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HomeMy WebLinkAboutResolution - 5166 - Contract - Enermart Inc - Natural Gas Boiler Fuel - 04/18/1996RESOLUTION NO.5166 April 18, 1996 Item 415 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 Contract with Enermart, Inc. of Dallas, Texas, to furnish and install all materials and services as bid for the Natural Gas Boiler Fuel, attached hereto and 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. APPROVED AS TO CONTENT: Victor Kilman, turchasing Manager APPROVED AS TO FORM: V Attorney DGV:js/ENERMART.RES ccdocs/April 9, 1996 Energas Company ENERGA , P. O. Box 1121 5110 80th Street (79424) Lubbock, Texas 79408-1121 Fax (806) 798-4494 June 27, 1996 Mr. Ron Shuffield Lubbock Power &Light P.O. Box 2000 Lubbock, Tx 79457 Dear Ron: Attached is an original copy of the Gas Sales Agreement between Enermart Trust and the City of Lubbock. We are pleased to provide you with this service and look forward to our continued relationship. Res,, y Kelley rimes copy: Tommy Buchanan 1 °JUN 28 199,1 GAS SALES AGREEMENT THIS GAS SALES AGREEMENT is made and entered into as of the js-- day of MA)� , 199 , by and between ENERMART TRUST, a Pennsylvania Business Trust, ("Seller"), and THE CITY OF LUBBOCK, TEXAS, a Texas municipality ("Buyer") , also referred to as the "parties." W I T N E S S E T H: WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase, certain volumes of natural gas in accordance with the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Agreement to Sell and Purchase. Subject to the terms and conditions of this Agreement, including the General Terms and Conditions attached hereto and made a part hereof for all purposes, Seller agrees to sell and deliver to Buyer at the Delivery Point(s), as hereinafter defined, and Buyer agrees to purchase and accept, during the term of this Agreement, all of the gas that is required for the operation of Buyer's facility located at its Municipal Hill Power Plant, 602 Municipal Drive, Lubbock Texas; provided, however, that Seller shall have no obligation to sell or deliver gas to Buyer in excess of 10,000 MMBtu per day. 2. Delivery Point(s). The point(s) at which gas is to be delivered by Seller to Buyer under this Agreement shall be at a point of interconnection between the facilities of Seller or Seller's designee and the facilities of Buyer or Buyer's designee located in Tract A, Municipal Hill Addition to the City of Lubbock, Lubbock County, Texas, or at such other point or points as the parties hereto may mutually agree in writing (the "Delivery Points)"). 3. Price. (a) The price to be paid by Buyer to Seller for each month during the months of May through September, 1996, shall be the arithmetic average of the high/low prices per MMBtu reported each day in the Gas Daily, published by Pasha Publications, Inc., Houston edition, in the table titled "Daily Price Survey," under the heading "North Texas Panhandle Northern (Mid Ten), for the day in which gas is delivered to the City of Lubbock, plus an increment of sixty cents ($0.60). (b) The price to be paid by Buyer to Seller for natural gas consumed during any month other than May through September, 1996, or any volumes taken in excess of 90,000 MMBtu during the months of May through September, 1996, shall be determined by the arithmetic average of the high/low prices per MMBtu reported each day in the Gas Daily, published by Pasha Publications, Inc., Houston edition, in the table titled "Daily Price Survey" under the heading "North Texas Panhandle Northern (Mid Ten), for the day in which gas is delivered to the City of Lubbock, plus an increment of seventy-six cents ($0.76). (c) In the event the City of Lubbock elects to purchase natural gas from another source, Energas Company shall put into effect its existing transportation fee of forty cents ($0.40) per MMBtu. 4. Billing and Payment. (a) On or before the tenth (10th) day of each calendar month after the month in which deliveries of gas hereunder commenced, Seller shall render to Buyer an invoice that shows the total volume of gas purchased hereunder during the preceding Billing Month and the monies due therefor, including any amounts due for taxes and charges paid by Seller for which Buyer is obligated under this Agreement to reimburse Seller. Buyer shall pay such invoice within ten (10) days after the date thereof and shall send such payment to the address of Seller noted on the invoice. (b) In the event Buyer fails to pay the full amount due Seller when the same becomes due, interest thereon shall accrue from the date that such payment became due until it is paid in full at the interest rate per annum then most recently announced publicly by Citibank, N.A., New York, New York, as its prime rate. If Buyer is stili in default ten (10) days after the due date, Seller may, in addition to any 2 and all other remedies available to Seller, suspend further deliveries of gas to Buyer under this Agreement. (c) All invoices and payments are subject to correction by either party for any errors contained therein until twelve (12) months after the date Seller received payment on an incorrect invoice or received an incorrect payment. 5. Term. This Agreement shall become effective as of May I, 1996, and shall continue in full force and effect until September 30, 1996. 6. Assignment. This Agreement may not be assigned by Buyer without the prior written consent of Seller, which consent shall not be unreasonably withheld. In the event Buyer assigns this Agreement without Seller's consent, such assignment shall be null and void and Seller may, in its sole discretion, immediately terminate this Agreement without notice to Buyer. 7. Notices. Any notice required to be given under this Agreement or any notice which either party hereto may desire to give the other party shall be in writing and shall be considered duly delivered when hand -delivered or when deposited in the United States mail, postage prepaid, registered or certified, and addressed as follows: If to Seller: ENERMART TRUST P. O. Box 650205 Dallas, Texas 75265-0205 Attention: Large Volume Sales Department If to Buyer: THE CITY OF LUBBOCK P. 0. Box 2000 Lubbock, Texas 79457 Attention: Mr. Ron Shuffield or such other address as Seller, Buyer, or their respective successors or permitted assigns shall designate by written notice given in the manner described above. Routine communications, including monthly invoices, may be mailed by ordinary mail and are deemed delivered when hand -delivered or 3 when deposited in the United States mail, postage prepaid, and addressed to the above -designated name and address. 8. Attachments. The General Terms and Conditions attached hereto are expressly incorporated herein and made a part of this Agreement for all purposes, and all references herein and therein to "this Agreement" include the terms and provisions contained herein and in such General Terms and Conditions. IN WITNESS WHEREOF, the parties hereto have executed this Gas Sales Agreement as of the date first above written. SELLER: ENERMART TRUST By: E. Matti gy 1Q 1, Vice President ,. 4 GENERAL TERMS AND CONDITIONS TO GAS SALES AGREEMENT BETWEEN ENERMART TRUST f.1a As THE CITY OF LUBBOCK, TEXAS ARTICLE I Definitions For purposes of this Agreement, unless the context hereof requires otherwise, the following definitions shall be applicable: Section 1.1. The term "gas" shall mean natural gas produced from gas wells (i.e., gas -well gas), gas produced in association with oil (i.e., casinghead gas), and the residue gas resulting from the processing of both casinghead gas and gas -well gas. Section 1.2. The term "day" shall mean the twenty-four (24) hour period commencing at 8:00 a.m., Central Time, on one calendar day and ending at 8:00 a.m., Central Time, on the following calendar day. Section 1.3. The term "month" or "Billing Month" shall mean the period extending from 8:00 a.m., Central Time, on the first day of one calendar month to 8:00 a.m., Central Time, on the first day of the next succeeding calendar month, except that the first Billing Month shall commence on the date of the initial delivery of gas hereunder and shall end at 8:00 a.m., Central Time, on the first day of the next succeeding calendar month. Section 1.4. The term "Mcf" shall mean the volume of gas which occupies a space of one thousand (1,000) cubic feet at a temperature of 60° Fahrenheit and at an absolute pressure equal to the pressure set forth in Subparagraph 3(a) of this Agreement. Section 1.5. The term "BTU" shall mean British thermal unit and represents the quantity of heat required to raise the temperature of one (1) pound avoirdupois of pure water from 58.5° Fahrenheit to 59.5° Fahrenheit. Section 1.6. The term "MMBtu" shall mean one million (1,000,000) BTUs. Section 1.7. The term "heating value" shall mean the number of BTUs produced by the complete combustion, at a constant pressure, of the amount of gas that would occupy a volume of one (1) cubic foot at a temperature of 60° Fahrenheit if saturated with water vapor and at a constant pressure of 14.73 psia and under standard gravitational force (acceleration 980.665 cm per sec. per sec.) with air of the same temperature and pressure as the gas when the products of combustion are cooled to the initial temperature of the gas and air when the water formed by combustion is condensed to the liquid state. Section 1.8. The term "psis" shall mean pounds per square inch absolute. ARTICLE II Pressure Section 2.1. Seller shall deliver the gas sold hereunder, or cause such gas to be delivered, at the pressure requested by Buyer; provided, however, that Seller shall not be obligated to deliver, or cause to be delivered, any gas at a pressure in excess of the pressure that is normally available at the Delivery Point(s) or to install or operate any compression facilities in order to deliver the gas at a specific pressure. ARTICLE III Measurement of Gas Section 3.1. Unless otherwise specifically provided herein, the unit of volume for purposes of the measurement of gas delivered hereunder at the Delivery Point(s) shall be one (1) Mcf. Section 3.2. The computation of the volumes of gas delivered hereunder shall be made in accordance with the American Gas Association Measurement Committee Report No. 3, including the Appendix thereto, as published in April, 1955, and amended or revised from time to time. Section 3.3. For purposes of the measurement of gas and calibration of meters, the average atmospheric (barometric) pressure at the Delivery Point(s) shall be assumed to be the local pressure as determined by Seller for the area in which the Delivery Point(s) is located unless otherwise specified by Seller. Section 3.4. Each of the parties hereto acknowledges and agrees that the measuring facilities currently located at the Delivery Point(s) shall be the Official Billing Measurement Station for purposes of this Agreement and that the owner of such official Billing Measurement Station (the "Owner"), or such other party as the Owner and Seller (in the event Seller is not the Owner) may mutually designate, shall perform the reading, calibrating, and adjusting of, and the changing of charts on, the equipment in the Official Billing 2 Measurement Station and shall perform all gas analyses relating to the gas delivered pursuant to this Agreement. Section 3.5. To the extent permitted by the Owner, each of Buyer and Seller may install, maintain, and operate check measuring instruments and telemeters in, and connected to, the Official Billing Measurement Station for purposes of checking the Owner's meters; provided, however, that all gas measurements required in this Agreement shall be determined by the Owner's meters and further provided that such check measuring and telemetering instruments and connections shall be installed so as not to interfere with the operation or future modification of the Owner's official billing meters and appurtenances. Each party hereto agrees to indemnify, defend, and hold the other party harmless from any and all claims and liabilities incurred by such other party arising from the installation, operation, maintenance, or removal by or for the indemnifying party of such check measuring and telemetering instruments to the Official Billing Measurement Station. Each party hereto shall have access, at reasonable hours, upon giving the other party at least twenty-four (24) hours prior written notice of its desire to obtain such access, and to the extent permitted by the Owner, to such check measuring and telemetering instruments installed by the other party, but the reading, calibrating, and adjusting thereof and the changing of charts thereon shall be performed by such other party. Section 3.6. If, upon testing, any measuring equipment, is found to be inaccurate by two percent (2%) or less, previous readings of such equipment shall be considered accurate in computing deliveries hereunder. If, upon such testing, any such measuring equipment shall be found to be inaccurate by more than plus or minus two percent (2%), then any previous _readings of such billing equipment shall be corrected to zero error for any part of the period since the last test during which such error is known to have existed or which may be agreed upon in actual practice by the parties. In case the period of such error is not definitely known or agreed upon, such correction shall be for a period of one- half of the time elapsed since the date of the last such test but not exceeding a correction period of fifteen (15) days. Section 3.7. Subject to the approval of the Owner, each party shall have the right to be present at the time of any installing, reading, cleaning, changing, repairing, inspecting, testing, calibrating, or adjusting done in connection with the measuring equipment at the Official Billing Measurement Station. 3 ARTICLE IV Maintenance of Equipment Section 4.1. Each party hereto agrees to maintain any equipment owned by it and used in the performance of its obligations herein in good, safe, and efficient operating condition and repair. ARTICLE V Quality of Gas Section 5.1. All gas delivered by Seller at the Delivery Point(s) shall be of good and merchantable quality and consistent with the quality of gas generally available in the pipeline system of the transporter delivering the gas at the Delivery Point(s). Section 5.2. If any of the gas delivered by Seller hereunder shall fail to conform to the quality standards described above, Buyer may refuse to accept further deliveries of any gas hereunder; provided, however, that, prior to such refusal to accept further deliveries, Buyer has notified Seller in writing of such nonconformity and Seller has failed to correct such nonconformity within ten (10) days after receipt of such notice. ARTICLE VI Heating Value Section 6.1. The gross heating value as determined by the Seller shall be corrected from the conditions of testing and analysis to that of the actual condition of the gas as delivered, expressed in BTUs per cubic foot and reported at a pressure base of 14.65 psia at 60° Fahrenheit on a dry basis when the gas as delivered contains seven (7) pounds of water or less per one million cubic feet. ARTICLE VII Interruptibility of Gas Deliveries Section 7.1. Buyer acknowledges and agrees that all gas sold under this Agreement may be subject to curtailment or interruption when necessary to protect the health and safety 4 of Seller's customers or to maintain service to Seller's higher priority customers, and that, in the event of such a curtailment or interruption, such curtailment or interruption shall not be the basis for any claim for damages sustained by Buyer. Buyer also agrees that gas sold hereunder is also subject to any applicable curtailment plan and priorities established by any company transporting the gas for Seller. Section 7.2. In the event a curtailment or interruption of delivery shall become necessary or advisable, Seller shall, as soon as possible prior to the actual curtailment or interruption, notify Buyer by telephone, telegraph, or other means, of the nature, extent, and probable duration of such curtailment or interruption. Buyer shall resume the taking of gas within three (3) days following notification by Seller that gas is again available. ARTICLE VIII Ownership and Control Section 8.1. Seller hereby warrants that (i) it has good title to all gas delivered to Buyer hereunder, (ii) it has the right to sell such gas, and (iii) all such gas is free from any and all liens, encumbrances, and adverse claims. Seller agrees to hold Buyer harmless from and against any adverse claims asserted with respect to any gas delivered hereunder. Section 8.2. Title to the gas shall pass from Seller to Buyer, upon the delivery thereof, at the Delivery Point(s). Section 8.3. As between the parties hereto solely, Seller shall be in exclusive control and possession of the gas deliverable hereunder at all times prior to the delivery thereof to or for the account of Buyer and shall be responsible for any damages, losses, or injuries caused thereby or by Seller's handling or delivery thereof (except to the extent such damages, losses, or injuries shall have been caused by the act or omission of Buyer), after which delivery Buyer shall be in exclusive control and possession thereof and responsible for any damages, losses, or injuries caused thereby or by Buyer's handling or receipt thereof (except to the extent such damages, losses, or injuries shall have been caused by the act or omission of Seller). Each of the parties hereto agrees to indemnify, defend, and hold the other party harmless from and against any and all claims, liabilities, damages, losses, costs, and expenses (including attorneys' fees) incurred by the indemnified party arising 5 from or relating to any damages, losses, or injuries for which the indemnifying party is responsible pursuant to the foregoing sentence. ARTICLE IX Governmental Regulations Section 9.1. This Agreement is subject to (i) all applicable and valid statutes, ordinances, rules, regulations, and orders of any federal, state, or local governmental authority having jurisdiction over either of the parties, the facilities used in the delivery of the gas sold hereunder, or the subject matter of this Agreement and (ii) the provisions of the applicable franchises, if any, under which Seller and any transporter of the gas operates. Seller and Buyer agree to obtain, if possible, any necessary authority to effectuate the purchase and sale of gas hereunder in the event this Agreement or the purchase and sale of gas hereunder for any reason becomes subject to the jurisdiction of any governmental authority that, as of the date hereof, does not have such jurisdiction. Section 9.2. Buyer hereby warrants and represents to Seller that none of the gas purchased hereunder will be resold, transported, used, or consumed in any state other than the State of Texas in such a manner or under any circumstances that would cause the gas covered hereunder, Seller, any transporter of the gas, or the facilities associated with the sale and delivery of such gas to become subject to the jurisdiction and regulations of the Federal Energy Regulatory Commission or any successor body having jurisdiction. Buyer recognizes and acknowledges that Seller entered into this Agreement in reliance upon such warranty and representation and that Seller would have been unwilling to enter into this Agreement in the absences of such warranty and representation. Consequently, Buyer agrees that it will not voluntarily commit the gas purchased hereunder to interstate commerce as that term is defined in the Natural Gas Act, but would do so only under compulsion of governmental authority. Buyer further agrees that, in the event Seller becomes or believes in its sole judgment that it, the transporter, any facilities used or the gas sold hereunder may become subject to the jurisdiction of the Federal Energy Regulatory Commission or any successor body as a result of the performance of its obligations hereunder, Seller may terminate this Agreement immediately and without any prior notice to Buyer. 6 ARTICLE X Buver's Financial Responsibilit Section 10.1. Seller may, without prior notice to Buyer, terminate this Agreement immediately upon the institution by or against Buyer of any proceedings in bankruptcy or under any insolvency law. ARTICLE XI Force iia 'eure Section 11.1. In the event that either Seller or Buyer is rendered unable, wholly or in part, by reason of an event of force majeure, to perform its obligations under this Agreement, other than to make payment due hereunder, and such party has given notice and full particulars of such force majeure in writing to the other party as soon as possible after the occurrence of the cause relied on, then the obligations of the parties, insofar as they are affected by such force majeure, shall be suspended during the continuance of such inability, but for no longer period, and such cause shall, insofar as possible, be remedied with all reasonable dispatch; provided, however, that the settlement of strikes or lock -outs shall be entirely within the discretion of the party having such difficulty, and the above requirement that any force majeure be remedied with all reasonable dispatch shall not require the settlement of strikes or lock -outs by acceding to the demands of the opposing party when such course is inadvisable in the discretion of the party having the difficulty. Section 11.2. The term "force majeure" as used in this Agreement shall mean any cause not reasonably within the control of the party claiming suspension and includes, but is not limited to, acts of God; strikes; lock -outs; wars; riots; orders or decrees of any lawfully constituted federal, state, or local body; fires; storms; floods; wash -outs; explosions; breakage or accident to machinery or lines of pipe; inability to obtain or delay in obtaining rights-of-way, material, supplies, or labor permits; temporary or permanent failure of gas supply or transportation services; repair, maintenance, or replacement of facilities used in the performance of the obligations contained in this Agreement; or any other cause whether of the kind herein enumerated or otherwise. 7 ARTICLE XII Remedies Upon Material Default Section 12.1. If either party hereto shall fail to perform any material covenant or obligation imposed upon it under this Agreement, then in such event the non -defaulting party may, at its option, terminate this Agreement upon acting in accordance with the procedures hereafter set forth in this Section. The non -defaulting party shall cause a written notice to be served on the defaulting party, which notice shall state specifically the cause of terminating this Agreement and shall declare it to be the intention of the non -defaulting party to terminate this Agreement if the default is not cured. The defaulting party shall have thirty (30) days after receipt of the aforesaid notice in which to remedy or remove the cause or causes stated in the termination notice, and, if within such thirty -day period, the defaulting party does so remedy or remove said cause or causes and fully indemnifies the non -defaulting party for any and all consequences of such breach, then such termination notice shall be withdrawn and this Agreement shall continue In full force and effect. In the event that the defaulting party fails to remedy or remove the cause or causes or to indemnify the non -defaulting party for any and all consequences of such breach within such thirty -day period, this Agreement shall be terminated and of no further force or effect from and after the expiration of such thirty -day period. Section 12.2. Any termination of this Agreement pursuant to the provisions of this Article shall be (i) without prejudice to the rights of Seller to collect any amounts then due Seller for gas delivered prior to the time of termination, (ii) without prejudice to the rights of Buyer to receive any gas for which it has paid but not received prior to the time of termination, and (iii) without waiver of any other remedy to which the non -defaulting party may be entitled. Section 12.3. The procedures for termination of this Agreement set forth in Section 12.1 above are not applicable to immediate terminations hereof by Seller made in accordance with any other provisions of this Agreement. 3 ARTICLE XIII Miscellaneous Section 13.1. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, except to the extent that any law, rule, or regulation of the federal government of the United States of America may be applicable, in which case such federal law, rule, or regulation shall govern or control. Section 13.2. This Agreement may not be modified or amended except by the written agreement of the parties hereto. Section 13.3. No waiver by either party hereto of any default of the other party under this Agreement shall operate as, or be deemed to be, a waiver of any other or subsequent default, whether of a like or different nature. Section 13.4. Each provision of this Agreement is intended to be several. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity of the remainder of this Agreement. Section 13.5. This Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns and is intended solely for the benefit of Seller and Buyer and their respective successors and permitted assigns and not for the benefit of any other person or entity not a party hereto. Section 13.6. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof. Section 13.7. The descriptive headings of the provisions of this Agreement are formulated and used for convenience only and shall not be deemed to affect the meaning or construction of any of such provisions. (END OF GENERAL TERMS AND CONDITIONS)