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HomeMy WebLinkAboutResolution - 1548 - Agreement - Energas Company - Gas Purchase & Sales, Municipal Hill Power Plant - 12/15/1983DGV:da WAS-21011iriTY RESOLUTION 1548 - 12/15/83 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 Gas Sales Agreement between Energas Company and City of Lubbock, 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 Resolu- tion as if fully copied herein in detail. Passed by the City Council this 15th day of December , 1983. ALAN NRY, R ATTEST: Evelyn Ga fg , City ry-Treasurer APPROVED AS TO CONTENT: /a j 7, 9"' W� 5 - r. 4, Robert Massengale, inance Director APPROVED AS TO FORM: Dona d G. Vandiver, Assistant City Attorney RESOLUTION 1548 - 12/15/83 GAS SALES AGREEMENT b e t w e e n ENERGAS COMPANY as "Seller" a n d CITY OF LUBBOCK as "Buyer" Dated: December 15 , 19P3 TITLE PAGE NUMBER I Definitions 1 II Quantity ? III Delivery Point - ? IV Delivery Pressure 4 V Metering 4 VI Measurement 5 VII Price 6 VIII Heating Value 8 IX Billing and Payment P X Quality o XI Title 1 XII Force Majeure 10 XIII Notices 71 XIV Successors and Assigns 12 XV Maintenance of Facilities 12 XVI Duration of Agreement 12 XVII Ina emnification 12 XVIII Descriptive Headings 73 XIX Covernmental Peaulations 1? GAS SALES AGREEMENT THIS AGREEMENT, made and entered into this day of December, 1983, by and between ENERGAS COMPANY, a Texas corpo- ration (hereinafter referred to as "Geller"), and CITY OF LUBBOCK, a municipal corporation (hereinafter referrer' to as "Buyer"); W I T N E S S E T H: VTHERFAS, Buyer is currently purchasing certain volumes of natural gas from Seller pursuant to a Gas Sales Aareement dated December 14, 1°79, as amended, which is to be canceler' ane super- seded effective January 1, 1984; and WHFRFAS, Buyer is desirous of purchasing certain volumes of gas to be used in Buyer's Municipal Hill power plant located in Lubbock County, Texas, and for general municipal consumption, and Seller desires to sell such volumes of gas to Buyer; NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, Seller and Buyer coo hereby mutually covenant and agree as follows: ARTICLE I DEFINITIONS Section 1. "Day" shall mean the period of twenty-four (24) consecutive hours commencing at 7:00 a.m. on one calendar clay and ending at 7:00 a.m. on the following day. Section 2. "Pilling Month" shall mean the period commencina at 7:00 a.m. on the first day of a calendar month and endin4_ at 7:00 a.m. on the first day of the following month. Section 3. "Accounting Year" shall mean a yearly period commencing at 7:00 a.m. on January 1 and ending at 7:00 a.m. on the next succeeding January 1. In the event deliveries commence hereunder on a date other than January 1, the period of time from the date of first deliveries until the next following January 1 shall be considered as the first accounting year. In the event deliveries permanently cease on a date other than a January I, the period of time from the January 1 immediately preceding the date of such delivery cessation shall be considered as the final accounting year. I Section 4. The term "Mcf" shall mean one thousand cubic feet at a temperature of 60 degrees Fahrenheit and an absolute pressure of 14.65 pounds per square inch. Section 5. The term "Stu" shall mean British thermal unit. Section 6. The term "Heating Value" shall mean the Btu con- tent of the gas delivered. Section 7. The term "Buyer's Plant" as used herein shall mean Buyer's electrical generating plant located at Municipal Pill in the City of Lubbock, Lubbock County, Texas. Section P. The term "Gas" shall mean any one or any combi- nation of the following: natural gas, liq_uefieO natural gas, syn- thetic gas, or manufactured gas. ARTICLE II QUANTITY Section 1. Commencing January 1, 1984, and continuing through the remaining term of this Cas Sales Agreement, Feller acrees to sell and deliver to Puyer the volume of gas as may be requested by Puyer for consumption in Buyer's Plant and for Puy- er's general municipal consumption. Section 2. Commencing January 1, 1.9P4, Buyer acrees to take and pay for, or nevertheless pay for if not taken, a minimum of 150,000 Mcf of gas during each accounting year thereafter during the term hereof. In the event any accounting year does not con- tain twelve (12) billing months, then Buyer shall be obligated to accept 1/12th of such volume for each complete billing_ month con- tained in such accounting year. Section 3. The parties shall meet on or before December 1, 1984 and determine the minimum volume to be purchased by Buyer during 1985. If the parties cannot reach a mutually satisfactory agreement relative to such minimum volume, the volume stated in Section 2 of this Article II shall remain in effect for 1985. ''ection 4. In the event Buyer fails to take from Seller during any accounting year of the term hereof the minimum volume of gas which Buyer is obligated to take and pay for from Seller during such accounting year pursuant to the applicable provisions of Section 2 of this Article II, then within ninety 190) days after the end of such accounting year when there is a deficiency in takes, Puyer shall pay Seller for that quantity of gas which equals the difference between the minimum volumes Buyer was obli- 2 gated to take and pay for and the volume which Buyer clid actually take and pay for. The price which Buyer shall pay Seller for such deficiency shall be the price in effect at the time the deficiency occurred. Section 5. Cas delivered under this contract shall be sub- ject to curtailment or interruption when necessary to protect public health and safety or to maintain service to higher priori- ty customers of Fellers. Such curtailment or interruption shall be performed in accordance with the Company's applicable rules from time to time in effect and on file with the Texas Pailroad Commission or any successor regulatory agency, and shall not be the basis for any claim for damages sustained by any party. In the event curtailment or interruption becomes necessary, Seller will use its best efforts to curtail all customers of the same classification in the immediate vicinity proportionately. Section 6. In the event an interruption in, or curtailment of, deliveries shall become necessary or advisable, Seller shall notify Buyer as soon as possible by telephone, or other means, of the nature, extent and probable duration of such interruption or curtailment. Buyer shall resume the taking of gas within a rea- sonable length of time following notification by Seller that aas is again available. Section 7. In the event --the delivery of gas is interrupted or curtailed at the request of Seller pursuant to Section 5 of this Article II, or at the reauest of Buyer pursuant to Article XII, the minimum volume of aas herein contracted for shall be reduced for that annual period by 1..5/365th of such minimum annu- al volume for each day or portion of a day that the delivery of gas hereunder was interrupted or curtailed. ARTICLE III DELIVERY POINT Section 1. The delivery of gas hereunder shall be made at a point located at Buyer's plant in the City of Lubbock and at Buy- er's various municipal facilities. Section 2. Sufficient space for a meter, or meters and reg- ulators, is to be furnished free by Buyer at a location to be agreed upon at each point of delivery. Section 3. Buyer agrees to assign to Seller sufficient easements and riahts of way over, across and under any land that Buyer hzs the right so to do, and the right to perform thereon any acts necessary for carrying out the terms of this contract. ARTICLE IV DELIVERY PRESSURE Section 1. Deliveries shall be made at the pressure requested by Buyer, but not to exceed 75 psig except deli-eries may be made at higher pressures if neither party objects. ARTICLE V METERING Section 1. Seller, at its sole cost, risk and expense, shall install, maintain and operate at the point or points of delivery hereunder a standard type orifice or positive meter or meters for measuring the volume of all gas purchased by Puyer hereunder and feller shall cause said meters to be read daily or at other mutually agreeable intervals. Orifice meters and other facilities so installed at the point of delivery shall be con- structed and installed in accordance with the specification pre- scribed by Peport No. ? of the Cas Measurement Committee of the American Gas Association dated April 1955, and supplements there- to, or other generally accepted specifications, agreed to by the parties. Section 2. Said meters -and all -meter readings and meter charts shall be accessible at all reasonable times to inspection and examination by Buyer, but the calibration and adjustment of Seller's meter or meters shall be done by Seller. Seller may destroy meter charts and other records after two years. Section 3. Buyer may install, maintain and operate such check measuring equipment as it desires, provided that such check meter and equipment shall be so installed as not to interfere with the operation of Seller's meters. Section 4. Fach such orifice meter installed by Seller shall be calibrated at least once each thirty (30) days by and at the expense of Seller, in the presence of Buyer's representative if Buver so requests. Seller shall give Buyer or Buyer's desiq- nated representative notice of each such calibration test in suf- ficient time to enable Buyer to have its representative present. If upon any such test, the measuring equipment is found to be not more than two percent (2%) erroneous in the aggregate, previous readings of such equipment shall be considered correct in comput- ing the deliveries of gas hereunder, but such equipment shall be adjusted at once to read accurately. If, upon any test, the meP- suring equipment shall be found to be inaccurate in the aggrecate by an amount exceeding two percent 12%) at a readina corrPspond- 4 ing to the average rate of flow for the period since the last preceding test, then any previous reading of such equipment shall be corrected to zero error for any period �.?hich is known defi- nitely or agreed upon, but in case the period is not known defi- nitely or agreed upon, then it shall be corrected to zero error for a period extending back one-half Q12) of the time elapsed since the date of the last test, but not to exceed thirty (30) days. If for any reason any meter is out of service or out of repair so that the volume of gas purchased cannot he ascertained or computed from the reading thereof, the volume of gas purchased curing the period such meter is out of service or out of repair. shall be estimated or agreed upon by the -parties hereto on the basis of the best data available using the first of the following methods which is feasible: a. By using the registration of Buyer's check meter if installed and accurately registering. b. By correcting the error in Seller's meter if the percent- age of error is ascertainable by calibration test or mathematical calculation. c. Py estimating the volume of delivery by using as a basis the volumes delivered during preceding periods under sim- ilar conditions when the meter .was register.ing_accurate- ly. ARTICLE VI MEASUREMENT Section 1. All measurement of gas hereunder shall be in accordance with the recommendations for measuring gas contained in Report No. 3 of the Gas Measurement Committee of the American Gas Pssociation dated April 1955, including the supplements ther- eto, or other generally accepted tables relating to gas.measure- ment applied in a practical and appropriate manner. Correction shall be made for deviation from Ideal Gas Laws as provided for in Section 5 of this Article VI. Section 2. An assumed atmospheric pressure of thirteen and one-tenth (13.1) pounds per square inch at the delivery point shall be utilized for measurement purposes, irrespective of any variation of the actual atmospheric pressure from such assumed pressures. Section 3. Seller shall, at its sole cost, risk and expense, install, maintain and operate a temperature compensating device or recording thermometer of standard manufacture, so that 5 it may properly record the temperature of gas flowing through Seller's meter or meters. The arithmetical average of the twen- ty-four (24) hour record, or that portion of the twenty-four (24) hours during which gas was passing, shall be assumed to be the temperature of the gas for that period and shall be used in mak- ing proper computations of measurement. Section 4. Seller shall, at its sole cost, risk and expense, install, maintain and operate a recording gravitometer of standard manufacture, so that it may properly record the grav- ity of the gas flowing through Seller's orifice meter or meters. The gravity so determined shall be used in the computations of mcasuremFnt. In the event Feller has installed, or shall in the future install, a recording gravitometer at a point on its system which properly records the specific gravity of the total stream, a portion of which is sold hereunder, said gravitometer may be used to ascertain the specific gravity for which correction is to be made. Seller may, at its option, install a composite sampling device at the delivery point hereunder and the specific gravity may be determined as often as may be found necessary in practice from samples obtained by such devices. Section 5. The deviation of the aas from the Ideal Cas Laws shall be determined by tests at one (1) year intervals or at such other intervals as may be found necessary in practice, or as may be requested by Buyer. Fuyer" shall not request such test more frequently than once every three months. Such tests shall. be made by a mutually agreeable method generally accepted by the gas industry from time to time. Each test shall determine the cor- rection to.be used in computing the volume of gas delivered here- under until the next such test is made. Section 6. Fach party hereto, or its designated represen- tative, shall conduct the tests and determinations under this Article VI which are to be made with equipment owned or to be furnished by said party, but the party making such tests or determination shall give the other party, or its designated rep- resentative, notice of each such test or determination in suffi- cient time to enable said other party to have its representative present. ARTICLE VII PRICE Section 1. Commencing January 1, 1°84, and continuing through December 31, 1985, Buyer shall, pay Seller for gas deliv- ered hereunder and measured as herein provided for a price to be the sum of: (1) Seller's weighted average cost of purchased gas 6 as defined in Section 3 of this Article VII, plus (2) an incre- ment of Twenty-nine and Twenty -One One Hundredths 129.21) Cents per Mcf. Such price is subject to the adjustments as provided for in Sections 2, 4 and 5 of this Article VII. Section 2. The above price provisions, as adjusted, are based on the delivery of natural gas having an average total heating value of 1,000 British thermal units per cubic foot. Should the average total heating value of the gas delivered in any billing period be more than 1,000 British thermal units per cubic foot, or less than 1,000 British thermal units per cubic foot, the total charge for such month shall be increased or decreased respectively in the percentage by which the average total heating value of such gas is greater than 1,000 British thermal units per cubic foot, or less than 1,000 British thermal units per cubic foot. Section 3. For purposes of this agreement, the term "weighted average cost of purchased gas" shall be defined as the Frmounts paid by Sel.ler's supplier for volumes of qas purchased at wellheads, at field lines, at gzsoline plant outlets, and at transmission lines under the provisions of the applicable con- tracts involved including recoupment of amortization of prepay- ments. It also includes volumes obtained in excess of receipts under qas exchange agreements and storage gas withdrawals in excess of injections during the period at the applicable costs and amounts paid for delivery of gas into Seller's Pupplier's West 'Texas Transmission System in situations where deliveries cannot be made into such system, thus reflecting the cost of gas at the initial point of delivery into Seller's supplier's I -lest Texas Transmission System. Section 4. In addition to the price to be paid for gas delivered hereunder, Buyer agrees to pay to Seller an amount equal to all gross receipts taxes imposed on Seller for gas pur- chased by Buyer hereunder. or ownward Section 5. The increment as provided for in Section 1 of this Article VII shall be adjusted upward by fifty percent (50%) of the percentage increase or decrease that the revised Consum- er's Price Index for Urban Wage Farners and CIerical Workers (CPI -I4), as published by the Bureau of Labor Statistics, is above or below a base of 207.1, which is the level established contem- poraneously with the base increment of 29.21 cents. In the event the Consumer's Price Index is terminated, then the parties shall adopt another method of increment adjustment which is mutually agreeable to both parties. It is agreed that the price adjust- ment pursuant to this Section 5 for the preceding month's deliv- 7 eries shall be based on the Consumer's Price Index for the third preceding month. ARTICLE VIII HEATING VALUE Section 1. The Btu content of the eras delivered hereunder shall be determined for a cubic foot of gas at a temperature of sixty t60) degrees Fahrenheit at an absolute pressure ec_uivalent to that of thirty (30) inches of mercury, and at the moisture content of the aas delivered. Fuch total heatina value of the cas delivered shall be determined by a composite sampling eevice to be installed, maintained and operated by Seller at its sole cost, risk and expense. The moisture content of the qas deliv- ered shall be determined by seller as often as is found necessary in practice. Section 2. The average total heating value per cubic foot of gas shall be determined for any billing period by taking the arithmetic average of the heating value as determined pursuant to Section 1 of this Article, and such average total heating value shall be used in adjusting the price provisions hereunder. In the event Seller has, or shall in the future install, a sampling device or recording calorimeter at a point on its system which properly records the heating value of the total stream a portion of which is sold hereunder, said sampling device or calorimeter may be used to ascertain the heating value for which correction is to be made. ARTICLE IX BILLING AND PAYMENT Section 1. On or before the 20th day of each calendar month, Seller shall render a statement to Puyer giving the total volume of gas purchased hereunder during the preceding monthly period, such statements to be rendered in accordance with this agreement, and shall include any amounts due for tax reimburse- ment under the provisions of Article VII hereof; provided, howev- er, if the amount of reimbursement to Seller cannot be determined currently, Seller may bill Buyer and Buyer shall make payment therefor within a reasonable period after such amount becomes determinable. Section 2. It is understood and agreed between the parties hereto that if Seller's weighted average cost of cas as defined in Section 3 of Article VII hereof cannot be determined by the 20th working day of the following month, then the parties agree P that Seller shall utilize an estimated weighted average cost of purchased gas in rendering the statement provided for in Section 1 of this Article IX. The parties further agree that the state- ment to be rendered the following month shall contain a debit or credit, whichever is applicable, in correcting the prior month's statement from the estimated weighted average cost to actual weighted average cost. Sector Payment shall be made by Fuyer to Seller within ten (1.0) says after receipt of the statement. Section 4. seller shall render to Puyer on or before the first day of march each year a statement setting out the amount of gas, if any, by which Buyer failed to take Buyer's minimum annual purchase obligation during the preceding accounting year as provided in Article II hereof, and Euyer shall pay to Seller the amount due within thirty (30) clays after receipt by Buyer of such statement. Sectiong. All statements, bills and payments shall be sub- 'ect to correction of any errors containee therein until the expiration of one year after date of payment. Section unpaid after shall bear until paid. 6. Any amounts due the due date for each interest at the rate of for aas hereunder remaining payment provided for herein ten percent (10%) per annum ARTICLE X QUALITY Section 1. Gas delivered by Seller hereunder shall conform to the following specifications: a. Liouids: The gas shall be commercially free from water ani—hy7rocarbons in liquid form. b. Hydrogen Sulphide: The gas shall not contain more than one () grain of hydrogen sulphide per one hundred (100) cubic feet. C. Oraanic Sulphur: The gas shall not contain more than twenty (20) grains of organic sulphur per one hundred (100) cubic feet. d. Carbon Dioxide: The aas shall not contain more than t ree percent (31�) carbon dioxide by volume. n e. Dust, Gums, etc.: The gas shall be commercially free of ust, gums and other solid matter. f. Water Vapor: The gas shall not contain more than nine (9) pounds of water in the vapor phase per million cubic feet. g. Heating Value: The gas shall have a gross heating value of not more than twelve hundred fifty (1250) and not less than nine hundred fifty (950) British thermal units per cubic foot. h. Te,:perature: The temperature of the gas shall not exceed one hundred twenty (120) degrees Fahrenheit. ARTICLE XI TITLE Section 1. Seller shall be in control and possession of the pas de. i—T veree hereunder and responsible for any c =mage or inju- ries caused thereby until the same shall have been delivered to Buyer at the point of delivery, after which delivery Buyer shall be deemed to be in exclusive control and possession thereof and responsible for any such damages or injuries. Section 2. Seller expressly warrants its title to and rights to sell the gas to be delivered hereunder free and clear of all liens and Seller will hold Buyer harmless against adverse claims thereon. ARTICLE XII FORCE MAJEURE Section 1. The obligations of either party hereto shall be suspended during such time as such party is prevented from com- plying therewith in whole or in part by acts of God, strikes, war, lockouts, orders or decrees of any lawfully constituted state, federal or local body, temporary failure of Seller's aas supply due to causes or conditions reasonably beyond the control of either party, whether like or unlike those herein enumerated, or on account of either party making necessary repairs to or replacements of facilities used in the delivery, receipt, trans- mission or utilization of gas, or because of any other cause, except financial, beyond the reasonable control of such party. Section 2. In the event of either Buver or Seller being rendered unable wholly or in part by force :rajeure to carry out 1() its obligations under this agreement, other than to make payments due hereunder, it is agreed that on such party giving notice and full particulars of such force majeure in writing or by telegraph 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 any inability so caused but for no lon- ger period, and such cause shall as far as possible be remedied with all reasonable dispatch. Section 3. The settlement of strikes or lockouts shall be entirely within the discretion of the party having the difficul- ty, and the above requirements that any force majeure scall be re:redied with al.] reasonable dispatch shall not require the set- tlement of strikes or lockouts by acceding to the demanOs of opposing party when such course is inadvisable in the discretion of the party having the difficulty. ARTICLE XIII NOTICES Section 1. Notices to be given hereunder, unless otherwise designated in writing, shall be deemed sufficiently given and served when deposited in the united States mail, postage prepaid, by first class, certified or registered mail to the following addresses: To Seller: Fnereas Company P. 0. Fox 40 Amarillo, Texas 791F9 To Buyer: City of Lubbock P. O. Box 2000 Lubbock, Texas 79457 Section 2. Routine communications, including monthly state- ments and payments, shall be considered duly delivered when deposited in the United States mail, postage prepaid, by first class, certified or registered mail to the above addresses, or to such other address as may be mutually agreed upon. 11 ARTICLE XIV SUCCESSORS AND ASSIGNS Section 1. This agreement may not be assigned by either party without the written consent of the other party, however, either party may assign its rights, title and interest in, to and under this agreement to a trustee or trustees, individual or cor- porate, as security for bonds or other obligations or securities, without such trustee or trustees assuming or becoming_ in any respect obligated to perform the obligations of the assignor under this aareement, and, if any such trustee be a corporation, without its being required to qualify to do business in any state in which any performance of this agreement may occur. However, such assignment, for security purposes, shall not relieve the assigning party of any of its obligations under this agreement. ARTICLE XV MAINTENANCE OF FACILITIES Section 1. Each party hereto shall maintain the equipment, including r^eters and facilities owned by it and used in its per- formance hereof, in good, safe, efficient operating condition and repair. ARTICLE XVI DURATION OF AGREEMENT . Section 1. This agreement shall be effective as of 7:00 a.m. on the first clay of January, 1984, and shall continue and remain in full force and effect for a term ending_ December 31, 19P5. ARTICLE XVII INDEMNIFICATION Section 1. Seller agrees to indemnify and hold Buyer harm- less against any and all loss, cost, claim or demand on account of any damage to property or injury to persons arising or result- ing from Seller's operations hereunder. Puyer agrees to indem- nify and hold harmless Seller against any and all loss, claim or demand on account of any damage to property or injury to persons arising or resulting from Buyer's operations hereunder. 12 ARTICLE XVIII DESCRIPTIVE HEADINGS Section 1. 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 such provisions. ARTICLE XIX GOVERNMENTAL REGULATIONS Section I. This agreement is made subject to all present and future valid laws of the State of Texas anO the United States, and regulations or orders of duly constituted govern- mental authorities having or asserting iurisdiction which are applicable to the subject matter hereof and effective from time to tir e. 'n the event any such authority shall establish a price at the point of delivery provided herein, or a point related to a point of delivery different frorr the price applica?lle pursuant to this agreement, then the price as provided herein shall be adjusted as recuired in view of such established price. EXECUTED as of the 15th day of December, 10-,F?. FVFRGAS COMPANY 'ATTEST: uy: Assist t Secreta President ecreta y CITY OF LUBBOCK By: / is N'ayo ft�L 33 Energas Company ENERC S® January 13, 1984 Mr. Donald Vandiver Assistant City Attorney City of Lubbock P. 0. Box 2000 Lubbock, Texas 79457 Dear Don: City Attorney Enclosed is a fully executed copy of the Gas Sales Agreement between Energas Company and the City of Lubbock. You will notice that I have made the agreed upon correction on page seven of the agreement. Please let me know if you have any questions. Ver ruly yours, VT Don E. J e Director Regulatory Affairs DEJ:be Enclosure cc: J. V. Huber W. P. McKee Energas Company January 13, 1984 ENERGAISo GENERAL CONTRACT MEMORANDUM SUBJECT: AMENDMENT TO GAS SALES AGREEMENT dated December 15, 1983, between ENERGAS COMPANY and CITY OF LUBBOCK Copies of Agreements have been distributed as follows: Customer 11 executed copy Corporate File 1 executed copy Contract File 1 xerox copy Budget 1 xerox copy to Evelyn Shelton Operations 1 xerox copy to Div. Mgr. (JLP) Gas Accounting 1 xerox copy to Bill Heien Rates 3 xerox copies to R. F. Stephens DEJ:be