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HomeMy WebLinkAboutResolution - 1086 - Ratify Contract, R#1070 - SWPSC - Option & Purchase Of Treated Sewage Effluent - 04_22_1982JPB:cl RESOLUTION i RESOLUTION 1086 - 4/22/82 Ratifies Resolution 1070 - 4/8/82 WHEREAS, at its regular meeting of April 8, 1982, the City Council autho- rized the Mayor to execute a Contract for Option and Purchase of Treated Sewage Effluent, subject to certain conditions contained in such resolution including ratification of the final document by the City Council; and, WHEREAS, such conditions precedent to such contract have been accomplished as specified; and, WHEREAS, the City Council finds that the ratification of such option contract with Southwestern Public Service Company is in the best interest of Citizens of the City of Lubbock, Texas; NOW THEREFORE: BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Contract for Option and Purchase of Treated Sewage Effluent be- tween the City of Lubbock, Texas and Southwestern Public Service Company, as heretofore executed by the Mayor as authorized and directed by Resolution of th City of Lubbock, Texas, enacted on the 8th day of April, 1982, which said Contract for Option and Purchase of Treated Sewage Effluent, attached herewith which 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 in detail, is hereby in all things, including its terms, condition and manner of execution, RATIFIED and CONFIRMED as valid and binding action by the City of Lubbock, Texas. Passed by the City Council the 22nd day of April, 1982. r BIL McALISTER, MAYOR ATTEST: Evelyn Ga fga, City Seery-Treasurer APPROVED AS TO CONTENT: - __ - - � , , / )Azr L am Wahl, Director of Water tilities APPROVED AS TO FORM: r ames P. Brewster, Civil Trial Attorney RESOLUTION 1086 - 4/22/82 _ Ratifies Resolution 1070 - 4/8/82 61TY SECRETARY TREASURER Q4� CONTRACT FOR OPTION AND PURCHASE OF TREATED SEWAGE EFFLUENT This Contract for Option and Purchase of Treated Sewage Effluent ("Agree- ment") is entered into, subject to the provisions of Article VIII of this Agreement, by the City of Lubbock, Texas, a home rule municipal corporation located in Lubbock County, Texas ("City") and Southwestern Public Service Company, a New Mexico corporation qualified to transact business in Texas ("SPS"). The terms and conditions of this Agreement shall be in effect during the Initial Term (as defined in Section 6.1 of this Agreement) and any Ex- tended Term (as defined in Section 6.2 of this Agreement). I. RECITATIONS Section 1.1. City Water System. The City owns and operates a municipal water system which provides water to residential and commercial customers within the boundaries of the City and in the immediate surrounding area. Section 1.2. Sewage Treatment System. The City owns and operates a 12,000,000 gallon per day activated sludge sewage treatment system which collects and treats sewage and other waste from within the boundaries of the City and the immediate surrounding area. Section 1.3. Water. As a result of the City's operation of its sewage treatment system (both current operations and future anticipated operations), waste water is accumulated. Section 1.4. SPS Operations. SPS owns and operates an electric utility system which provides retail and wholesale electrical service to residential and commercial customers within the boundaries of the City and in the sur- rounding area. SPS's system presently includes an electric generating station which is located in Section 21, Block S, G.C.&S.F. Railroad Company Survey, Lubbock County, Texas ("Jones Station"). Section 1.5. Future SPS Operations. SPS is currently contemplating the con- struction of an additional electric generating station in Lubbock County, Texas (this anticipated station, for the purposes of this Agreement only, will be referred to as "SPS 6 and 7 Station"). The anticipated completion date of SPS 6 and 7 Station is March 1, 1989 for Unit I and March 1, 1992 for Unit II. Section 1.6. SPS Requirements. As one step in SPS's efforts to locate SPS 6 and 7 Station in Lubbock County, Texas, it is necessary for SPS to secure a dependable supply of water for its contemplated operations. Section 1.7. Previous Agreements. The City and SPS have previously entered into the Jones Agreement (as defined in Section 2.1 of this Agreement) which provides for the sale of Reclaim Water (as defined in Section 2.10 of this Agreement) to SPS for use at Jones Station. Section 1.8. Disposal Agreement. The City Commission of the City has deter- mined that it is in the best interest of the City and its residents for the City to enter into this Agreement which enables the City to sell and dispose of Reclaim Water and at the same time provides a source of water to SPS for use at SPS 6 and 7 Station. II. DEFINITIONS In addition to the words and terms defined elsewhere in this Agreement, the following words and terms as used in this Agreement shall have the follow- ing meanings: Section 2.1. Jones Agreement. The term "Jones Agreement" as used in this Agreement shall mean that contract dated May 1, 1968 between the City and SPS covering the sale and purchase of Reclaim Water. Section 2.2. Jones Station Point of Delivery. The term "Jones Station Point of Delivery" as used in this Agreement shall mean the point on the Jones Station Property where Reclaim Water passes from City -owned pipelines to SPS- owned facilities. ERF 4/16/82 -1- Section 2.3. Jones Station Property. The term "Jones Station Property" as used in this Agreement shall mean the portion of Section 21, Block S, G.C.&S.F. Railroad Company Survey, Lubbock County, Texas owned by SPS. Section 2.4. Jones Station Water. The term "Jones Station Water" as used in this Agreement shall mean the Reclaim Water supplied by the City to SPS for use at Jones Station. Section 2.5. LP&L. The term "LP&L" as used in this Agreement shall mean Lubbock Power and Light Company, a municipal electric utility, owned by the City. Section 2.6. SPS 6 and 7 Station Point of Delivery. The term "SPS 6 and 7 Station Point of Deliveryas used in this Agreement shall mean the point where Reclaim Water destined for use at SPS 6 and 7 Station passes from City - owned facilities to SPS-owned facilities, which point, subject to further agreement of the Parties, will be adjacent to City's Southeast Lubbock Water Reclamation Plant. This exact point will be determined by the parties at a later date, and when determined, a complete description of the SPS 6 and 7 Station Point of Delivery will be attached to this Agreement as Exhibit "A". Section 2.7. SPS 6 and 7 Station Property. The term "SPS 6 and 7 Station Property" as used in this Agreement shall mean the property owned by SPS surrounding the SPS 6 and 7 Station. Upon final location of SPS 6 and 7 Station by SPS, SPS will provide the City a full legal description of the SPS 6 and 7 Station Property, which will then be attached to this Agreement as Exhibit "B". Section 2.8. SPS 6 and 7 Station Water. The term "SPS 6 and 7 Station Water" as used in this Agreement shall mean the Reclaim Water supplied by the City to SPS for use at SPS 6 and 7 Station. Section 2.9. Point of Delivery. The term "Point of Delivery" as used in this Agreement shall mean collectively the Jones Station Point of Delivery and the SPS 6 and 7 Station Point of Delivery. Section 2.10. Reclaim Water. The term "Reclaim Water" as used in this Agree- ment shall mean treated sewage effluent from the City's existing and future sewage treatment plants. Section 2.11. Substitute Water. The term "Substitute Water" as used in this Agreement shall mean any water supplied by the City to SPS in place of Reclaim Water, to enable SPS to operate SPS facilities situated in Lubbock County, Texas. III. OBLIGATIONS OF THE PARTIES Section 3.1. Jones Station Water. The City will make available to SPS at the Jones Station Point of Delivery SEVEN MILLION SEVEN HUNDRED THOUSAND (7,700,000) gallons of Reclaim Water per day. Section 3.2. SPS 6 and 7 Station Water. The City will make available to SPS at the SPS 6 and 7 Station Point of Delivery, beginning on March 1, 1989 ("Unit I Commencement Date") TEN MILLION ONE HUNDRED THOUSAND (10,100,000) gallons of Reclaim Water per day. The City will thereafter make available to SPS at the SPS 6 and 7 Station Point of Delivery, beginning on March 1, 1992 ("Unit II Commencement Date"), in the aggregate, TWENTY MILLION TWO HUNDRED THOUSAND (20,200,000) gallons of Reclaim Water per day. The City acknowledges that, due to the uncertainties of construction and other unknown factors, SPS may find it necessary to change the Unit I Commencement Date and the Unit II Commencement Date. If SPS determines that it is necessary to change these two dates, SPS will notify the City in writing of any change as soon as SPS deter- mines that the change is necessary. Written notification of any change, a copy of which notification, if any, will be attached to this Agreement as Exhibit "E," will amend this Section with regard to either or both commence- ment dates. In no event will either the Unit I or Unit II Commencement Date be extended more than two (2) years without the consent of the City. Commencing on January 1 of the year following the Unit I Commencement Date, as that date may be changed from time to time in accordance with the terms of ERF 4/16/82 -2- this Agreement, and continuing until January 1 of the year following the Unit II Commencement Date, as that date may be changed from time to time in accor- dance with the terms of this Agreement, SPS will take from the City a minimum of one billion (1,000,000,000) gallons of Reclaim Water per year. Commencing on January 1 on the year following the Unit II Commencement Date, as that date may be changed from time to time in accordance with the terms of this Agreement and continuing for the Term of this Agreement only, SPS will take from the City a minimum of two billion (2,000,000,000) gallons of Reclaim Water per year. Section 3.3. Standards for Reclaim Water. All Reclaim Water delivered to SPS by the City shall: (a) have a pH value of not less than 6.8 nor more than 9.0 when measured according to the Standard Method of the American Public Health Association ("APHA") or according to any other mutually acceptable method as determined on an average sample obtained hourly over any twenty-four (24) hour period and at a point prior to the injection of chlorine; (b) at the Point of Delivery, contain less than twenty-five (25) ppm (parts per million) suspended solids ("SS"), when measured according to the Standard Method of the APHA, or according to any other mutually acceptable method; (c) at the Point of Delivery, have a biochemical oxygen demand ("BOD") less than twenty-five (25) ppm, as determined by the standard method of the APHA or any other mutually acceptable method; (d) at the Point of Delivery, contain less than ten (10) ppm grease and oil, as determined by Standard Methods for the Examination of Water and Wastewater, 14th Edition, or any other mutually acceptable method; and (e) be treated with chlorine to the extent that a free available residual chlorine of not less than one -tenth (0.1) ppm can be detected in a sample taken at the Point of Delivery when tested fifteen (15) minutes after the sample is taken. This requirement may be altered at SPS's sole option to provide for sufficient treatment to prevent the formation of slime or algae in any line or facility utilized to transport Reclaim Water, however, chlorination in excess of one -tenth (0.1) ppm shall be at SPS expense. Section 3.4. Jones Station Delivery Facilities. The pipeline, pipeline easements, pumping station, and other delivery facilities currently being used to deliver Reclaim Water to the Jones Station Point of Delivery ("Jones Sta- tion Delivery Facilities") are owned, operated, and maintained by the City according to the Jones Agreement. Except as set out in Section 5.6 of this Agreement, the City will continue to own, operate and maintain the Jones Station Delivery Facilities at the City's expense. Section 3.5. SPS 6 and 7 Station Delivery Facilities. The exact location of the SPS 6 and 7 Station Point of Delivery and facilities to deliver the Re- claim Water, including a pipeline, pipeline easements, pumping station, and other necessary delivery facilities ("SPS 6 and 7 Station Delivery Facili- ties") will not be determined by the time this Agreement is executed. SPS will construct, own, operate and maintain the SPS 6 and 7 Station Delivery Facilities. For the same consideration City will grant SPS all rights -of -way necessary for the location, construction, replacement, removal, maintenance, and operation of a pipeline and pumping station on, under, over, and across all present and future public streets, roads, highways, lanes, avenues, side- walks, bridges, alleys and on other public grounds and public rights -of -way which may be legally and practically available for the pipeline and the pump- ing station. SPS will provide all electric power needed to operate the SPS 6 and 7 Station Delivery Facilities. Section 3.6. Water Pressure. Water pressure at the point of entry to the Jones Station Reactor shall be maintained by the City at not less than 3 psi. ERF 4/16/82 -3- Section 3.7. Testing. Testing, to determine whether or not Reclaim Water complies with the standards set out in Section 3.3 of this Agreement, shall be performed by the City, at the City's expense, with sufficient frequency to accurately determine water quality at all times. SPS shall have the right to be present at and observe all testing and to perform its own tests, if de- sired. If the City's test results and SPS's test results are different, SPS may, at its own expense, have additional tests performed by a mutually agree- able third party. The results of any tests performed by a third party, in accordance with this Section 3.7, shall be binding on the parties and shall be used for all purposes of this Agreement. Results of third party tests, as described, will be applied retroactively to all computations for the previous thirty (30) days or to the date of the last third party tests, if any, which- ever period of time is shorter. All results of tests made by the City shall be made available to SPS upon request. Section 3.8. Metering. The City shall, at its sole expense, provide and maintain sufficient metering equipment to accurately measure the quantity of all Reclaim Water taken by SPS in accordance with this Agreement. The City will, at its sole expense, calibrate all metering equipment at least once semi-annually. SPS may request additional calibration in the presence of an SPS representative; however, if any additional calibration indicates that the metering equipment on which additional calibration was performed was accurate (within plus or minus 2%), SPS shall pay the expense of the additional cali- bration. If, upon any calibration, the metering equipment is determined to be inaccurate, (in excess of plus or minus 2%), the City will pay for the cali- bration and correct the registration for one-half (1/2) of the time elapsed since the last calibration. Section 3.9. Substitute Water. If the City is unable for any reason, in- cluding Force Majeure, to deliver or make available to SPS the quantities of Reclaim Water stated in Sections 3.1 and 3.2 of this Agreement, the City will make every reasonable effort to supply to SPS Substitute Water from any other source available at a rate equal to the City's cost of the Substitute Water. Nothing contained in this Agreement shall obligate the City to supply Reclaim Water from sources other than sewage flows from present, future and contem- plated City sewage reclamation faciliites. Section 3.10. Availability and Disposal. It is the obligation of the City under this Agreement to make available to SPS all Reclaim Water as it is produced daily from the City's existing and future treatment plants up to the quantities set out in Article III of this Agreement. The City shall, however, have no duty to construct or maintain any storage capacity in excess of that which currently exists, if any. All quantities of Reclaim Water made avail- able to SPS in accordance with this Agreement and not taken by SPS as it is made available, may be disposed of by the City at the City's discretion. Section 3.11 City Permits. Upon receipt by City of Exhibit "B" as required in Section 2.7 of this Agreement it shall be the sole responsibility of City to proceed with reasonable promptness to secure all permits, approvals and licenses required to authorize the delivery of Reclaim Water to SPS from the Texas Department of Water Resources, Texas Water Commission and any other departments of the State or Federal Government having jurisdiction. Section 3.12. Cost of City Permits. The cost of securing the permits, ap- provals and licenses described in Section 3.11 of this Agreement shall be the sole responsibility of City. SPS will cooperate with City in obtaining any permits, approvals and licenses needed in connection with this Agreement. Section 3.13. SPS Permits. SPS will secure all permits, approvals and li- censes required to authorize SPS' disposition of Reclaim Water. SPS shall have the sole responsibility and shall bear all costs of disposition of Re- claim Water received by SPS and shall bear all costs for the facilities neces- sary for disposition of Reclaim Water. Section 3.14. Cost of SPS Permits. The cost of all permits, approvals and licenses described in Section 3.13 of this Agreement shall be the sole respon- sibility of SPS. City agrees to cooperate with SPS in obtaining any permits, approvals and licenses needed in connection with this Agreement. ERF 4/16/82 -4- Section 3.15. Other Disposition. SPS shall have full authority to select the manner of disposition of Reclaim Water, including re -sale, so long as the method of disposition is in full compliance with all applicable laws and regulations of the state and federal agencies regulating same, and in compli- ance with the provisions of all permits, approvals and licenses granted to SPS regarding disposition. Section 3.16. New System. The City will construct or cause to be construct- ed, by Unit II Commencement Date, adjacent to the City's Southeast Lubbock Water Reclamation Plant, at the City's sole expense, a new activated sludge sewage treatment system ("New System"), with the capacity to treat and deliver an additional thirteen million (13,000,000) gallons of Reclaim Water per day. The New System, when completed, will be utilized in part by the City to comply with the City's obligations to supply Reclaim Water to SPS in the quantities and meeting the standards of quality set out in this Agreement. IV. REPRESENTATIONS AND WARRANTIES Section 4.1. Representations and Warranties of the City. The City repre- sents and warrants to SPS that: (a) the City is a legally existing home rule municipal corporation, incorporated under the laws of the State of Texas, is capable of perform- ing all of its obligations contained in this Agreement, and has all requisite power and authority to enter into this Agreement and to carry out its terms. (b) there is no action, proceeding or investigation pending, or threatened, and there is no term of any charter, ordinance, mortgage, indenture, bond, contract, agreement, instrument, judgment, decree, order, statute, rule or regulation, which in any way prevents or inter- feres with or adversely affects the City entering into this Agreement, or the validity of this Agreement as to the City or the carrying out by the City of any of the terms of this Agreement; (c) other than the items mentioned in Sections 3.11-3.15 of this Agreement, no further approval of the transactions contemplated by this Agreement is required from any federal, state or local agency or author- ity; and (d) this Agreement has been duly and validly authorized by all necessary action and when executed and delivered will constitute a valid and binding instrument of the City in accordance with its terms. Section 4.2. Representations and Warranties of SPS. SPS represents and war- rants to the City that: (a) SPS is a corporation duly organized and validly existing in good standing under the laws of the State of New Mexico, is qualified to transact business in the State of Texas, and has all requisite corporate power and authority to enter into this Agreement and to carry out its terms; (b) there is no action, proceeding or investigation pending, or as far as SPS is aware, threatened, and there is no term of any charter, bylaw, mortgage, indenture, contract, agreement, instrument, judgment, decree, order, statute, rule or regulation, which in any way prevents or interferes with or adversely affects the entering into by SPS of this Agreement, or the validity of this Agreement as to SPS, or the carrying out by SPS of any of its obligations under this Agreement; (c) other than the items mentioned in Sections 3.11-3.15 of this Agreement, SPS is not required to obtain any further approval, action, waiver or consent of any governmental body for its execution, delivery or performance of this Agreement; and (d) this Agreement has been duly and validly authorized by all necessary corporate action and when executed and delivered will consti- tute a valid and binding Agreement of SPS in accordance with its terms. ERF 4/16/82 -5- V. WATER RATES AND PAYMENT Section 5.1. Initial Base Rates. For all Reclaim Water delivered by the City to SPS at the Point of Delivery, SPS agrees to pay the City the following rates ("Initial Base Rates"), based on the unit measure of one thousand (1,000) gallons of water, U.S. Standard Liquid Measure: (a) For the first fifty million (50,000,000) gallons per month -- twenty cents (20C) per one thousand (1,000) gallons. (b) For the next fifty million (50,000,000) gallons per month -- ten cents (100 per one thousand (1,000) gallons. (c) For the next one hundred seventy-five million (175,000,000) gallons per month -- five cents (5C) per one thousand (1,000) gallons. (d) For all over two hundred seventy-five million (275,000,000) gallons per month -- two cents (2C) per one thousand (1,000) gallons. Section 5.2. Initial Base Rate Adjustment. The Initial Base Rates set out in Section 5.1 of this Agreement shall be adjusted annually in the following manner. On each anniversary of the 1st day of the month following the Execu- tion Date ("Annual Adjustment Date") the rates to be charged for Reclaim Water for the next year ("R") will be calculated as follows: R=AB C WHERE: A = each rate charged for Reclaim Water in the year preceding the Annual Adjustment Date ("Annual Adjustment Year"), B = the average cost per kilowatt hour of electric energy delivered by SPS to LP&L during the Annual Adjustment Year (in accordance with SPS wholesale rates applicable to LP&L), except that "B" shall not ekceed the calculated cost per kilowatt hour of firm power delivered to LP&L by SPS at a load factor of 75% during the Annual Adjustment Year, and C = the average cost per kilowatt hour of electric energy delivered by SPS to LP&L during the year immediately preceding the Annual Adjust- ment Year (in accordance with SPS wholesale rates applicable to LP&L), except that "C" shall not_exceed the calculated cost per kilowatt hour of firm power delivered to LP&L by SPS at a load factor of 75% during the year immediately preceding the Annual Adjustment Year. (For any year that no wholesale electric energy is delivered to LP&L by SPS, SPS's Large General Service Rate, including fuel costs, for Texas will be used to calculate the rate adjustment in place of the SPS/LP&L wholesale rate.) Section 5.3. Flow Payment. In addition to the other amounts payable to the City in accordance with this Agreement, SPS agrees to pay monthly to the City (within thirty (30) days after SPS receives an invoice setting out in detail the City's calculation of the amount due), Flow Payments ("Flow Payments"), calculated in the following manner. On June 1, of each year the number of gallons of Reclaim Water delivered to SPS by the City each week during the previous twelve (12) months will be determined. The least number of gallons delivered per week during the previous twelve (12) months of each year ("Mini- mum Weekly Flow"), shall be used to calculate Flow Payments due the succeeding year. For monthly billing purposes the Minimum Weekly Flow will be divided by seven (7) to establish the "Constant Flow". The Constant Flow will then be multi- plied by the number of days in the billing month to establish the "Monthly Constant Flow". The actual number of gallons of Reclaim Water delivered by the City to SPS during the billing month will then be compared to the Monthly Constant Flow. If the actual number of gallons of Reclaim Water delivered to SPS by the City in the billing month is less than the Monthly Constant Flow, the Flow Payment for that month shall be the actual number of gallons delivered that month ERF 4/16/82 -6- divided by one thousand (1,000) and multiplied by one cent (1C). If the actual number of gallons of Reclaim Water delivered in the billing month is in excess of the Monthly Constant Flow the Flow Payment for that billing month shall be the sum of (i) the Monthly Constant Flow divided by one thousand (1,000) and multiplied by one cent (1C) and (ii) the number of gallons of Reclaim Water delivered to SPS by the City that month in excess of the Monthly Constant Flow divided by one thousand (1,000) and multiplied by two and one- half cents (21C). Section 5.4. Annual Adjustment of Flow Payment. As the Minimum Weekly Flow used to determine the Flow Payment is based on the previous years experience and is thus an estimate of the actual Minimum Weekly Flow, upon a determin- ation of the actual Minimum Weekly Flow, to be used to estimate the succeeding years Flow Payments, the parties will use the actual Minimum Weekly Flow to adjust any payments made during the past year which would have been different had the actual Minimum Weekly Flow been known. Debits and credits to adjust past Flow Payments to the actual Minimum Weekly Flow shall be reflected on the next monthly invoice to SPS. Section 5.5. Penalties for Non -Conforming Reclaim Water. If Reclaim Water delivered to SPS by the City does not conform to the Standards set out in Section 3.3 of this Agreement, SPS, at its option, may either refuse delivery of the non -conforming Reclaim Water or take delivery of the water subject to the following adjustments in the price of the nonconforming Reclaim Water. The following penalties shall have no effect on the provisions of Sections 5.3, 5.4, 5.6, 5.7, or 5.6 of this Agreement. (a) For all Reclaim Water delivered to SPS by the City that does not conform to the Standards set out in Section 3.3(a) of this Agreement, SPS will pay to the City a total of one cent (1C) per one thousand (1,000) gallons. (b) For all Reclaim Water delivered to SPS by the City that does not conform to the Standards regarding SS or BOD set out in Sections 3.3(b) and (c) of this Agreement, the following percentage penalties shall be applied to reduce the payments specified in Sections 5.1 and 5.2 of this Agreement. BOD or SS Penalty 25-30 ppm 10% 31-35 ppm 20% 36-40 ppm 30% 41-50 ppm 50% 51- + ppm 100% (c) The cost of all Reclaim Water delivered to SPS by the City that does not conform to the Standards set out in Section 3.3(d) of this Agreement, will be reduced by five per cent (5%) for each ppm in excess of the Standard. (d) The cost of all Reclaim Water delivered to SPS by the City that does not conform to the Standards set out in Section 3.3(e) of this Agreement will be reduced by six cents (6C) per one thousand (1,000) gallons. (e) Should Reclaim Water delivered to SPS by the City fail to conform to more than one of the Standards set out in Section 3.3 of this Agreement, the applicable penalty which reduces the overall cost of Reclaim Water the greatest amount, will be imposed. In no event shall any penalty imposed exceed 100% of the amounts due under Sections 5.1 and 5.2 of this Agreement. Section 5.6. Pumping Cost Reimbursement. In addition to those payments due the City in accordance with other Sections of this Agreement, SPS agrees to reimburse all costs incurred and paid by the City for electric power needed to pump Reclaim Water from the City's Southeast Lubbock Water Reclamation Plant to the Jones Station Point of Delivery. SPS will have the right to provide this electric power itself if the costs to be reimbursed to the City are, in SPS's opinion, excessive. ERF 4/16/82 -7- Section 5.7. Surcharge. In addition to other amounts payable to the City in accordance with this Agreement, SPS will pay the City, monthly, within thirty (30) days after receipt by SPS of an invoice setting out in detail the City's calculation of the amount due, a surcharge of two (2) cents per one thousand (1,000) gallons for Reclaim Water delivered to SPS by the City. Section 5.8. Energy Charge. In addition to other amounts payable to the City in accordance with this Agreement, SPS will pay the City, monthly, within thirty (30) days after receipt by SPS of an invoice setting out in detail the City's calculation of the amount due, an energy charge ("EC") calculated as follows: Energy Charge = (A)(C)(D) (B) WHERE: A = the total number of kilowatt hours used by the City (during the month for which an energy charge is being made) ("Calculation Period") in the City's operation of its activated sludge sewage treatment systems, B = the total number of one thousand (1,000) gallon units of water treated by the City's activated sludge sewage treatment systems during the Calculation Period, C = the total charge per kilowatt hour for electric energy billed to LP&L by SPS for all wholesale power delivered to LP&L by SPS during the Calculation Period, except that "C" shall not exceed the calculated cost per kilowatt hour of firm power delivered to LP&L by SPS at a load factor of 75% during the Calculation Period. D = the total number of one thousand (1,000) gallon units of acti- vated sludge treated Reclaim Water delivered per day to SPS by the City in excess of twelve million (12,000,000) gallons per day during the Calculation Period. If, during any Calculation Period no electric energy is delivered to LP&L by SPS, "C" in the above equation will be equal to "C" in the most recent calcu- lation of EC, assuming no change in SPS's Large General Service Rate for Texas since the most recent calculation of EC. If, during any Calculation Period in which no electric energy is delivered to LP&L by SPS, there is a change in SPS's Large General Service Rate for Texas, including fuel costs, "C" will be adjusted up or down for that Calculation Period (and will remain the same until any further adjustment in SPS's Large General Service Rate in Texas, including fuel costs, at which times "C" will again be adjusted in the same manner) in the same percent as the change in SPS's Large General Service Rate for Texas, including fuel costs. Section 6.1. Initial Term. The initial term ("Initial Term") of this Agree- ment shall be for a period of thirty-seven (37) years, commencing, subject to SPS's exercise of the Option, on the earlier to occur of (a) January 1, 1987, or (b) the placing of all or any part of SPS 6 and 7 Station improvements on the tax rolls of Lubbock County, Texas, or any other member of the Lubbock County Tax Appraisal District having the authority to tax SPS 6 and 7 Station ("Commencement Date"). The Commencement Date, when established, shall be stated in a letter to be executed by both parties to this Agreement. A copy of the letter is to be attached to this Agreement as Exhibit "C". Section 6.2. Extended Term. The term of this Agreement shall be automati- cally extended from year to year ("Extended Term") after the expiration of the Initial Term, subject to the termination provisions contained in Section 6.3 of this Agreement. Section 6.3. Termination. This Agreement may be terminated by either party at the expiration of the Initial Term or any Extended Term only if the party desiring to terminate gives written notice of termination to the other party at least three (3) years prior to the intended termination date. A longer period of notice is requested, if possible. ERE 4/16/82 -8- Section 6.4. Jones Agreement. On Commencement Date, the Jones Agreement will terminate and be totally replaced (except for liability provisions and liabilities already incurred) by the terms and conditions of this Agreement. However, Flow Payments due under the Jones Agreement will continue in ac- cordance with the Jones Agreement until redetermined in accordance with Sec- tion 5.3 of this Agreement. VII. FORCE MAJEURE Section 7.1. Defined. The term "Force Majeure" as used in this Agreement shall mean acts of God, acts of the public enemy, blockades, insurrections, strikes, riots, disorders, civil disturbances, fires, explosions, storms, floods, landslides, washouts, labor and material shortages, boycotts, break- downs of or damage to plants, equipment or facilities, interruptions to trans- portation, embargoes, acts of military authorities, acts of local, state or federal agencies or regulatory bodies, court actions, arrests and restraints, and, without limitation by enumeration, any other cause or causes not reason- ably within the control and without the fault or negligence of the party claiming Force Majeure. In addition, if either party is delayed, restricted or prohibited from performing its part of this Agreement as a result of restrictions upon, delays in receiving, or failure to receive, any permits, approvals, licenses or other required governmental authority, these restrictions, delays or fail- ures, shall be deemed to be Force Majeure provided the cause or causes of any event of this nature is not reasonably within the control of and is not due to the fault or negligence of the party claiming Force Majeure. Section 7.2. Effect. If, because of Force Majeure, either party to this Agreement is unable to carry out any of its obligations under this Agreement, and if that party shall promptly give to the other party written notice of the particulars of the event of Force Majeure, then, the obligations of the party giving notice shall be suspended to the extent made necessary by the event of Force Majeure and during its continuance. The party giving the notice shall use its best efforts to eliminate the Force Majeure with all reasonable dili- gence and dispatch. Nothing contained in this Agreement shall require the party affected by the Force Majeure to submit to an unreasonable labor agree- ment, and it is agreed that any settlement of labor strikes shall be entirely within the reasonable discretion of the affected party. VIII. OPTION Section 8.1. Condition Precedent. Although the parties to this Agreement have executed and delivered this Agreement, it shall not take effect until the exercise by SPS of the Option granted in Section 8.2 of this Agreement. Section 8.2. Grant of Option. For the sum of Five Hundred ($500) dollars cash and other valuable consideration, the receipt and sufficiency of which is acknowledged, the City, by this Agreement, grants SPS the exclusive right and option to give effect to this Agreement in accordance with all of the terms and conditions set out in this Agreement ("Option"). Section 8.3. Duration of Option. The Option shall commence on Execution Date and shall continue for a period of ninety (90) days after Execution Date ("Initial Option Period"). From and after the expiration of the Initial Option Period, SPS will continue to have the option of first refusal, as described below, for a period of one (1) year ("Secondary Option Period"). If, during the Secondary Option Period, the City receives a bona fide written offer from a third party to purchase the Reclaim Water, SPS shall immediately be notified of the offer by delivering to SPS a copy of the offer, which may be accomplished in the manner described in Section 9.1 of this Agreement. Upon receipt of a copy of any bona fide offer, as described, SPS will have thirty (30) days to exercise the Option. Section 8.4. Notice of Exercise of Option. SPS may exercise this Option by executing and delivering to the City a copy of the Option Acceptance Letter attached to this Agreement as Exhibit "D". Delivery of the Option Acceptance Letter will be deemed sufficient if delivered in accordance with the provi- sions of Section 9.1 of this Agreement. ERF 4/16/82 -9- Section 8.5. Effect of Failure to Exercise Option. In the event SPS fails to exercise the Option prior to the expiration of the Option, in accordance with its terms, this Agreement shall automatically become null and void and of no further force and effect. IX. GENERAL Section 9.1. Notice. Any notice to be given by the parties to this Agree- ment shall be in writing and shall be sufficient if personally delivered or sent certified mail, return receipt requested, postage prepaid, to the fol- lowing addresses. Notice to SPS shall be sufficient if made or delivered to: Southwestern Public Service Company 1120 Main Street P. 0. Box 631 Lubbock, Texas 79408 Attention: Division Manager Notice to the City shall be sufficient if made or delivered to: City of Lubbock City Hall Box 2000 Lubbock, Texas 79457 Attention: City Secretary Any notice shall be deemed delivered on the date mailed in the manner set out above. The designation or address of the party to be notified may be changed at any time by delivery of notice of that change to the other party. Section 9.2. Indemnity by SPS. The City shall not be liable or responsible for, and shall be saved and held harmless by SPS from and against any and all claims and damages of every kind, (including injury to or death of any person or persons and for damage to or loss of property), arising out of or attri- buted, directly or indirectly, to (1) the operations or performance of SPS or SPS's agents, employees or subcontractors under this Agreement, or (2) the Reclaim Water after it passes the Point of Delivery, irrespective of the legal theory upon which any claim or suit may be grounded. Section 9.3. Indemnity by the City. SPS shall not be liable or responsible for, and shall be saved and held harmless by the City from and against any and all claims and damages of every kind (including injury to or death of any person or persons and for damage to or loss of property), arising out of or attributed, directly or indirectly, to (1) the operations or performance of the City or the City's agents, employees or subcontractors under this Agree- ment, or (2) the Reclaim Water before it passes the Point of Delivery, ir- respective of the legal theory upon which any claim or suit may be grounded. Section 9.4. Cumulative Remedies. Pursuit, by either party, of any remedy available for default shall not constitute a forfeiture or waiver of any amount due by the defaulting party or of any damages accruing by reason of the violation of any of the terms, provisions, and covenants of this Agreement. No waiver of any violation shall be deemed or construed to constitute a waiver of any other violation or breach of any of the terms, provisions, and cove- nants contained in this Agreement and forebearance to enforce one or more of the remedies available, upon an event of default, shall not be deemed to constitute a waiver of that default. Provided however, the sole remedy avail- able to SPS for City's non-compliance with the standards for Reclaim Water set out in Section 3.3 of this Agreement shall be through the remedies of Section 5.5 of this Agreement. Section 9.5. Partial Invalidity. If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdicition to be invalid, void, or unenforceable, the remainder of the provisions shall remain in full force and effect and shall in no way be affected, impaired, or invalidated. Section 9.6. Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the matters covered by this Agreement. No other agreement, statement, or promise made by any party, or to any employee, officer, or agent of any party, which is not contained in this Agreement, shall be binding or valid. ERF 4/16/82 -10- Section 9.7. Attorney's Fees. If any action at law or in equity, including an action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to re- cover reasonable attorney's fees from the other party, which fees may be set by the court in the trial of the action or may be enforced in a separate action brought for that purpose. These fees shall be in addition to any other relief which may be awarded. Section 9.8. Assignment. This Agreement may be assigned by either party upon notice in writing to the other party. Section 9.9. Governing Law. This Agreement shall be governed by and con- strued in accordance with the laws of the State of Texas. Section 9.10. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors, and assigns of the respective parties to this Agreement. Section 9.11. Lubbock County. The parties concur that the sole purpose of the City entering into this Agreement is to furnish SPS with a sufficient supply of Reclaim Water for the operation of SPS's generating facilities located in Lubbock County only. Should SPS 6 and 7 Station not be located in Lubbock County, Texas, as anticipated, this Agreement shall terminate and upon its termination the Jones Agreement shall automatically be reinstated. Each party to this Agreement has executed the Agreement on the date of that party's acknowledgment. The Execution Date ("Execution Date") of this Agreement shall for all purposes be deemed to be the date of the last acknowl- edgment. CITY OF LUBBOCK, TEXAS ATTEST: By By City Se etary Bill McAliste , Mayor SOUTHWESTERN PUBLIC SERVICE COMPANY By Esler, Vice -President Engineering & Construction AS TO FORM ECOI!Gyono-168� ERF 4/16/82 -11- STATE OF TEXAS ) COUNTY OF LUBBOCK ) This -instrument was acknowledged before me on the day of , 1982,;by-Bil'I`McAlister as Mayor of the City of Lubbock, Texas. L��- , Rota -Public, State of Texas My Commission expires % 3 STATE OF TEXAS ) COUNTY OF ) This instrument was acknowledged before me on the �%W day of , 1982, by W. R. Esler, Vice -President, Engineering & Constructi n of Southwestern Public Service Company, a New Mexico corporation, on behalf of said corporation. r. Notary Public, State of Texas ' My Commission expires lo30-ffSO ERF 4/16/82 -12- EXHIBIT A TO AGREEMENT BETWEEN CITY OF LUBBOCK, TEXAS AND SOUTHWESTERN PUBLIC SERVICE COMPANY DATED AS OF THE DAY OF , 1982 DESCRIPTION OF SPS 6 AND 7 STATION POINT OF DELIVERY AS DETERMINED BY THE PARTIES, TO BE ATTACHED WHEN AVAILABLE, IN ACCORDANCE WITH SECTION 2.7 OF THE AGREEMENT TO WHICH THIS EXHIBIT IS ATTACHED. EXHIBIT B TO AGREEMENT BETWEEN CITY OF LUBBOCK, TEXAS AND SOUTHWESTERN PUBLIC SERVICE COMPANY DATED AS OF THE DAY OF , 1982 LEGAL DESCRIPTION OF SPS 6 AND 7 STATION PROPERTY, TO BE ATTACHED WHEN AVAILABLE, IN ACCORDANCE WITH SECTION 2.8 OF THE AGREEMENT TO WHICH THIS EXHIBIT IS ATTACHED. EXHIBIT C TO AGREEMENT BETWEEN CITY OF LUBBOCK, TEXAS AND SOUTHWESTERN PUBLIC SERVICE COMPANY DATED AS OF THE DAY OF . 1982 LETTER ESTABLISHING COMMENCEMENT DATE OF THE TERM, TO BE ATTACHED WHEN AVAILABLE, IN ACCORDANCE WITH SECTION 6.1 OF THE AGREEMENT TO WHICH THIS EXHIBIT IS ATTACHED. EXHIBIT D TO AGREEMENT BETWEEN CITY OF LUBBOCK, TEXAS AND SOUTHWESTERN PUBLIC SERVICE COMPANY DATED AS OF THE DAY OF , 1982 City of Lubbock City Hall Box 2000 Lubbock, Texas 79457 Attention: City Secretary Southwestern Public Service Company, by this Option Acceptance Letter, exercises the Option granted to it by the City of Lubbock, Texas in Article VIII of that certain Water Purchase Agreement ("Agreement") entered into by the City of Lubbock and Southwestern Public Service Company on the day of , 1982, relating to the sale by the City and the purchase by Southwestern of Reclaim Water as defined in the Agreement. Dated this day of , 198_ SOUTHWESTERN PUBLIC SERVICE COMPANY By EXHIBIT E TO AGREEMENT BETWEEN CITY OF LUBBOCK, TEXAS AND SOUTHWESTERN PUBLIC SERVICE COMPANY DATED AS OF THE DAY OF . 1982 WRITTEN NOTIFICATION OF ANY CHANGE IN UNIT I OR UNIT II COMMENCEMENT DATE, TO BE ATTACHED WHEN AVAILABLE, IN ACCORDANCE WITH SECTION 6.1 OF THE AGREEMENT TO WHICH THIS EXHIBIT IS ATTACHED.