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HomeMy WebLinkAboutResolution - 2003-R0556 - Ownership Agreement - West Texas Municipal Power Agency - 12/08/2003RESOLUTION Resolution No. 2003-RO556 December 8, 2003 Item No. 46 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 a Capacity Operation and Transfer of Ownership Agreement between the City of Lubbock and the West Texas Municipal Power Agency relating to J.R. Massengale generation Unit No. 8, which is attached hereto, 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 herein in detail. Passed by the City Council this 8th day of Decembe�!:2 , 2003. GAL, MAYOR ATTEST: R ecca Garza, City Secretar APPROVED AS TO CONTENT: G Gary Zheng Chief Operations Officer APPROVED AS TO FORM: Matthew L. )W de Natural Resources Attorney as/ccdocs/OCO Resolution November 26, 2003 Resolution No. 2003-RO556 December 8, 2003 Item No. 46 CAPACITY OPERATION AND TRANSFER OF OWNERSHIP AGREEMENT BETWEEN THE CITY OF LUBBOCK AND THE WEST TEXAS MUNICIPAL POWER AGENCY RELATING TO J.R. MASSENGALE GENERATION UNIT NO.8 This Capacity Operation and Transfer of Ownership Agreement ("the Agreement") between West Texas Municipal Power Agency ("WTMPA"), a municipal corporation and political subdivision of the State of Texas, and the City of Lubbock ("Lubbock"), a municipal corporation and home rule city situated in Lubbock County, Texas (collectively WTMPA and Lubbock may be referred to as the "Parties" or individually as a "Party"). WITNESSETH: WHEREAS, WTMPA acquired, constructed and installed a 40 megawatt (MW) combustion turbine generator known as J. Robert Massengale generation Unit No. 8 ("JRM No. 8") and financed the repowering of Lubbock's two identical 22 MW Westinghouse non -reheat, condensing steam turbine generators known as Unit 6 and Unit 7, (collectively sometimes referred to as the "Facilities"), all located at Lubbock Power & Light's ("LP&L's") Massengale Station, formerly known as Plant No. 2 ; and WHEREAS, Lubbock previously dedicated the 22 MW power capacity of either LP&L's Unit 6 or Unit 7 to WTMPA, the other unit being maintained as a reserve or back-up source for WTMPA, pursuant to a Power Capacity Agreement entered into by the Parties on April 23, 1998 via City of Lubbock Resolution 5826, in exchange for WTMPA providing the funds to finance the repowering of Unit 6 and Unit 7; and WHEREAS, Lubbock operates and maintains JRM No. 8 and Units 6 and Unit 7 for and on behalf of WTMPA pursuant to an Operation Management Agreement entered into by the Parties on April 23, 1998 via City of Lubbock Resolution 5827, in exchange for WTMPA paying Lubbock for the operation and management of JRM No. 8 and Unit 6 and Unit 7; and WHEREAS, Lubbock and WTMPA have entered into a Comprehensive Settlement Agreement ("CSA"), together with the Cities of Brownfield (`Brownfield"), Floydada ("Floydada") and Tulia ("Tulia"), sometimes referred to as "the other member cities;" and WHEREAS, pursuant to the CSA, WTMPA has agreed to allocate and dedicate to Lubbock both the capacity of its JRM #8 and the capacity of Lubbock's Units 6 and 7; and WHEREAS, pursuant to the CSA, WTMPA further has agreed to transfer title and ownership to Lubbock of JRM No. 8 and its capacity rights to Lubbock Units 6 and 7 at such time as WTMPA's Bonds, Series 1998, in the initial sum of $28,910,000, dated May 1, 1998 ("the Bonds") and subsequent bond issues refinancing the Bonds, have been fully paid. In consideration among other considerations, stated in the CSA, Lubbock will pay (1) all principal, interest and any related charges of the Bonds; (2) will pay all costs related to JRM No.8 and 1278/31; ped 129874v12; jwd/agrt/2s7m012!.doc ,20, 663 - P-0� � Units 6 and 7; and (3) release Brownfield, Floydada, Tulia and WTMPA from any further responsibility or expenses for the Facilities and claims for monetary debts claimed to be owed to Lubbock related to the operation of the Facilities; and WHEREAS, Lubbock and WTMPA will implement the actions referenced to in the above recitals in this Agreement; and WHEREAS, WTMPA and Lubbock believe it to be in the best interest of each respective Party to repeal the Power Capacity Agreement and the Operation Management Agreement in their entirety and replace these agreements with this Agreement; NOW, THEREFORE, for the mutual consideration and under terms and conditions hereafter set forth, LUBBOCK and WTMPA agree as follows: SECTION I A. Transfer of Capacity to Lubbock Effective at 12:01 a.m. November 1,2003, WTMPA shall allocate and dedicate to Lubbock, exclusively, all of WTMPA's capacity in the Facilities, free and clear of any rights to the capacity by the other member cities of WTMPA. B. Term of Transfer The allocations referenced in Section I.A above shall terminate on the date the Bonds and any subsequent bonds issued to refinance the Bonds have been fully paid ("the Term"). C. Assignment of Capacity Allocated to Lubbock Lubbock shall have full power and authority to assign the capacity in the Facilities, in whole or in part, to a wholesale electric provider, including, without limitation, another electric utility, independent power producer or GENCO, provided (1) prior thereto WTMPA must approve in writing the assignment, which approval will not be unreasonably withheld, (2) WTMPA's bond counsel advises WTMPA in writing that the proposed assignment by Lubbock does not jeopardize the tax exempt status of the Bonds or otherwise subject WTMPA to any penalties and (3) Lubbock shall remain responsible to WTMPA for all its obligations and responsibilities under this Agreement and the CSA. D. Maintenance Responsibility of the Facilities Effective upon the date of transfer stated in Section I.A, Lubbock shall maintain the Facilities, including improvements and replacements, in good working condition and operate the Facilities in accordance with Good Utility Practice and all applicable laws, rules and regulations during the Term. Lubbock shall obtain and maintain in current status all required permits for the Facilities. To assist Lubbock in its maintenance responsibilities for the Facilities, subsequent to the date of transfer, WTMPA will contribute to Lubbock the funds currently deposited in its -2- Bond Reserve Fund, approximating $ 177,072.35, for the purpose of maintenance and repair of the Facilities. E. Good Utility Practice 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. F. Costs of Operation and Maintenance of the Facilities Effective on the date of transfer stated in Section I.A, Lubbock shall be responsible, exclusively, during the Term for payment of all costs of operation and maintenance, including, without limitation, fuel, labor, repair, replacements, improvements, insurance, permits, regulatory and legal proceedings, reports to governmental agencies and compliance with environmental directives. It is the intent of this Section I.F that neither WTMPA or the other member cities shall have any cost responsibility of any nature whatsoever for the Facilities during the Term. G. INDEMNITY BY LUBBOCK TO WTMPA TO THE EXTENT AUTHORIZED BY LAW, AND WITHOUT LIMITATION, LUBBOCK INDEMNIFIES AND HOLDS HARMLESS WTMPA FROM AND AGAINST ALL CLAIMS, DEMANDS OR CAUSES OF ACTION OF ANY CHARACTER WHATSOEVER, INCLUDING LITIGATION COSTS AND EXPENSES, COURT COSTS AND ATTORNEY(S)' FEES THAT MAY HEREAFTER BE BROUGHT BY ANY THIRD PARTY FOR ALLEGED DAMAGES FOR PERSONAL INJURY, PROPERTY, BREACH OF CONTRACT, WARRANTY, PATENT, CONSEQUENTIAL LOSSES (INCLUDING BUT NOT LIMITED TO LOST REVENUE, LOST PROFITS, DELAY COSTS AND EXPENSES, OR OTHER ECONOMIC LOSSES) ARISING OUT OF OR ANYWISE CONNECTED WITH LUBBOCK'S POSSESSION, MANAGEMENT, OPERATION AND MAINTENANCE OF JRM No. 8 AND LP&L UNITS 6 AND 7. HOWEVER, THIS INDEMNIFICATION DOES NOT APPLY TO ANY CLAIM, DEMAND OR CAUSE OF ACTION CAUSED SOLELY BY BREACH OF THIS AGREEMENT BYWTMPA, OR BREACH OF THE CSA BY WTMPA OR CAUSED SOLELY BY THE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF WTMPA. -3- SECTION II A. Ownership Transfer to Lubbock On the date the Bonds, and any bonds issued by WTMPA to refinance, redeem or otherwise retire the Bonds, have been fully paid, title to JRM No. 8 and any capacity interest in LP&L Units 6 and 7 shall vest in Lubbock. WTMPA shall provide any reasonable documentation requested by Lubbock to memorialize the sale. B. Payment of Bond Debt Lubbock shall pay WTMPA the full principal and interest expenses, and any other existing or future costs associated therewith, of the Bonds. The phrase "and any other existing or future costs associated therewith, of the Bonds" includes, among other costs, maintenance of the "Bond Fund as that term is defined under Section 4.3 of the Bond Resolution adopted on May 7, 1998, authorizing issuance of the Bonds. As of September 30, 2003, the amount in the Bond Fund was $ 1,006,944.41. It is agreed among all the Parties that Lubbock shall be entitled exclusively to the interest earned on any amount in the Bond Fund until the date all outstanding bonds are fully paid, inasmuch as Lubbock will be maintaining the Bond Fund subsequent to the effective date of the Agreement. Lubbock's payments shall be made monthly in equal payments for deposit in the Bond Fund established in the Bond Ordinance authorizing issuance of the Bonds and in sufficient advance time for WTMPA to transfer payments received from Lubbock to its Paying Agent for timely payment of principal and interest to the bondholders and to pay timely ancillary or miscellaneous expenses, if any, associated with maintenance of the Bonds. C. Release of Responsibilities for JRM No. 8 On the effective date of transfer of capacity in the Facilities to Lubbock, WTMPA, Brownfield, Floydada and Tulia shall have no further responsibility or expense associated with the Facilities, save and except any non -delegable responsibility required by the terms and conditions of the Bonds and the Amended Power Sales Agreement, 1998, among WTMPA, Brownfield, Floydada and Tulia. D. INDEMNITY BY LUBBOCK TO WTMPA TO THE EXTENT AUTHORIZED BY LAW, COMMENCING ON THE DATE OF THE CAPACITY TRANSFER STATED IN SECTION IA, LUBBOCK INDEMNIFIES AND HOLDS HARMLESS WTMPA FROM ANY OBLIGATION OF ANY NATURE WHATSOEVER RELATING TO OR ANYWISE CONNECTED WITH PRINCIPAL AND INTEREST PAYMENTS AND OTHER ASSOCIATED EXPENSES, IF ANY, FOR THE BONDS, AND FAILURE TO MAINTAIN AND OPERATE THE FACILITIES IN ACCORDANCE WITH SECTION I.D and I.E. E. INDEMNITY BY WTMPA TO LUBBOCK TO THE EXTENT AUTHORIZED BY LAW, WITHOUT LIMITATION, WTMPA INDEMNIFIES AND HOLDS HARMLESS LUBBOCK FROM AND AGAINST ALL CLAIMS, DEMANDS OR CAUSES OF ACTION OF ANY CHARACTER WHATSOEVER, INCLUDING LITIGATION COSTS AND EXPENSES, COURT COSTS AND ATTORNEY(S)' FEES THAT MAY HEREAFTER BE BROUGHT BY ANY THIRD PARTY FOR ALLEGED DAMAGES FOR VIOLATION OF ANY BOND COVENANT RELATED TO WTMPA'S BONDS, SERIES 1998, INCLUDING ANY REFINANCING THEREOF, OR ANY BREACH OF CONTRACT ASSOCIATED WITH WTMPA'S BONDS, ARISING OUT OR OTHERWISE CAUSED SOLEY BY ACTIONS OR INACTIONS OF WTMPA. HOWEVER, THIS INDEMNIFICATION DOES NOT APPLY TO A VIOLATION OF ANY BOND COVENANT RELATED TO WTMPA'S BONDS, SERIES 1998, INCLUDING ANY REFINANCING THEREOF, OR ANY BREACH OF CONTRACT ASSOCIATED WITH WTMPA'S BONDS, CAUSED SOLELY BY A BREACH OF THIS AGREEMENT OR A BREACH OF THE CSA BY LUBBOCK. SECTION III Force Maieure Neither Party shall be liable to the other Party for failure to perform its obligations under this Agreement, other than payment of money, 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 government 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. SECTION IV Default (1) As used in this Section IV, "default" shall mean the failure of WTMPA or Lubbock 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 Section III hereof. -5- --W3 (2) 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, other than payment of money, which default must be cured within five (5) business days from the date of notice and, if cured within such time, the default specified in such notice shall cease to exist. (3) If a default is not cured as provided in paragraph (2) above, the Party not in default may resort to all remedies available at law or equity, including, without limitation, recovery of reasonable expenses and reasonable attorneys' fees incurred in connection therewith, termination of this Agreement and repossession of property. SECTION V Governing Law and Venue The validity, interpretation and performance of this Agreement and each of its provisions shall be governed by the laws of the State of Texas. Venue for any litigation arising out of a dispute under this Agreement shall lie in Lubbock County, Texas. SECTION VI Repeal of Power Capacity Agreement and Operation Management Agreement WTMPA and the City, by executing this Agreement, hereby repeal in its entirety, the Power Capacity Agreement entered into by the Parties on April 23, 1998 (City of Lubbock Resolution 5826). Further, WTMPA and the City, by executing this Agreement, hereby repeal in its entirety, the Operation Management Agreement entered into by the Parties on April 23, 1998 (City of Lubbock Resolution 5827). SECTION VII Miscellaneous A. Notice. Any notice, request, demand or statement which may be given to or made upon a Party hereto by the other Party hereto under any of the provisions of this Agreement shall be in writing, unless it is specifically provided otherwise herein, and shall be treated as duly delivered when deposited in the United States Mail, by certified mail, postage prepared, and properly addressed to the Party to be served, as follows: If the notice is to the City of Lubbock: City Manager City of Lubbock Attn: Lubbock Power & Light/WTMPA WON ,R6 3 - x,54 P.O. Box 2000 Lubbock, Texas 79457 If the Notice is to WTMPA: West Texas Municipal Power Agency Attn: President of WTMPA P.O. Box 10 Floydada, Texas 79235; The names, titles and addresses of either Party in this section may be changed by written notification to the other Party. B. 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. C. Amendments. This Agreement may only be amended by a writing signed by both Parties. D. Severability. T 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, WTMPA and Lubbock 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). If any portion of this Agreement is held unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall not be affected and shall remain fully in force and enforceable. E. 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. -7- S603 -,-U0-5& F. 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 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. G. Waivers. A waiver by a Party of a default by the other Party shall not be deemed a waiver of any other or subsequent default. H. Regulation. This Agreement is subject to applicable federal, state and local laws, ordinances, rules and regulations. Save and except the provisions outlined in Section V, nothing herein contained shall be construed as a waiver of any right to question or contest any such law, ordinance, rule, regulation or asserted regulatory jurisdiction. I. Relationship of Parties The Parties shall not be deemed in a relationship of partners or joint venturers by virtue of this Agreement, nor shall either Party be an agent, representative, trustee or fiduciary of the other. Neither Party shall have any authority to bind the other to any agreement. J. Survivorship of Provisions Section I.G shall survive the expiration of the Term of this Agreement, or earlier termination of this Agreement, for a period of four (4) years from the date of expiration or other termination. K. Drafted by All Parties This Agreement has been and shall be construed to have been drafted by all the parties to it so that the rule of construing ambiguities against the drafter shall have no force or effect. L. Consultation Each party has consulted with whatever consultants, attorneys or other advisors the party deems appropriate concerning the effect of the Agreement and each respective party assumes the risk arising from not seeking further or additional consultation with such advisors. Xrv3 -P-055(- M. QU55( M. Settlement Purposes If this Agreement does not become effective for any reason, it shall be deemed negotiations for settlement purposes only and will not be admissible in evidence or usable for any purposes whatsoever. N. 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. O. Entire Agreement This Agreement shall constitute the entire agreement and understanding between WTMPA and Lubbock related to the subject matter hereof and supercede any prior agreement or document of understanding related to the subject matter hereof. P. Bond Counsel Approval This Agreement shall be submitted to WTMPA's bond counsel and the implementation of this Agreement shall not commence until bond counsel has advised in writing that there is no conflict with the terms and conditions of the Bond Resolution. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed this 8th CI7 By ATTEST: day of December (Qja'e� 'a, j�� "I Reb cca Garza, City SecretaryS APPROVED AS TO CONTENT: Gary Zheng, Lubbock Power & Light Chief Operations Officer 2003. WEST TEXAS MUNICIPAL POWER AGENCY By: Gary iffown, President ATTEST: C. Eldon Job, Seer tary-Treasurer M APPROVED AS TO FORM: Matthe ade, Natural Resources Attorney a� 3 - P-o6� (�' -10-