Resolution No. 8694
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RESOLUTION NO. 8694
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A
NATURAL GAS PURCHASE AND SALE AGREEMENT BY AND
BETWEEN THE CITY OF VERNON AND SEMPRA ENERGY
TRADING CORP.
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7 WHEREAS, the City of Vernon (~City") is constructing a 134
8 MW Combined Cycle Power Plant, the Malburg Generating Station, for the
9 purpose of installing additional generating capacity that will yield
10 an efficient, cost-effective, and reliable source of electric
11 generation to the City's inhabitants; and
12 WHEREAS, the City desires to purchase certain quantities of
13 natural gas for its existing combustion gas turbines at the Vernon
14 Power Plant and the Malburg Generating Station; and
15 WHEREAS, the City desires to enter into a Natural Gas
16 Purchase and Sale Agreement with Sempra Energy Trading Corp.
17 ("Sempra") under which Sempra agrees to sell natural gas on favorable
18 terms to the City during a one-year period, February 16, 2005 through
19 February 15, 2006, and thereafter on a month-to-month basis until
20 terminated upon 30-days notice; and
21 WHEREAS, the term, price, quantity and point(s) of delivery
22 are set forth in the Agreement and in Transaction Confirmations that
23 may need to be executed to take advantage of lower prices for natural
24 gas in a timely fashion; and
25 WHEREAS, on March 16, 2005, the Finance Committee considered
26 the recommendation of Bruce V. Malkenhorst, the Director of Finance,
27 dated March 10, 2005, that an agreement be approved and executed with
28 Sempra and that the Chief Executive Officer of the Gas Municipal
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1 Utility Department be authorized to execute all necessary documents to
2 fulfill the City's natural gas requirements; and
3 WHEREAS, the City Council of the City of Vernon has
4 determined that, pursuant to the provisions of subsection (a) of
5 Section 2.27 of the Vernon City Code, it is in the public interest and
6 necessity to enter into the Agreement with Sempra.
7 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
8 CITY OF VERNON AS FOLLOWS:
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SECTION 1:
The City Council of the City of Vernon hereby
10 finds and determines that the recitals contained hereinabove are true
11 and correct.
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SECTION 2:
The City Council of the City of Vernon hereby
13 approves the Natural Gas Purchase and Sale Agreement, in substantially
14 the same form as the copy which is attached hereto as Exhibit A and
15 incorporated by reference.
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SECTION 3:
The City Council of the City of Vernon hereby
17 authorizes the Chief Executive Officer of the Gas Municipal Utility
18 Department to execute said Agreement for, and on behalf of, the City
19 of Vernon.
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SECTION 4:
The City Council of the City of Vernon hereby
21 authorizes the Chief Executive Officer of the Gas Municipal Utility
22 Department to execute any necessary Transaction Confirmation in the
23 form set forth in Exhibit A to the Agreement.
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SECTION 5:
The City Council of the City of Vernon hereby
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directs the City Clerk, or his designee, to send one fully executed
Agreement to:
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Sempra Energy Trading Corp.
Attn. Energy Operations
58 Commerce Road
Stamford, CT 06902
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SECTION 6:
The City Clerk of the City of Vernon shall
2 certify to the passage of this resolution, and thereupon and
3 thereafter the same shall be in full force and effect.
4 APPROVED AND ADOPTED this 16th day of March, 2005.
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9 BRUCE V. MALKENHORST, City Clerk
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1 STATE OF CALIFORNIA
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4 I, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do
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COUNTY OF LOS ANGELES
5 hereby certify that the foregoing Resolution, being Resolution No.
6 8694, was duly adopted by the City Council of the City of Vernon at a
7 regular meeting of the City Council duly held on Wednesday, March 16,
thereafter was duly signed by the Mayor of the City of
8 2005, and
9 Vernon.
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13 ( SEAL)
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BRUCE V. MALKENHORST, City Clerk
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EXHIBIT
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NATURAL GAS PURCHASE AND SALE AGREEMENT
Date: February 16, 2005
Seller:
Sempra Energy Trading Corp.
58 Commerce Road .
Stamford, CT 06902
Buver:
City of Vernon
4305 Santa Fe Avenue
Vernon, CA 90058
Notices & Correspondence:
Notices & Correspondence:
58 Commerce Road
Stamford, CT 06902
4305 Santa Fe Avenue
Vernon, CA 90058
Attn: Energy Operations
Phone: (203) 355-5626
Fax: (203) 355-6604
Attn: Daniel E. Garcia
Phone: (323) 826-1422
Fax: (323) 826-1425
Payments:
Invoices & Payments:
As provided in invoice
4305 Santa Fe Avenue
Vernon, CA 90058
Phone: (323) 826-1422
Fax: (323) 826-1433
Federal Tax ID Number: 956000808
Seller and Buyer are individually referred to as a "Party" and collectively referred to as
the "Parties." The Parties represent as follows:
A. Seller owns or controls quantities of natural gas ("gas") it desires to sell;
and
B. Buyer desires to purchase certain quantities of gas Seller has available.
The Parties have agreed to the following terms and conditions for the purchase and
sale of gas:
1. The primary term of this Natural Gas Purchase and Sale Agreement (this
"Agreement") shall be from February 16, 2005 through February 15,
2006. This Agreement shall extend month-to-month thereafter until
terminated by either Party by giving thirty (30) days prior written notice.
Notwithstanding the termination of this Agreement, the terms and
provisions of this Agreement shall continue to apply to any Transaction
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entered into prior to the termination of this Agreement until such
Transaction is terminated according to its terms.
2. The term, price, quantity and point(s) of delivery of any particular
purchase and sale of gas by the Parties (each a "Transaction" and
collectively, "Transactions") and any special provisions as agreed to by
the Parties from time to time shall be in substantially the same form as set
forth in Exhibit A (the "Transaction Confirmation") attached hereto and
incorporated into this Agreement. When signed by both parties or
deemed accepted by both parties in accordance with the terms of this
Agreement, each Transaction Confirmation shall be a part of and
supplement the terms and provisions of this Agreement. Except as
provided in Paragraphs 19 and 25 of the attached "Conditions of
Purchase and Sale," in the event there is a conflict between the terms and
provisions of this Agreement and the terms and provisions of a
Transaction Confirmation, the terms and provisions of a Transaction
Confirmation shall control to the extjant of any conflict.
3. The attached "Conditions of Purchase and Sale" dated February 16, 2005
are hereby incorporated into and made a part of this Agreement as
essential terms and conditions. Additionally, all Transactions shaJl be
subject to the guidelines of Southern California Gas Company ("SoCal" or
"SoCaIGas").
4. The Credit support Addendum attached hereto as Exhibit 8 is hereby
incorporated into and made a part of this Agreement as essential terms
and conditions.
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By their signatures as they appear below, Buyer and Seller hereby accept and agree to
the terms and conditions of this Agreement and all Transaction Confirmations.
Seller:
Buyer:
Sempra Energy Trading Corp.
City of Vernon
By:
By
Name:
Name: Bruce V. Malkenhorst
Title:
Title: City Administrator
APPROVED AS TO FORM:
APPROVED AS TO FORM:
Marcia Greenblatt
Eric T. Fresch, City Attorney
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NATURAL GAS PURCHASE AND SALES AGREEMENT
Dated: February 16, 2005
Sempra Energy Trading Corp. (Seller)
and
City of Vernon (Buyer)
CONDITIONS OF PURCHASE AND SALE
1. Firm Deliverv: For each day of the delivery period, Seller shall sell and deliver
and Buyer shall purchase and receive Buyer's full requirements of gas for
Buyer's meter location(s) listed on Exhibit A subject to this Agreement on a
"Firm" basis. "Firm" shall mean that Seller's obligation to sell and deliver and
Buyer's obligation to purchase and receive gas shall only be excused by an .
event of "Force Majeure" as defined herein.
2. Invoices and Payment: Seller shall invoice Buyer on or before the fifteenth (15th)
day of the month for deliveries of gas made in the prior month based on Buyer's
actual usage. Buyer shall pay Seller on the later of the 25th day of the month of
the month following deliveries or ten (10) days after Buyer's receipt, via
facsimile, United States first class mail, or courier, of Seller's invoice or if such
date is not a business day on the following business day. Seller, at its sole
option and in its sole discretion, may suspend deliveries of gas, in whole or in
part, pursuant to any or all Transactions whenever any payment on any invoice
for any Transaction is two (2) business day or more past due. Billing will be
based on Buyer's actual usage as reflected by telemeter readings on Gas Select
via SoCalGas. Should telemetry not be available, Buyer shall provide meter
read statements to Seller as requested by Seller. Buyer, at its sole cost, shall be
responsible for installing and maintaining telemetry at Buyer's facility. On any
amounts not paid on or before the due date, Buyer shall be liable for and shall be
charged interest on all past due amounts at the lesser of (i) the prime interest
rate per annum on corporate loans at large U.S. money center commercial banks
(as reported in the first edition of Wall Street Journal "Money Rates" table for the
calendar month in which payment is due) plus 2% per annum, compounded daily
from the due date through but not including the date paid, or (ii) the maximum
rate of interest permitted by applicable law compounded daily from the due date
through but not including the date paid. Statements and invoices shall be
delivered by facsimile, United States first class mail (postage pre-paid), or
overnight courier to the addressee set forth on page one (1) hereof. In addition,
payments shall be made by wire transfer to the account set forth on page one (1)
hereof or, if different, as set forth in any invoice delivered pursuant hereto. In the
event that Seller has reasonable grounds for insecurity, Seller may demand
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adequate assurance of Buyer's ability to pay and may from time to time demand
different terms of payment whenever, in Seller's sole discretion, Buyer's financial
condition requires such change. Seller, upon making such demand and until the
assurance requested by Seller has been provided to Seller, may, in its sole
discretion, suspend deliveries of gas pursuant to any or all Transactions, in
whole or in part. If Buyer refuses or fails to give the assurance requested by
Seller or to accept different terms of payment requested by Seller within two (2)
business days after receipt of Seller's demand, Buyer shall be deemed to have
anticipatorily repudiated this Agreement and all Transactions, and Seller may, in
its sole discretion, immediately cancel this Agreement any or all Transactions, in
whole or in part and receive the Settlement Amount in accordance with the
provisions of Paragraph 19.
3. Title and Possession: Risk of loss and title shall transfer from Seller to Buyer at
the Point of Delivery described in the Transaction Confirmation. Seller shall be
solely liable and responsible for, and shall indemnify and hold harmless Buyer
from and against, all claims, losses, liabilities, or damages (including attorneys'
fees and other reasonable litigation costs) (collectively, "Claims") arising out of or
related to, directly or indirectly, title to the gas, personal injury (including bodily
injury or death) related to the gas, or property damage related to the gas prior to
the Point of Delivery, and Buyer shall be solely liable and responsible for, and
shall indemnify and hold harmless Seller from an against, Claims arising out of or
related to, directly or indirectly, payment, personal injury (including bodily injury
or death) related to the gas, or property damage related to the gas at and after
the Point of Delivery.
4. Quality: All gas delivered shall be merchantable and shall conform to all of the
specifications promulgated or otherwise required by SoCa!. Buyer may refuse to
accept such gas pending correction of quality deficiencies. Seller and Buyer
agree to accept SoCal's determination of the quantity and heating value of the
natural gas at Buyer's meter location, provided that such determination is made
in accordance with SoCal's procedures for measurement.
5. Entirety of AQreement: This Agreement, including the Conditions of Purchases
and Sales, Transaction Confirmations and Exhibits, shall constitute the entire
agreement between the parties and supersedes all previous agreements
(whether written or oral), unless otherwise provided herein. No other promises,
agreements or warranties additional to this Agreement shall be deemed a part
hereof nor shall any alteration or amendment of this Agreement be effective
without the written consent of each Party.
6. Contracted Marketer Status: During the term ofa transaction, Buyer will enter
into and maintain a contract with SoCal for firm transportation from the SoCal
system delivery point to Buyer's meter location(s) in accordance with SoCal's
tariff and comply with the requirements of such contract. At least ten business
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days prior to the beginning of the month in which a transaction is to commence,
Buyer will designate Seller as its contracted marketer for nomination and
balancing, according to SoCal's guidelines. In the event that Buyer and Seller
enter into a new transaction with respect to the same meter location (e.g.,
change pricing terms), Buyer's prior designation of Seller as its contracted
marketer will remain in effect. Seller will maintain status as a qualified
contracted marketer with SoCal and will purchase, nominate and balance the
gas for Buyer. .
7. liQuidated Damages: In addition to any liability for imbalance charges in
Paragraph 17 below, which shall not be recovered twice by the following remedy,
in the event that Seller does not exercise any other remedy permitted by the
terms of this Agreement against Buyer in the event of a breach of Firm obligation
by Buyer and the exclusive and sole remedy of Buyer in the event of a breach of
Firm obligation by Seller shall be recovery of the following: (i) in the event of a
breach by Seller on any day(s), payment by Seller to Buyer in an amount equal
to the positive difference, if any, between the purchase price paid by Buyer
utilizing the Cover Standard for replacement Gas and the Contract Price (as set
forth on any applicable Exhibit A hereto), adjusted for commercially reasonable
differences in transportation costs to or from the Point(s) of Delivery, multiplied
by the difference between the Contract Quantity (as set forth on any applicable
Exhibit A hereto) and the quantity actually delivered by Seller for such day(s); or
(ii) in the event of a breach by Buyer on any day(s), payment by Buyer to Seller
in the amount equal to the positive difference, if any, between the Contract Price
and the price received by Seller utilizing the Cover Standard for the resale of
such Gas, adjusted for commercially reasonable differences in transportation
costs to or from the Point(s) of Delivery, multiplied by the difference between the
Contract Quantity and the quantity actually taken by Buyer for such day(s); or
(iii) in the event that Buyer has used commercially reasonable efforts to replace
the Gas or Seller has used commercially reasonable efforts to sell the Gas to a
third party, and no such replacement or sale is available, then the exclusive and
sole remedy of the non-breaching party shall be any unfavorable difference
between the Contract Price and the Spot Price, adjusted for such transportation
to the applicable Point(s) of Delivery, multiplied by the difference between the
Contract Quantity and the quantity actually delivered by Seller and received by
Buyer for such day(s). "Spot Price" means the price listed in the publication Gas
Daily (published by Financial Times Energy or any successor thereto) under the
heading "Midpoint" in the table "Daily Price Survey" applicable to the geographic
location closest in proximity to the Point(s) of Delivery for the relevant day.
"Cover Standard" means that the non-defaulting party shall use commercially
reasonable efforts to obtain Gas, or sell Gas, at a price reasonable for the
delivery or production area, as applicable, consistent with: the.amount of notice
provided by the defaulting party; the immediacy of the Buyer's Gas consumption
needs or Seller's Gas sales requirements, as applicable; the quantities involved;
and the anticipated length of failure by the defaulting party.
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8. Force Maieure: "Force Majeure" as used in this Agreement means acts of God;
landslides; lightning; earthquakes, storms or storm warnings, such as hurricanes,
which result in evacuation of the affect area; floods; washouts; fires; explosions;
interruption of firm transportation and/or storage; unplanned outages of,
breakage of, or accidents related to equipment, machinery, or lines of pipe;
weather affecting a broad geographic area (such as low temperatures which
cause freezing or failure of wells, equipment, machinery or lines of pipe); strikes,
lockouts or other industrial disturbances; riots; sabotage; insurrection; war; any
governmental or court action such as necessity for compliance with any court
order, law, statute, ordinance, or regulation promulgated by a governmental
authority having or alleging to have jurisdiction; or any other cause or causes
(except financial) beyond such Party's reasonable control, whether similar or
dissimilar to those stated above, and which cause or causes could not have
been avoided or prevented by the exercise of due diligence. In the event either
Party is rendered unable, wholly or in part, to perform its obligations under this
Agreement (except for the obligation to make any payment) because of an event
of Force Majeure, the obligations of each Party pursuant to this Agreement
(other than the obligation to make any payment) shall be suspended for the
continuance of any inability so caused but for no longer period. The Party
claiming Force Majeure shall immediately notify the other Party in writing
describing the nature and estimated duration of such inability to perform. The
cause of such inability to perform shall, so far as possible, be remedied by the
Party prevented from performance of this Agreement with all reasonable
dispatch.
9. Taxes and Fees: Seller shall pay and discharge all production, severance, or
similar taxes levied on the gas delivered by Seller and hold Buyer harmless in
connection therewith prior to the point of delivery. All taxes, fees, tariffs, and
charges incurred at and after the Point of Delivery shall be borne and paid by
Buyer and Buyer shall hold Seller harmless in connection therewith.
10. Notices: Any notice shall be in writing and shall be delivered by courier, by
United States first-class mail (postage pre-paid), or by facsimile to the address or
facsimile number, as applicable, first set forth herein, unless changed by written
notice. Notices shall be deemed received when (i) for notices delivered by
United States first-class mail (postage prepaid), the day such notice is deposited
. in a United States Post Office with postage fully prepaid; (ii) for notices delivered
by facsimile, if delivered before 5:00 p.m. Central Standard Time on any
business day, the day such notice was transmitted by facsimile, otherwise the
next business day, and (iii) for notices delivered by courier, the day received by
the Party if received on a business day, otherwise, the next business day. The
term "business day" as used in this Agreement means any day the receiving
Party is regularly open for the purpose of conducting business and specifically
excludes all Saturdays, Sundays, and holidays the receiving Party's office
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located at the address for, notice purposes is closed for business.
11. Auditino: Each Party hereto shall have the right, within two (2) years of the date
of any invoice and at it sole expense, to request to receive copies of the relevant
records of the other Party to the extent necessary to verify the accuracy of any
invoice, charge, computation, or demand made under or pursuant to this
Agreement. If a Party has not received written notice of such a request from the
other Party within two (2) years of the date of any invoice, such invoice shall be
deemed correct for all purposes, and each Party waives any right to claim such
invoice was incorrect or inaccurate.
12. Assignment: This Agreement shall not be assignable by either Party without the
prior written consent of the other Party, which shall not be unreasonably
withheld.
13. Waiver: The waiver by either Party of the breach of any provision hereof by the
other Party shall not be deemed to be a waiver of the breach of any other
provision or provisions hereof or of any subsequent or continuing breach of such
provision or provisions.
14. Successors: This Agreement shall bind and inure to the benefit of the Parties
hereto and their respective successors and permitted assigns.
15. Disputes: Choice of Law and Venue: In any litigated dispute under this
Agreement, the prevailing Party shall be entitled to recover from the other Party
all reasonable legal costs and all direct out-of-pocket costs associated with the
litigation incurred by the prevailing Party, including, without limitation, all
reasonable attorneys' fees and costs of court. THIS AGREEMENT AND ANY
DISPUTES ARISING PURSUANT TO OR RELATED TO THIS AGREEMENT
SHALL BE GOVERNED BY, CONSTRUED, ENFORCED AND INTERPRETED
ACCORDING TO THE LAWS OF THE STATE OF CALIFORNIA.
16. Confidentiality: This Agreement and all of its provisions are strictly confidential
between the Parties and shall not be disclosed to the extent permitted by law,
except to their respective employees, attorneys and accountants, and with
respect to Seller, the employees, attorneys and accoontants of its parent
company, who agree to keep the provisions of this Agreement strictly
confidential, without the prior written consent of the other Party. Any Party that
believes it is required by law to disclose the provisions of this Agreement shall,
before disclosing same, immediately notify the other Party in writing.
17. Imbalances: Buyer and Seller shall use all reasonable efforts to avoid the
occurrence of any imbalances under this Agreement and shall immediately notify
the other upon discovery of any imbalance. Both Parties agree to cooperate to
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prevent or remedy any imbalance that may occur on a daily basis, and the Party
causing an imbalance shall be responsible for any imbalance penalties that may
occur under this Agreement. Specifically, during any period when transporter
has invoked balancing parameters for less than a full calendar month, including
but not limited to OFO and EFO events as defined in the transporter's tariff;
Seller prepares estimated quantities of Buyer's full requirement of natural gas for
the Buyer's meter location(s) based upon historical usage data that Buyer
provides to Seller. Accordingly, Buyer must notify Seller promptly by telephone
(and follow up with written notice) of any changes in the daily and monthly
estimated quantities on any given day or month. In the event that Buyer fails to
so notify Seller and as a result an imbalance penalty is imposed by transporter,
said imbalance shall accrue to Buyer. Any imbalance created prior to the
effective date hereof shall be Buyer's responsibility.
18. Nominations: Procedures for Buyer's submission of nominations to Seller shall
be stated in a Transaction Confirmation. Seller shall perform all nominations on
Buyer's behalf with Buyer's cooperation and shall actas Buyer's Contracted
Marketer or Authorized Agent as provided by transporter's current Contracted
Marketer or Authorized Agency program or any successor program implemented
by transporter.
19. Default and Breach: The Parties specifically acknowledge that this Agreement
and all Transactions are "forward contracts" as such term is defined in the United
States Bankruptcy Code, 11 U.S.C. Section 101 (25). The occurrence at any
time with respect toa Party of any of the following constitutes a material breach
and/or event of default of this Agreement: (a) a Party makes a general
assignment Or arrangement for the benefit of creditors; (b) a Party becomes
bankrupt, a debtor in a bankruptcy proceeding, insolvent or unable to pay its
debts as they become due; (c) a Party files a petition or otherwise commences a
proceeding under any bankruptcy, insolvency, reorganization or similar law, or
has any such petition filed or commenced against it; (d) a Party has a liquidator,
administrator, receiver, trustee, conservator or similar official appointed with
respect to it or a substantial portion of its property or assets; (e) a "Credit Event"
(as such term is defined in Exhibit B attached hereto) occurs with respect to
Buyer; (f) a Party fails to make any payment on or before the date due; or (g) any
of the representations and warranties given herein by a Party is materially
incorrect or inaccurate. Additionally, the receipt of gas from any other supplier
from the agreed upon meter locations constitutes a material breach and/or event
of default of this Agreement with respect to Buyer. In the event of a material
breach of any terms of this Agreement or an event of default, the non-defaulting
Party may elect to terminate this Agreement by providing the defaulting Party
written notice stating the effective date of termination (the "Liquidation Date"),
which Liquidation Date may be the date of written notice.
If the non-defaulting Party elects to terminate this Agreement, the non-defaulting
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Party shall calculate and be entitled to or shall pay the Settlement Amount. The
"Settlement Amount" is the positive value, if any, of (a) the products of the
quantities of gas multiplied by the prices for such gas during the remaining term
of a Transaction assuming it had not been terminated, minus (b) is the
equivalent quantities and relevant market prices for the remaining term of a
Transaction either quoted by a bona fide third party offer or which are reasonably
expected to be available in the market under a replacement contract, plus (c) the
value of gas delivered but not yet paid for, plus (d) is the non-defaulting Party's
out-of-pocket damages and losses, including, without limitation, its associated
costs and attorneys' fees, resulting from the default or material breach of the
other Party. To ascertain the market prices of a replacement contract the non-
defaulting Party may consider, among other valuations, the settlement prices of
the New York Mercantile Exchange ("NYMEX") gas futures contracts, quotations
from any leading dealer in gas sway contracts and other bona fide third party
offers, all adjusted for the length of the remaining term and the basis differential,
if any. The owing Party shall pay the other Party the Settlement Amount, if any,
within two (2) business days of receipt of the non-defaulting Party's
determination of the Settlement Amount. The Parties agree that the Settlement
Amount is not a penalty but is a reasonable approximation of the liquidated
damages suffered by the Non-defaulting Party because of the defaulting Party's
material breach of this Agreement or because of an event of default.
20. ReQulatorv: Should the implementation of Capacity Brokering or Federal Energy
Regulatory Commission ("FERC") Order 636, or any companion order thereto or
any other order issued or tariff approved by a State or Federal regulatory body
having jurisdiction over the gas covered by this Agreement cause this Agreement
to have an adverse economic impact on either Party hereto or prevent either
Party from performing under the terms of this Agreement, the Parties shall
promptly and in good faith negotiate alternative arrangements satisfactory to
each other that would allow deliveries of gas in conjunction with this Agreement
to continue. If no alternative agreement can be reached within thirty (30) days,
then the obligations of the Parties under this Agreement may be terminated in
accordance with the provisions of Paragraph 19 by the adversely affected Party
by providing written notice to the other Party no later than thirty (30) days after
negotiations cease.
21. Limitation of DamaQes: FOR BREACH OF ANY PROVISION OF THIS
AGREEMENT, A PARTY'S LIABILITY SHALL BE LIMITED TO ACTUAL
DIRECT DAMAGES ONLY. IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY,
SPECIAL OR INDIRECT DAMAGES IN TORT, CONTRACT, OR OTHERWISE,
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, AND ANY CLAIM FOR SUCH DAMAGES IS EXPRESSLY
WAIVED.
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22. Index and Methodolo~:IY: For index priced gas volumes, should the index or
methodology used to determine the cost of gas be materially changed or should
the index cease to be published, Buyer and Seller shall in good faith attempt to
choose an alternate index, and alternate publication, and/or revise the contract
price methodology.
23 Re{)resentations and Warranties. Each party represents and warrants to the
other party that, on the date of this Agreement and at the time it enters into a
Transaction, (a) it possesses all power, authority and applicable approvals (if
any) necessary for it to enter into this Agreement and each Transaction and the
person signing this Agreement and the person entering into a Transactions have
been duly authorized to do so, (b) this Agreement constitutes the valid and
binding obligation of such party enforceable against it in accordance with its
terms, except as the enforceability of this Guarantee may be limited by the effect
of any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and by general principles of equity, (c)
the execution, delivery and performance of this Agreement will not cause such
party to be in violation of any other agreement or law, regulation, license, order
or court process or decision to which it is a party or by which it or its properties
are bound or affected, (d) it has and will maintain all regulatory authorizations,
consents, certificates and documentation as may be necessary and legally
required for it to buy or sell the gas.
In addition to the foregoing, Buyer represents to Seller that it is not entitled to
claim immunity on the grounds of sovereignty or other similar grounds with
respect to itself or its revenues or assets (irrespective of their use or intended
use) from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order
for specific performance or for recovery of property, (iv) attachment of its assets
(whether before or after judgment) or (v) execution or enforcement of any
judgment to which it or its revenues or assets might otherwise be made subject
to any proceedings in the courts of any jurisdiction and no such immunity
(whether or not claimed) may be attributed to such party or its revenues or
assets.
24. Imbalance Trading: Buyer shall execute all documents required by transporter to
allow Seller to have Buyer's imbalance account placed into Seller's Contracted
Marketer or Authorized Agent account with transporter and Seller shall perform
all imbalance trading on behalf of Buyer.
25. Electronic Recording and Signatures: The Parties hereby consent to the
electronic recording of their oral agreements and related telephone
conversations. Recorded telephone conversations shall be deemed to be a
"writing" and may be used as evidence of the Transaction in the absence of a
written Transaction Confirmation. Seller shall promptly confirm all oral
11
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agreements in writing by facsimile or otherwise using a form substantially similar
to Exhibit A attached hereto, but failure to do so shall not invalidate any
Transaction. If Buyer fails to object to the terms of a written Transaction
Confirmation within three (3) business days of receipt of same, such Transaction
Confirmation shall be deemed accepted by Buyer and correct in all respects.
The letterhead of a Party shall be deemed to be such Party's signature, and
facsimile handwritten signatures shall be deemed to be original handwritten
signatures for all purposes.
26. Counterparts: This Agreement and any Transaction Confirmation may be
executed in multiple counterparts. Each counterpart shall be deemed an
original, but when taken together, such counterparts shall be deemed to be one
agreement.
12
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EXHIBIT "A"
TO
NATURAL GAS PURCHASE AND SALES AGREEMENT
Seller:
Sempra Energy Trading Corp.
58 Commerce Road
Stamford, CT 06902
Representative:
Exhibit Date:
Term:
Buyer's Facilities:
Point(s) of Delivery:
Contract Quantity:
Nomination Procedure:
TRANSACTION CONFIRMATION
DATED:
Buver:
City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058
Representative: Daniel E. Garcia
, through , Seller
has the option to extend the Term through
, by written notification to Buyer by
Existing facilities (combustion turbines) including the new
134 MW power plant scheduled to be completed by April 1 ,
2005
All Southern California border receipt points into SoCalGas
system.
Buyer shall purchase, and Seller shall sell, one hundred
percent (100%) of Buyer's share of natural gas
requirements from Seller for Buyer's Facilities.
Monthly Quantity: Five (5) business days prior to the
upcoming month, Buyer will provide Seller a monthly
nomination for any base load quantity.
Daily Quantity - During the month, Buyer may need
additional daily volume from Seller. Buyer will notify Seller
no later than the day before effective flow date by 8:00 a.m.
CST of its daily nomination. Nominations for Saturday
through Monday are due by 8:00 a.m. CST on the Friday
before effective flow days.
13
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Contract Price (per dry MMBtu):
This Transaction Confirmation is subject to, forms a part of, and supplements the terms and
conditions of that certain Natural Gas Purchase and Sale Agreement. Defined terms and
references used in this Transaction Confirmation but not defined herein shall have the meanings
set forth in the Agreement.
ACCEPTED and AGREED:
Seller:
Sempra Energy Trading Corp.
By
Name:
Title:
Buver:
The City of Vernon
By
Name:
Title:
14
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EXHIBIT B
TO NATURAL GAS PURCHASE AND SALES AGREEMENT
CREDIT SUPPORT ADDENDUM
A. Credit Reauirements. At any time, and from time to time during the term of this
Agreement, if the Contract Exposure (as such term is defined below) should exceed
$5,000,000 (the "Security Threshold"), Seller may require Buyer to provide Performance
Assurance (as such term is defined below) in an amount equal to the amount by which the
Contract Exposure exceeds the Security Threshold (rounding upwards for any fractional
amount to the next $100,000). The Performance Assurance shall be delivered within one
(1) business days of the date of Seller's request. Buyer, at its sole cost, may request
Seller to reduce its Performance Assurance then in place if the Contract Exposure reverts
back to an amount less than or equal to the sum of the Performance Assurance and the
Security Threshold then in place (rounding upwards for any fractional amount to the next
$100,000).
B. Seller may, in its sole discretion, in order to support Buyer's Security Threshold and
secure all payment obligations of Buyer hereunder, require Buyer to execute and deliver
to Seller a term bank letter of credit agreement which term bank letter of credit agreement
shall be in form and substance and from a commercial bank satisfactory to Seller in its
sole discretion and shall be executed and delivered by Buyer before the delivery of any
gas pursuant to this Agreement, or if gas is being delivered pursuant to this Agreement,
Seller may, in its sole discretion, immediately suspend any or all deliveries of .gas, in
whole or in part, until Buyer delivers to Seller such letter of credit.
C. Credit Events of Default. The following events (each a "Credit Event") shall be events of
default of the Agreement and Seller shall have the right to exercise any of the remedies
available to Seller upon the occurrence of a Credit Event.
(i) Buyer fails to establish, maintain, extend or increase Performance Assurance
when required pursuant to this Credit Support Addendum; or
(ii) In the reasonable opinion of Seller, (x) a material adverse change has occurred in
the business, financial condition or operations of Buyer, and/or (y) Buyer's ability to
meet its obligations under the Agreement has become materially impaired; or
(iv) Buyer's Credit Rating is downgraded by either Moody's or S&P from the Credit
Rating in existence on the date of this Agreement or Buyer ceases to be rated by
S&P or Moody's subsequent to the date of this Agreement; or
(v) Buyer fails to timely provide financial information as provided in Paragraph D
below.
D. Financial Information. Buyer shall deliver within 180 days following the end of each
15
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fiscal year, a copy of any audited or unaudited consolidated financial statements for such
fiscal year. In all cases the statements shall be the most recent accounting period and
prepared in accordance with generally accepted accounting principles, consistently
applied.
E. Definitions. With respect to this Credit Support Addendum, the following definitions shall
apply. Defined terms and references used in this Credit Support Addendum but not
defined herein shall have the meanings set forth in the Agreement.
(i) "Performance Assurance" means collateral in the form of cash, Letters of Credit or
other collateral deemed sufficient by Seller.
(ii) "Letter of Credit" means one or more irrevocable, standby letters of credit from a
major U.S. commercial bank or foreign bank with a U.S. office having (a) a Credit
Rating of at least "A-" from S&P or "A3" from Moody's and (b) capital and surplus
of at least U.S. $10 billion.
(ii) "Contract Exposure" means an amount equal to the Settlement Amount (as
defined in Paragraph 19 of the Agreement) that would be payable from Buyer to
Seller, as if a Liquidation Date had been declared effective as of the date of
calculation pursuant to Paragraph 19 of the Agreement (without regard to whether
a material breach or event of default of the Agreement has occurred), and all other
amounts owed but not yet paid by Buyer to Seller, whether or not such amounts
are then due, for performance already provided pursuant to all Transactions
conducted under the Agreement.
(iv) "Credit Rating" means on any date of determination, with respect to Buyer, the
lower of its long-term senior unsecured debt rating (not supported by third party
credit enhancement) or its issuer credit rating by Moody's or S&P, and (y) with
respect to a financial institution, its long-term senior unsecured debt rating or its
deposit rating (not supported by third party credit enhancement) by Moody's or
S&P.
(vi) "Moody's" means Moody's Investors Service, Inc., or its successor.
(vii) "S&P' means Standard & Poor's Ratings Services (a division of McGraw-Hili, Inc.)
or its successor.
16
THOMAS A. YBARRA
Mayor Pro-Tern
WM. "BILL" DAVIS
Councilman
JOHN KARNS
Karns & Karabian
General Counsel
CITY COUNCIL
LEONIS C. MALBURG
Mayor
KEVIN WILSON
Director of Community Services & Water
H. "LARRY" GONZALES
Councilman
STEVEN E. PARKER
Fire Cruef
W. MICHAEL McCORMICK
Councilman
SOL BENUDIZ
Police Cruef
BRUCE V. MALKENHORST
City Administrator / City Clerk
Cruef Executive Officer of
Light & Power
ERIC T. FRESCH
City Attorney
LEWIS J. POZZEBON
Director of Environmental Health
CITY HALL
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058
TELEPHONE (323) 583-8811
RORY BURNETT
Gursey, Schneider & Co. LLP
City Accountant
Finance Committee
City of Vernon
10, 2005 ~
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March
j
Honorable Members:
The City Attorney is requesting that a Purchase and Sale Agreement
with Sempra Energy Trading Corp. be approved to allow the Gas
Municipal Utility Department to purchase natural gas to supply the
Malburg Generating Station and future retail customers. It is hereby
recommended that said Agreement be approved and executed and it is
further recommended that authority be granted to the Chief Executive
Officer of the Gas Municipal Utility Department to execute all
necessary documents to fulfill the City's natural gas requirements.
Very truly yours,
/--- ~~~
Bruce V. Malkenhorst
Director of Finance
BVM/ng
"Exclusively Industrial"
CITY ATTORNEY'S OFFICE
INTER-OFFICE MEMORANDUM
(J~
DATE: March 9, 2005
TO: Bruce V. Malkenhorst, City Administrator
FROM: Eric T. Fresch, City Attorney f, .1~J.- fJ;/)
SUBJECT: Natural Gas Purchase and Sale Agreement
I recommend that the City enter into a Purchase and Sale
Agreement for Natural Gas with Sempra Energy Trading Corp. This
will allow the Gas Municipal Utility Department to purchase
natural gas to supply the Malburg Generating Station as well as
future retail customers. I further recommend that as the Chief
Executive Officer of the Gas Municipal Utility Department, you
or your designee act as the authorized agent with the authority
to enter into such transactions that are necessary to fulfill
the City's natural gas requirements.
ETF:bmjr
cc: Manuel Garcia, Generation Operations Manager
CITY ADMINISTRATOR/CITY CLERK'S
INTER-OFFICE MEMORANDUM
DATE:
March 29, 2005
TO: Manuel Garcia, Generation Operations Manager/
MGS Project Manager
FROM:~NellY Giron, Deputy City Clerk
Re:' Resolution No. 8694 - Approving and Authorizing
the Execution of a Natural Gas Purchase and Sale
Agreement with Sempra Energy Trading Corp.
Transmitted herewith is a copy of the above-referenced
resolution that was approved by City Council on March 16,
2005, and two partially executed original agreements to be
sent to Sempra for their signature.
Please ensure that one fully executed original agreement is
submitted to the City Clerk's office.
Thank you.
NG:rcm
cc: Resolution No. 8694
Agreement File: 05-040
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