfr,"lAe-A aG��
ATTEST:
Rebecca Garza, City Secretary
APPROVED AS TO CONTENT:
Lee Ann Dumbauld, City Manager
APPROVED AS TO FORM:
Mitchell Satterwhite,
Assistant City Attorney
CONTRACT FOR SALE AND PURCIIASE OF
TREATED SEWAGE EFFLUENT WATER
SIGNATURE PAGE
Executed the date first written above.
CITY OF LUBBOCK: SOUTHWESTERN PUBLIC SERVICE COMPANY:
Tom Martin, Mayor Name:
Title:
ATTEST:
Reb ca CJarza, City Secretary
APPROVED AS TO CONTENT:
4&&44��
Le Ann Dumbauld, City Manager
APPROVED AS TO FORM:
CIA,
i i!i
CONTRACT FOR SALE AND PURCHASE OF
TREATED SEWAGE EFFLUENT WATER
SIGNATURE PACE
ATTACHMENT "A"
Resolution No. 2009-RO464
CHI-1722850v12
Resolution No. 2009-RO464
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