HomeMy WebLinkAboutContract 26457 CITY SECRETARY
CONTRACT NO.
PROFESSIONAL ENERGY SERVICES AGREEMENT
THIS PROFESSIONAL ENERGY SERVICES AGREEMENT is dated and effective as of ch2L Q v 2000
by and between Lone Star Energy Services,Inc.,a subsidiary of TXU Gas Company("Provider")and the City of Fort
Worth("Customer"). Provider and Customer will also be referred to in this Agreement individually as a"Party" and
collectively as the"Parties".
Purpose: Customer has requested Provider(and/or Provider's affiliates)to provide certain Professional Energy Services
(as defined below)to Customer's Property(as defined below).
NOW THEREFORE,in consideration of the foregoing premises and the following mutual agreements,and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Provider and Customer,
and intending to be legally bound hereby, the Parties agree as follows:
1. DEFINITIONS. In addition to terms defined elsewhere in this Agreement, for purposes of this Agreement,
the following definitions shall be applicable:
a. "Agreement" means this Professional Energy Services Agreement and all attachments and exhibits
referenced herein,together with any written amendments,modifications or supplements hereto.
b. "Commencement Date" means the date of execution of this Agreement which is also the date upon
which Provider shall begin to provide the Consulting Services pursuant to this Agreement.
C. "Commissioning Date"means that date upon which Provider begins to provide the Other Professional
Services pursuant to this Agreement.
d. "Commodities"means individually or collectively,any or all gas and electricity.
e. "Consulting Services" means the consulting services to be provided by Provider with respect to the
Project as described in Part I of Attachment A hereof.
f. "Other Professional Services"means the other professional services to be provided by Provider with
respect to the Project as described in Part II of Attachment A hereof.
g. "Professional Energy Services" shall mean the services to be provided by Provider(and/or Provider's
affiliates)to the Property as specified in Attachment A.
h "Professional Energy Services Charges"means the monthly payment,consisting of a Fixed Component
and the Variable Components, referred to in the section of this Agreement entitled "Professional Energy Services
Charges"and in Attachment B.
i. "Proiect"means a gas turbine generation plant to be constructed on the Property.
j. "Prope " means that real property and the Project to be constructed on such real property as
identified in Attachment D.
k. "System" means collectively all of the mechanical, electrical, plumbing and other equipment,
interconnects,meters,piping,systems and facilities now or hereafter located on the System Site which will be operated
and maintained by Provider as identified in Attachment A.
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1. "System Site"means that portion of the Property upon which the System will be located and rights of
ingress and egress reasonably necessary to get to the System.
M. "TNRCC Permit No. 7553" means the air quality permit issued by the Texas Natural Resource
Conservation Commission("TNRCC")to Customer covering air emissions at and from the Property,identified as Permit
No. 7553,as has been or may be amended or altered from time to time.
2. TERM AND RENEWAL OF AGREEMENT. The term of this Agreement with respect to the Other
Professional Services will commence on the Commissioning Date and will continue through July 1, 2021, unless
terminated earlier in accordance with the provisions of this Agreement. The Parties agree that construction of the Project
shall commence by February 28,2001 (or by an extended deadline authorized by the TNRCC in connection with TNRCC
Permit No. 7553)and that the Project shall be completed and that the Commissioning Date shall be no later than July
1,2001,unless otherwise agreed by the Parties. The term of this Agreement with respect to the Consulting Services will
commence on the date hereof and will continue through July 1,2021,unless terminated earlier in accordance with the
provisions of this Agreement.
3. PROFESSIONAL ENERGY SERVICES.
a. Ownership of and Conditions at the Property. Customer has or shall notify Provider in writing of any
conditions at the Property,including the System,of which Customer knows,reasonably should know,or becomes aware
of that(i)may pose an actual or potential threat to Provider's employees'health or safety or(ii) could materially and
adversely affect Provider's performance of its obligations described in this Agreement. Customer shall provide to
Provider,upon Provider's reasonable request,any information or documentation relating to the Property or the System.
b. Provision of Professional Energy Services. Subject to the other terms of this Agreement,during the
term of this Agreement, Provider and Customer will provide the material and labor reasonably necessary for each to
perform their respective obligations described in Attachment A. Provider represents and warrants to Customer that: (i)
any non-professional services and work to be provided by Provider hereunder will be performed in a good and
workmanlike manner; and(ii)in providing the Professional Energy Services to Customer,Provider will maintain,and
otherwise conform to the specifications and output and delivery standards set forth in Attachment C ("Output and
Delivery Standards"). Except as set forth on Attachment C hereof,if at any time during the term hereof,the System,
or any part thereof,fails to perform for the purposes intended by this Agreement,Provider agrees to take such corrective
actions to cure such nonperformance(including replacement of the System,or any part thereof,if reparative actions do
not restore the System to its fully functional status), at the sole cost and expense of Provider [other than costs and
expenses resulting from the following,which shall be the sole responsibility of Customer: (i)the fault of Customer,(ii)
Force Majeure Events,(iii)other factors out of the control of Provider, such as outages associated with heat recovery
systems, distributed control system or other plant support systems, (iv) the unavailability, for any reason, of a
replacement System,or any part thereof or(v)the Used Air Compressors(defined hereafter)],as Provider shall deem
necessary or appropriate. THE PARTIES ACKNOWLEDGE AND AGREE THAT THE FOREGOING
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS ARE THE ONLY STANDARDS OF
PERFORMANCE AND REMEDIES APPLICABLE TO PROVIDER'S PROVISION OF PROFESSIONAL ENERGY
SERVICES OR PERFORMANCE OF ITS OBLIGATIONS DESCRIBED IN THIS AGREEMENT. NO OTHER
REPRESENTATIONS,OBLIGATIONS,OR WARRANTIES,WHETHER EXPRESS OR IMPLIED,INCLUDING,
BUT NOT LIMITED TO,IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, SHALL APPLY TO PROVIDER'S PROVISION OF PROFESSIONAL ENERGY SERVICES OR
PERFORMANCE OF THIS AGREEMENT AND ALL SUCH WARRANTIES ARE HEREBY EXPRESSLY
DISCLAIMED.
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C. Exclusive Richt to Provide Professional Energv Services. Provider(and/or Provider's affiliates)shall
be the sole and exclusive provider of the Professional Energy Services to Customer at the Project and Customer shall
not obtain such Professional Energy Services from any third party or provide such services on its own behalf, either
directly or indirectly through an affiliate except that Customer shall undertake and perform each of the responsibilities
designated for it to perform in Attachment A.
d. Control of Commodities. Provider shall negotiate as Customer's sole and exclusive agent under
Customer's supervision and control,for procurement of Commodities for the Property on behalf of Customer. Provider
shall manage all Commodities provided to the Property in accordance with the Output and Delivery Standards. If
Customer can procure Commodities on terms that are, in Customer's reasonable judgment,more favorable than those
Customer is then receiving,then Customer shall direct Provider to procure Commodities for Customer from such other
provider on behalf of Customer.
e. Conditions to Provision of Other Professional Services. Except as otherwise specifically provided
herein,Provider's obligation to commence providing the Other Professional Services set forth on Attachment A and the
Output and Delivery Standards set forth on Attachment C under this Agreement shall be subject to and conditioned upon
satisfaction of the following conditions:
(i) Completion of construction of the Project for the uses intended by the Agreement;
(ii) Provider shall have reasonably accepted and approved the System for the uses intended by
this Agreement;
(iii) Customer shall have delivered to Provider a recorded easement or easements in such foils
and terms as shall be reasonably satisfactory to Provider which shall grant to Provider for the term of this Agreement
rights which shall run with the land over,under, across and through the entire System Site and providing ingress and
egress thereto,for the operation,maintenance,removal,repair and replacement of the System as Provider shall, in its
reasonable discretion,deem necessary and appropriate;and
(iv) Customer shall have assigned all of its right, title and interest under any manufacturer's
warranties relating to the System to Provider;and
(v) All other terms and conditions set forth herein shall have been fully performed or satisfied
to Provider's satisfaction.
Upon completion of construction of the System,Customer shall notify Provider in writing that construction of
the System has been completed for the uses intended by this Agreement and Provider shall commence performing all
necessary testing on the System to determine whether or not Provider reasonably accepts the System;provided,that such
testing period shall not exceed ten(10)business days. Within ten(10)business days of completion of such testing by
Provider, Provider shall notify Customer that either (i) Provider reasonably accepts the System and that the
Commissioning Date shall occur as of the date of such notice or(ii)Provider shall not have reasonably accepted the
System and the reasons therefor,specified in reasonable detail. Customer shall have ten(10)business days thereafter,
unless otherwise extended by Provider, to cure such defect(s). If such defect(s)has not been cured to the reasonable
satisfaction of Provider within such time period,Provider may terminate this Agreement and neither Party will have any
further obligation or liability to the other Party pursuant to this Agreement or otherwise,subject to Section 11(i).
4. REPRESENTATIONS AND WARRANTIES OF CUSTOMER.
Customer hereby makes the following representations and warranties to Provider,upon which Provider may
rely:
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a. Existence. Customer is a duly organized and existing municipal corporation under the laws of the
State of Texas and has the power and authority to enter into this Agreement and incur the obligations hereunder.
b. Authorization. Customer has taken all actions necessary to be taken by it to authorize the
execution,delivery and performance of this Agreement. No consent,waiver,authorization of or filing with any
person or entity is required in connection with the execution,delivery,performance,validity or enforceability of this
Agreement.
C. No Legal Bar. The execution,delivery and performance of this Agreement does not and will not
violate any charter provisions of Customer or any law,regulation,order, injunction,judgment,decree,or writ,or any
lease,mortgage,contract or agreement to which Customer or the Property is subject.
d. Enforceability. This Agreement constitutes a legal,valid and binding agreement of Customer and is
enforceable against Customer in accordance with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency,failure to appropriate funds in the future,or other laws affecting creditors'rights generally and
the effect of general principles of equity.
5. SYSTEM.
a. Warranties of Customer. Customer hereby warrants that: (i) Customer is, or will be, the sole and
exclusive owner of the System;(ii)the description of the System in Attachment A is an accurate and complete description
of all of the mechanical, electrical, and other equipment, interconnects, meters,piping, systems and facilities that are
useful or necessary to provide Professional Energy Services to the Property;(iii)upon completion of construction,the
System will be in good and working order for the uses intended by this Agreement.
b. Ownership of System. Provider shall have no responsibility to design or construct any portion of the
Project or the System and Customer shall have the direct contractual relationship with all contractors concerning
construction and installation thereof. Customer shall be responsible for all costs and expenses associated with
construction of the System,and the payment to all contractors for such costs and expenses. Customer shall at all times
own the System, including any component that becomes part of the System. Provider shall have responsibility for the
repair, maintenance and operation of the System so that the System shall perform as is required by the Output and
Delivery Standards. Subject to the provisions of Section 3(b)hereof,Provider shall have the sole and exclusive right to
manage and control the System and the System Site during the term of this Agreement. Customer will own and have all
rights to use the heat emitted by the Project. Any air emission reduction credits or other benefits realized from the
closing of Customer's existing generators will be for the account of Customer.
C. Easements,Licenses and Rights of Access. Customer warrants that it has the authority to and hereby
does grant to Provider all licenses,easements,and rights of access to the Property to the extent reasonably necessary for
Provider to perform its duties and obligations required by this Agreement. Such easements,licenses and rights of access
shall not terminate so long as this Agreement is in effect. Customer shall provide reasonable assistance to Provider in
order that Provider may validly file any documents required to protect Provider's rights and obligations under this
Agreement.
d. Compliance with Laws,Rules and Regulations. Provider will comply with all governmentally imposed
laws, regulations, rules, codes, permits and ordinances (collectively, the "Laws") applicable to the provision of
Professional Energy Services,except that Customer,as the permit holder under TNRCC Permit No. 7553,shall retain
ultimate responsibility for compliance with such permit. In addition to the indemnifications provided by Provider to
Customer elsewhere in this Agreement,Provider also agrees to and will defend,protect,indemnify,and hold harmless
Customer Group(defined hereafter)from and against all fines and penalties arising out of a violation of the air emission
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limitations set forth in TNRCC Permit No. 7553 which is caused by Provider's negligent or intentional act or omission
in connection with Provider's operation of the System. Provider will comply with all reasonable written rules,
procedures,and practices of Customer pertaining to the operation of the System Site, which are currently in effect or
which Customer may adopt from time to time. Customer will comply with all Laws applicable to the ownership and
operation of the Property,the System and the System Site,including all rights of access thereto. In the event any Laws
are enacted after the Commissioning Date which would require that operational improvements or changes be made to
the System,Customer shall have the option to directly pay for such improvements or changes or Provider shall pay for
such improvements or changes and the Professional Energy Service Charges shall be adjusted equitably to compensate
Provider for the cost thereof.
e. TNRCC Permit No.7553. Customer shall not seek to amend or alter TNRCC Permit No. 7553 with
respect to any requirement,condition or other aspect applicable to the System except as approved by Provider.
f. Annual Appropriations of Agreement. Customer agrees to notify Provider,in writing,within ten(10)
business days of the adoption by Customer's city council of the next succeeding year's annual budget that the Agreement
has been approved and sufficient appropriations were made for payments hereunder.
g. Notice to Customer.Provider agrees to provide written notice to Customer in accordance with Section
11(a) hereof within ten (10) business days of obtaining knowledge that Solar Turbines, Inc. (`Solar") has ceased
operations;provided,that,Provider has no duty to inquire about the continued operations of Solar.
6. PROFESSIONAL ENERGY SERVICES CHARGES.
a. Professional Energy Services Charges.Customer agrees to pay Provider the monthly and other charges
set forth in Attachment B in accordance with this section commencing on the first day of the month after the
Commissioning Date. That portion of the Professional Energy Services Charges which is fixed (i.e., the Fixed
Component)shall be invoiced on or about the fust(I")of the month,and will be due on the thirtieth(30th)day of such
month,and that portion of the Professional Energy Services Charges which is variable(i.e.,the Variable Components)
from month to month(such as,Commodities charges)will be billed in arrears on or about the first(1")day of the month
following the month in which such variable charges are incurred. Any amount not paid by the thirtieth(30`h)day of the
month shall bear interest at a rate of 1-1/2%per month,but in no event to exceed the highest lawful rate of interest.
b. Sales and Use Taxes. In each invoice Provider submits to Customer in accordance with this
Agreement, Customer will be solely responsible for all sales, use or similar taxes, if any, payable with respect to
Provider's provision of the Professional Energy Services(unless Customer provides Provider with a valid manufacturing
exemption certificate with respect to such taxes),whenever arising or due. In so far as permitted by applicable law,
Customer agrees to and will indemnify and hold Provider harmless from and against any and all claims, expenses,
liabilities, or costs for,or relating to,any and all sales,use or similar taxes, including penalties and interest thereon.
Customer shall be solely responsible for all ad valorem or personal property taxes assessed against the System, the
System Site,the Property,and all other property owned or leased by Customer. Nothing contained herein shall ever be
construed so as to require Customer to assess,levy and collect any tax to fund this indemnification provision.
C. No Withholding of Payments. In the event any dispute arises between Provider and Customer with
respect to the Professional Energy Services or this Agreement,other than a dispute regarding a material breach of this
Agreement by Provider,the Parties will promptly undertake to resolve such dispute,but Customer will not be entitled
to withhold, set off, reduce or delay timely payment of any of the Professional Energy Services Charges pending
resolution of such dispute. If,as a resolution of such dispute,Customer is entitled to be reimbursed any payment for
Professional Energy Services Charges,Provider shall repay such amount within ten(10)business days from the date of
resolution of such dispute, plus interest at a rate of one and one-half percent (1 1/2%) per month from the date the
disputed payment was made by Customer,but in no event to exceed the highest lawful rate of interest. This subsection
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(c)shall not apply to any dispute which alleges a material breach of this Agreement by Provider;provided,however,in
no such event will Customer be entitled to withhold,set off,reduce or delay timely payment of any Variable Component
of the Professional Energy Services Charges.
7. PERSONNEL.
a. Provider Project Executive and Account Team. Provider will designate and,during the term of this
Agreement, will provide a Provider project executive (the"Provider Proiect Executive") who will (i) have overall
management responsibility for Provider's performance of its obligations under this Agreement,and(ii)act as a liaison
with the Customer. The Provider Project Executive will report,periodically,as mutually agreed by the Parties, to an
individual designated by Customer as Customer's liaison with Provider. Provider will also designate and provide all
necessary members of Provider account team(the"Provider Account Team"). The Provider Project Executive, the
Provider Account Team, and any employees or agents of Provider retained to carry out its obligations under this
Agreement shall have the knowledge,expertise,training,licensing and certifications necessary to perform their respective
tasks effectively and safely. The Provider Project Executive shall resolve any objection Customer may have to any
member of the Provider Account Team in an appropriate manner. The Provider Project Executive and the Provider
Account Team are and shall remain employees of Provider,and shall not be employees of Customer. Provider shall pay
all salary and fringe benefits for the Provider Project Executive and the Provider Account Team and shall be responsible
for the supervision and direction of the Provider Project Executive and the Provider Account Team for all activities.
b. Solicitation. During the term of this Agreement and for a period of one (1) year following any
expiration or termination of this Agreement,neither Party will offer employment to or employ any person employed then,
or at any time within the preceding one(1)year,by the other Party or its contractors,without that Party's prior written
consent.
8. TERMINATION.
a. Termination for Cause. If either Party commits a material breach of this Agreement,the non-breaching
Party must give written notice to the breaching Party that describes the breach in reasonable detail. The breaching Party
must commence curing such breach within fourteen(14)calendar days after the time the breaching Party receives such
written notice and complete the cure within fourteen(14) calendar days from the date of commencement of the cure.
If the breaching Party does not substantially cure such breach within the stated period of time (except for failure of
Customer to make any payment when due as discussed below),the non-breaching Party may,in its sole discretion,and
without prejudice to any other right under this Agreement, law,or equity,terminate this Agreement by giving written
notice to the breaching Party;provided,however, if the breach is not reasonably susceptible to cure by the breaching
Party within such fourteen (14) day period, the non-breaching Party shall not exercise its option to terminate this
Agreement so long as the breaching Party has commenced to cure the default within such fourteen(14)day period and
diligently completes the work within a reasonable time without unreasonable cessation of the work to complete the cure.
This Section 8 shall not apply to any breach arising from the failure of Provider to comply with Attachment C.
For the purposes of this Agreement,a material breach shall also include:
(i) if either Party discovers that at the time of execution of this Agreement the other Party did
not have the capacity or the proper authority to enter into this Agreement for any reason or was barred from entering into
this Agreement because of any law,regulation,court order,agreement,lease,mortgage,or any other reason;
(ii) the failure of either Party to comply with any federal,state,or local law,regulation,rule or
order that causes a material adverse affect upon this Agreement, either Party, or either Party's performance of its
obligations described in this Agreement;
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(iii) if either Party (A) becomes or declares that it is insolvent or bankrupt, (B) becomes or
declares that it is the subject of any proceedings relating to its liquidation or insolvency,(C)appoints,has appointed on
its behalf,or consents to the appointment of,a receiver or similar officer,of or with respect to all or substantially all of
its assets under any bankruptcy, insolvency,or other similar law,or(D)makes an assignment for the benefit of all or
substantially all of its creditors;
(iv) if construction of the Project shall not be commenced by February 28, 2001 (or by an
extended deadline authorized by the TNRCC in connection with TNRCC Permit No. 7553);
(v) if construction of the Project shall not be sufficiently complete so that the Professional Energy
Services can commence by Provider by July 1,2001;or
(vi) failure to comply with the requirements and provisions of Attachment C.
In addition to any remedy available at law or in equity to the non-breaching Party,the breaching Party shall pay all of
the reasonable costs and expenses,including,without limitation,reasonable attorneys'fees,incurred by the non-breaching
Party in obtaining any remedy for,or relief from,the breaching Party's breach.
b. Remedies for Failure of Customer to Pay Professional Energy Services Charges. If Customer fails for
any reason, other than Customer's failure to appropriate funds for the payment of its obligations hereunder, to pay
Provider any Professional Energy Services Charge when due,and does not make such payment within ten(10)days after
receiving written notification of such failure from Provider,then Provider may immediately,and without further notice
to Customer, and without any liability or responsibility for the consequences thereof, take any one or more of the
following actions in Provider's sole discretion,in addition to all other remedies available to it,at law or equity: suspend
any or all services described in this Agreement provided by Provider or terminate this Agreement.
C. Remedies For Other Breaches by Customer. Notwithstanding anything in this Agreement to the
contrary, in the event of a material breach by Customer(other than Customer's failure to appropriate funds for the
payment of its obligations hereunder),Provider may,in its sole discretion and in addition to and not in lieu of any other
remedies that Provider may have under this Agreement,or at law or equity,and without any liability or responsibility
for the consequences thereof suspend any or all services described in this Agreement provided by Provider or terminate
this Agreement.
d. Termination for Nonappropriation. In the event sufficient amounts are not appropriated for the
Professional Energy Services Charges required to be paid in the next succeeding year of the Agreement,Customer may
terminate this Agreement at the end of the then current year of the Agreement and Customer shall not be obligated to
make payment of the Professional Energy Services Charges provided for in this Agreement beyond the then current year
of the Agreement.Customer agrees to deliver written notice of such nonappropriation and payment for any outstanding
Professional Energy Services Charges payable to Provider through the then current year of the Agreement within ten(10)
business days after Customer's city council determines not to appropriate payment for the next succeeding year of the
Agreement. In the event any outstanding Professional Energy Services Charges are not paid to Provider as set forth in
this section,Provider shall have the right to exercise any rights and remedies available to it, whether at law or equity,
including but not limited to,those set forth in Section 8(c)hereof.
e. Termination for Destruction of the Property.If the Property is destroyed,condemned,abandoned or
for any other reason becomes unusable by Customer other than as a result of the fault of Provider, either Party may
terminate this Agreement upon written notice to the other Party.
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9. INDEMNIFICATION,LIABILITY AND INSURANCE.
a. Insurance. At the Commissioning Date and until termination of this Agreement, Provider shall
provide and maintain either by self-insuring or by a nationally reputable insurer: (i)workers'compensation insurance,
applicable to its employees,in accordance with the statutory requirements of the State of Texas;(ii)employers'liability
insurance,with limits of$500,000 per each accident or occupational disease; (iii)public liability insurance with limits
of$1,000,000 per occurrence;and(iv)all risk property and boiler and machinery insurance with limits of not less than
the full replacement cost value of the System. Such all risk property and boiler and machinery insurance shall name
Customer as loss payee as its interest may appear. During the term of this Agreement,Customer shall maintain public
liability insurance with limits of$1,000,000 per occurrence. To the extent any loss is recovered by a claim covered by
an insurance policy, the Parties hereby release each other from any and all liability or responsibility to the other or
anyone claiming through or under them by way of subrogation or otherwise for any insured loss or damage caused by
casualty loss or by the fault or negligence of the other Party,or anyone for whom the Party may be responsible.
b. Indemnification.
(i) Provider's Duty to Indemnify. Except as otherwise provided in this Agreement,Provider
agrees to and shall defend,protect, indemnify, and hold harmless Customer, its parent or affiliated entities, and their
respective officers, directors, shareholders, agents, servants, employees, independent contractors and subcontractors
(hereinafter collectively referred to as the"Customer Group"),from and against any and all claims,losses,expenses,
damages,demands,judgments,causes of action,suits,and liability in tort,contract,or any other basis and of every kind
and character whatsoever(hereinafter collectively referred to as "Claims"), arising out of or incident to, directly or
indirectly, this Agreement to the extent that Claims are caused by, result from, or arise out of Provider Group's (as
defined below)negligence,gross negligence,intentional misconduct or strict liability.
(ii) Customer's Duty to Indemnify. In so far as permitted by applicable law,Customer agrees to
and shall defend, protect, indemnify and hold harmless the "Provider Group", that is defined as: (A) Provider, (B)
Provider's parent or affiliated entities, (C)Provider's assigns and any entity holding any security interest in or against
this Agreement, and (D) the respective officers, directors, shareholders, agents, servants, employees, independent
contractors and subcontractors of(A), (B), and (C) above, from and against all Claims arising out of or incident to,
directly or indirectly,this Agreement to the extent that Claims are caused by,result from,or arise out of(i)Customer
Group's negligence,gross negligence,intentional misconduct or strict liability or(ii)the Used Air Compressors. Nothing
contained herein shall ever be construed so as to require Customer to assess, levy or collect any tax to fund this
indemnification provision.
C. Environmental Conditions.
(i) As used in this subsection:
(a) the term "Environmental Laws" means any applicable federal, state, or local
statutes,laws(including the Comprehensive Environmental Response,Compensation and Liability Act,42 U.S.C. ' '
9601-9675),ordinances,regulations,rules,resolutions,orders,permits,determinations,writs,injunctions,common law,
rulings,judgment,and decrees,now or hereafter in effect relating to the generation,production,installation,use,storage,
treatment,transportation,release,threatened release,or disposal of Hazardous Materials,and/or relating to the protection
of human health,safety,natural resources,industrial hygiene,or the environment.
(b) The term "Hazardous Materials" means any wastes, substances, radiation, or
materials(whether solids, liquids,or gases)(i)that are hazardous,toxic,infectious,explosive,radioactive,carcinogenic,
or mutagenic,(ii)that are or become defined as"pollutants," "contaminants," "hazardous materials,""hazardous wastes,"
"hazardous substances," "toxic substances," "radioactive materials," "solid wastes,"or other similar designations,in,or
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otherwise subject to regulation under,any Environmental Laws,or(iii)without limitation,which contain polychlorinated
biphenyls(PCBs),asbestos or asbestos-containing materials,lead-based paints,urea-formaldehyde foam insulation,and
petroleum or petroleum products(including crude oil or any fraction thereof)or any additives thereto.
(ii) Provider shall take all necessary remediation action or other actions required for industrial
properties under applicable Environmental Laws for the release, or threatened release of Hazardous Materials at the
System Site that is caused by Provider's negligent or intentional act or omission. However,Customer acknowledges that
it is the"generator" of any Hazardous Materials that result from the operation of the Project or Provider's performance
of its obligations described in this Agreement. Except as provided above,Customer shall be solely responsible for proper
handling and disposal of any Hazardous Materials generated,found,or existing at the Property. At Customer's request,
Provider will assist Customer in complying with any applicable handling,disposal,reporting,record keeping,or other
requirements,but Customer will remain solely responsible for compliance therewith.
(iii) In addition to the indemnifications provided by Customer to Provider elsewhere in this
Agreement, in so far as permitted by applicable law,Customer also agrees to and will defend,protect, indemnify,and
hold harmless Provider Group from and against all Claims arising out of the presence,release,or threatened release of
Hazardous Materials at the Property or the Customer Group's intentional or negligent, known or unknown failure to
properly handle or dispose of Hazardous Materials as required by any applicable Environmental Law except to the extent
that such presence,release,or threatened release of Hazardous Materials is caused by Provider's negligent or intentional
act or omission. Nothing contained herein shall ever be construed so as to require Customer to assess, levy or collect
any tax to fund this indemnification provision.
(iv) In addition to the indemnifications provided by Provider to Customer elsewhere in this
Agreement,Provider also agrees to and will defend,protect,indemnify,and hold harmless Customer Group from and
against all Claims arising out of the presence, release, or threatened release of Hazardous Materials at the Property
caused by Provider's negligent or intentional act or omission.
d. Waiver of Consequential Damages. In no event will either Party be liable to the other in contract,tort,
products or strict liability or on any other basis,for any special,indirect or consequential damages of any nature,which
shall include, without limitation, such items as: (i) indirect operating costs, (ii) overhead costs, (iii) loss of profits or
revenues,(iv)fines and penalties,(v)costs of capital,(vi)loss of use of money,(vii)other business interruption costs
or losses,or(viii)costs associated with insolvency,failure,or dissolution of a business entity.
e. LIMITATION OF LIABILITIES. PROVIDER'S LIABILITY TO CUSTOMER FOR CLAIMS
ARISING OUT OF ITS PERFORMANCE OF THIS AGREEMENT, INCLUDING THE PROVISION OF THE
PROFESSIONAL ENERGY SERVICES AND ANY NEGLIGENCE,INTENTIONAL MISCONDUCT OR PRODUCT
OR STRICT LIABILITY AT THE PROPERTY, SHALL BE LIMITED AS FOLLOWS:
(I) FOR ALL CLAIMS OF A TYPE THAT ARE COVERED BY INSURANCE REQUIRED
BY THIS AGREEMENT,PROVIDER'S LIABILITY SHALL BE LIMITED TO THE AMOUNT COVERED AND
PAID BY SUCH INSURANCE PROVIDER,AND
(II) EXCEPT AS PROVIDED IN ATTACHMENT C ATTACHED HERETO, FOR ALL
CLAIMS OF A TYPE THAT ARE NOT COVERED BY THE INSURANCE REQUIRED BY THIS AGREEMENT,
PROVIDER'S LIABILITY SHALL BE LIMITED IN THE AGGREGATE TO$100,000 FOR ALL SUCH CLAIMS
ARISING IN ANY CALENDAR YEAR.
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C,W INDOWS\TEMP\AGMr FOR ENERGY SERVICES V 12.DOC
10. CONFIDENTIALITY.
a. Definition. For the purposes of this section, except as provided below, the term "Confidential
Information" means this Agreement and all confidential or proprietary information,documents,and electronic data that
either Party obtains in any manner from the other Party. Confidential Information does not include any information or
documents that: (i)have or become public information under the Texas Public Information Act(Chapter 552 of the Texas
Government Code)without any breach of this Agreement;(ii)was already legally in the receiving Party's possession prior
to the time that the Party disclosed such Confidential Information to the receiving Party;(iii)the receiving Party obtained
from a third party(other than one acting on behalf of the Party disclosing such information)who the receiving Party has
no reason to believe is unlawfully in possession of the information and who the receiving Party has no reason to believe
is in violation of any contractual,legal,or fiduciary obligation to the Party disclosing such Confidential Information;(iv)
is or was independently developed by the receiving Party without the benefit or use of any Confidential Information
received hereunder;or(v)is required to be disclosed by any law,regulation or court of applicable jurisdiction,but the
Party required to disclose such information shall, as soon as reasonably possible after such Party discovers the
information is required to be disclosed, notify the other Party in writing. Either Party's failure to notify the other Party
shall create no monetary liability on the part of the Party failing to notify the other.
b. Subject to the Public Information Act of Texas,as such may be applicable to Customer,both Parties
shall hold all Confidential Information that either receives from the other Party in strict confidence and use at least the
same degree of care as it uses with respect to its own confidential information to prevent the disclosure of such
Confidential Information. Neither Party shall disclose the Confidential Information to any person or entity except to
persons who are necessary to perforin such receiving Party's obligation described in this Agreement. Neither Party shall
provide Confidential Information to any such person until such person agrees to abide by the terms of this Agreement.
Each Party shall,at its own expense, take all reasonably available steps necessary to prevent the unauthorized use or
disclosure of any Confidential Information by any of its representatives or employees or by any other person or entity
who gains access to such Confidential Information from such Party in violation of the terms of this Agreement.
C. The Parties agree that monetary damages for breach by either Party of this section are not a complete
or sufficient remedy and the non-breaching Party shall be entitled to equitable relief,including injunction and specific
performance,as remedies for any such breach. Such remedies shall be in addition to any other rights or remedies such
Party may have in law or equity.
11. MISCELLANEOUS PROVISIONS.
a. Notices. All notices required under this Agreement from one Party to the other shall be deemed to
have been duly delivered if hand delivered or sent by United States Certified Mail,return receipt requested,postage pre-
paid,as follows:
If to Customer: If to Provider:
City of Fort Worth Lone Star Energy Services,Inc.
1000 Throckmorton 301 South Harwood Street
Fort Worth,Texas 76102 Dallas,Texas 75201
Attention: City Manager Attention: Vice President,Delivery
With a copy to: With a copy to:
City Attorney Worsham Forsythe Wooldridge LLP
1000 Throckmorton 1601 Bryan St.,30`h Floor
Fort Worth,Texas 76102 Dallas,Texas 75201
Attention: Alexander G.McGeoch
ll
C:\WINDOWS\TEMPUGMC FOR ENERGY SERVICES V 12.DOC
Director of City of Fort Worth Water Department
1000 Throckmorton
Fort Worth,Texas 76102
b. Independent Contractor Relationship. Provider will act as and be deemed to be an independent
contractor. Neither Provider,nor any of its employees or agents will act as,nor be deemed to be,an agent or employee
of Customer. Provider will have the sole right to control and directly supervise the method,manner and details of the
work to be performed and resources provided by Provider.
C. Assignment;Change of Ownership.Customer shall not assign,transfer,or otherwise dispose of any
of its obligations or duties under this Agreement without the prior written consent of Provider, such consent not to be
unreasonably withheld. Without providing notice to or receiving the consent of Customer,Provider may assign,transfer,
or otherwise dispose of this Agreement, in whole or in part, or any of its obligations or duties hereunder to (i) any
affiliated or subsidiary entity or (ii) as long as Provider remains liable and responsible for the provision of the
Professional Energy Services to Customer,any person or entity. Provider may also assign, in whole or in part,its right
to receive payments hereunder to any third party without providing prior notice to or receiving the consent of Customer
to such assignment;provided,however, for payment purposes, the assignment shall not be effective for 30 days after
Customer is provided notice of the name and address to whom payment is to be made. This Agreement will inure to the
benefit of and be binding upon the undersigned Parties and entities,and their respective legal representatives,successors
and permitted assigns.
d. Subcontracting. Provider may,in its sole discretion,subcontract any part of its obligations under this
Agreement with the prior consent of Customer,which consent shall not be unreasonably withheld.
e. Force Majeure. If either Party becomes unable,either in whole or part,to fulfill its obligations under
this Agreement due to acts of God, strikes, lockouts, or other industrial disturbances, acts of public enemies, wars,
blockades, insurrections, riots, epidemics, earthquakes, fires, floods, restraints or prohibitions by any court, board,
department,commission or agency of the United States or of any States,any arrests and restraints,civil disturbances,
or explosions,failure of service by any one or more of the energy source providers providing service to the System,or
some other reason beyond such Partys control(not including the payment of money due hereunder)(collectively,"Force
Majeure Events"), the obligations so affected by such Force Majeure Event will be suspended only during the
continuance of such event. The Party so affected will give written notice of the existence,extent and nature of the Force
Majeure Event to the other Party as soon as reasonably possible after the occurrence of the event. The Party so affected
will use commercially reasonable efforts to remedy its inability to perform as soon as possible. Failure to give notice
will result in the continuance of the affected Party's obligation regardless of the extent of any existing Force Majeure
Event.
f. Governing Law. This Agreement will be governed by,and construed and enforced in accordance with,
the laws of the State of Texas without giving effect to any conflicts of law principles which otherwise might be
applicable. The Parties agree that venue for any proceeding arising from or relating to this Agreement shall be in Tarrant
County,Texas.
g. Non-Waiver of Rights. A waiver by either Party of any breach of this Agreement, or the failure of
either Party to enforce any of the terms and provisions of this Agreement,will not in any way affect,limit or waive that
Party's right to enforce and compel strict compliance with the same or other terms or provisions of this Agreement.
h. No Third-Party Rights. Nothing in this Agreement(including any attachments hereto) shall create,
or be construed as creating,any express or implied rights in any person or entity other than the Parties.
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C:,WINDOWS,TEMP\AGMT FOR ENERGY SERVICES V 12.DOC
i. Survival. No termination or cancellation of this Agreement will relieve either Party of any obligations
under this Agreement that by their nature survive such termination or cancellation, including, but not limited to, all
warranties and obligations of indemnity.
j. Severability. In the event any provision of this Agreement is held to be void,unlawful or otherwise
unenforceable, that provision will be severed from the remainder of the Agreement and replaced automatically by a
provision containing terms as nearly like the void,unlawful,or unenforceable provision as possible;and the Agreement,
as so modified,will continue to be in full force and effect.
k. Entirety of Agreement; Attachments. This Agreement, together with any and all exhibits and
attachments identified and made a part hereof,shall constitute the entire Agreement between the Parties relating to the
subject matter hereof,and supersedes all prior negotiations,undertakings,understandings and agreements between the
Parties relating to the subject matter of this Agreement. Each of these exhibits and attachments attached hereto shall be
deemed to be incorporated herein by reference and to form a part of this Agreement. No changes, modifications,
amendments or supplements to this Agreement will be valid unless agreed to in writing by the Parties.
1. Counterparts. This Agreement may be executed in multiple counterparts,each of which is considered
an original and shall be binding upon the Party who executed same,but all of such counterparts shall constitute the same
agreement.
M. Further Assurances. Customer and Provider agree to provide such information,execute and deliver
any instruments and documents and to take such other actions as may be reasonably requested by the other Party which
are not inconsistent with the provisions of this Agreement and which do not involve the assumptions of obligations other
than those provided for in this Agreement,in order to give full effect to this Agreement and to carry out the intent of this
Agreement.
n. Interpretation. Titles of sections or subsections are intended for convenience only and are not to be
used to interpret this Agreement. Both Parties had readily available access to legal counsel and both participated in the
drafting of this Agreement. Therefore both Parties are deemed to be joint-drafters of this Agreement for purposes of
interpretation.
o. Right to Audit.
(i) Provider agrees that Customer shall,until the expiration of one(1)year after final payment
under this Agreement,have access to and the right to examine and photocopy any books,documents,
papers and records of Provider directly related to this Agreement. Provider agrees that Customer shall
have access during normal working hours to all necessary Provider facilities and shall be provided
adequate and appropriate workspace in order to conduct audits in compliance with the provisions of
this section. Customer shall give Provider reasonable advance notice of intended audits.
(ii) Provider further agrees to include in all its subconsultant, subcontract or sales agreements
hereunder a provision to the effect that the subconsultant, subcontractor and purchaser agree that
Customer shall, until the expiration of one (1) year after final payment under such contract, have
access to and the right to examine and photocopy any books,documents,papers and records of such
subconsultant, subcontractor, or purchaser directly related to the sub-agreement, and further, that
Customer shall have access during normal working hours to all subconsultant, subcontractor, or
purchaser facilities,and shall be provided adequate and appropriate work space,in order to conduct
audits in compliance with the provisions of this section together with subsection(iii)hereof.Customer
shall give subconsultant,subcontractor and purchaser reasonable advance notice of intended audits.
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C WINDOWS TEMP\AGW FOR ENERGY SERVICES VI2.DOC
(iii) Provider agrees to photocopy such documents as may be requested by the Customer, and
further agrees to include such a provision in any subconsultant,subcontractor or purchase agreement.
Customer agrees to reimburse Provider or any subconsultant,subcontractor or purchaser for the cost
of copies at the rate published in the Texas Administrative Code in effect as of the time copying is
performed.
P. Minority and Women Business Enterprise Participation.In accord with City of Fort Worth Ordinance
No. 13471 (the "Ordinance"), Customer has goals for the participation of minority business enterprises and woman
business enterprises in Customer contracts. Provider acknowledges the M/WBE goal established for this Agreement and
agrees to make a Good Faith Effort(as defined in the Ordinance)to cooperate with Customer in meeting that goal.Any
knowing or intentional misrepresentation of facts and/or the commission of fraud by Provider may result in the
termination of this Agreement and debarment from participating in Customer contracts for a period of time of not less
than three(3)years.
14
Cr WINDOWS,TEMP,AGMT FOR ENERGY SERVICES V 12.DOC
The Parties have signed this Agreement acknowledging their agreement to its provisions as of the date first
above stated.
ATTEST: CITY OF FORT O
DGloria earson Mike Groomer
City Secretary Assistant City Manager
APPROVED AS TO FORM AND LEGALITY
LONE STAR ENERGY SERVICES,INC.
Contract Auth izat
t� or�//�}}a,,ion
Name: 26ED C-"
Date Title: 2 S 0 FJ�1T
15
C:,WINDOWS`TEMPWGMT FOR ENERGY SERVICES V 11.DOC
ATTACHMENT A
Professional Energy Services
Description of Professional Energy Services.
Provider shall provide the following professional services with respect to the Project:
PART I-Consulting Activities During Design And Construction
1. Develop and implement the integration plan for the gas-turbine plant into the existing operations of the Village
Creek Sewage Treatment Facility with no adverse effect on public health and safety.
2. Review the overall long-term concept and confirm that it is a viable method for reliably supplying electricity and
waste heat during the term of the Agreement.
3. Review the equipment specifications to ensure that the application in this operating environment and intended
results are valid assumptions.
4. Recognizing that the electric utility grid connection will require extensive control,metering and protection
equipment,this equipment will be reviewed by Professional Electrical Engineers to protect the utility and the
gas turbine generators.
PART II-Activities During Operation and Maintenance Phase of the Generators..
1. Evaluate the impact of non-standard fuel supply on the operation of equipment.Continually monitor equipment
performance and adjust the operation and maintenance of the plant equipment according to fuel characteristics.
2. Operate and maintain the System to meet TNRCC Permit No. 7553 requirements and air quality regulations
applicable to the two stationary gas turbines,except as otherwise specifically delegated in this Attachment A.
3. Provide a multi-disciplined engineering approach to encompass both electrical and mechanical engineering
aspects of the System.
4. Continuously monitor and evaluate the electric power market to identify opportunities for electric sales by
Customer into the grid to maximize the economic benefits of the equipment in all market conditions.
5. Manage the marketing of renewable energy credits from the use of renewable energy resources such as digester
gas and landfill gas.
6. Review and test this non-traditional fuel source(digester gas)to validate equipment demands. Using this
information,predict complications which may arise and prepare contingency plans for operation.
7. Develop a methodology and plan with the waste treatment plant management to ensure a reliable and predictable
fuel supply.
8. Prepare a plan to use alternative fuels or fuel supplements to achieve the proper fuel mix.This will require
working with the original equipment manufacturer(OEM)of the gas turbines and possibly the amendment of
TNRCC Permit No. 7553.
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Cd W INDOW S,TEMP\AGMr FOR ENERGY SERVICES V 12.DOC
9. Develop an operating plan that will match the OEM equipment requirements to Customer's expectations for the
plant capacity and reliability.
10. Develop a specific training plan for the gas turbine/generator operation. These detailed plans will include
system startup,shutdown,emergency operating conditions,abnormal situations,manual/automatic,etc.
Technician training and development will be done by professional engineers for monitoring operating trends in
the System such as vibration levels,temperatures and other OEM standards.
11. Develop a comprehensive overhaul and maintenance plan. A customized maintenance plan will be developed
using a combination of OEM recommendations,good maintenance practices,a professional predictive
maintenance program,diagnostic instruments and expertise gained from operating experiences.
12. Develop a communication link with the OEM and establish a technical "problem resolution protocol".
Determine and put in place the necessary technical resources needed for continued operation.
13. Develop a comprehensive safety program to ensure a safe working environment for the public and employees.
A professional safety assessment will be made prior to startup,testing,and subsequent operation.
14. The skills and knowledge of a professional engineer will be available on a daily basis,not just to assure
optimization of operation but also to assess any problems that may arise as a matter of public health and safety
or merely a maintenance item to be handled routinely by technicians.Recommendations for corrective actions
and changes in operation shall be performed solely under the direction of the professional engineer licensed
in the state of Texas.
15. Professional engineers(mechanical&electrical)will not only direct and supervise operating technicians on a
continuous basis,but will perform routine inspections to check the performance and condition of the gas turbine
engine technology to assess and evaluate compliance with OEM standards,safety and environmental
requirements.
Description of the System and Delegation of Associated Responsibilities.
A description of the System and a delegation of the associated responsibilities with respect to the System between Provider
and Customer are as follows. Multatech Engineering, Incorporated specifically describes these systems in the referenced
drawings for Water Department Project No. PE2-070420160110 dated November 11, 1999.
Provider will operate and maintain the two Solar Taurus 60 gas turbine generators (TGU 1&2) and the two fuel gas
compressors(TGC 1&2). Customer will operate and maintain the heat recovery units(THRU-1 &THRU-2)and associated
heat exchange systems.
1. Multatech Enizineeriniz,Incorporated Drawing No.P1.01,Heating Water Reservoir System
Customer will operate and maintain all of the equipment and systems on this drawing.
2. Multatech Engineering,Incorporated Drawing No.P 1.02,Natural and Digester Gas Fuel System
Customer will operate and maintain all of the equipment and systems on this drawing up to the inlet flange of
the fuel gas compressor units(TGC 1&2). Provider will operate and maintain all of the equipment and systems
on this drawing beyond and including the gas compressor units(TGC 1&2);this includes all gas regulators and
check valves.
3. Multatech Engineering,Incorporated Drawine No.P1.03,Potable and Service Water System
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Cr W1NDOWS'',TEMP,AGMI'FOR ENERGY SERVICES V 12.DOC
Provider will operate and maintain all of the equipment and systems on this drawing. Customer will be
responsible for the water supply and all discharges.
4. Multatech Engineering,Incorporated Drawing No. P 1.04,Hot Oil System
Customer will operate and maintain all of the equipment and systems on this drawing.
5. Multatech En ing eerieg Incorporated Drawing No.P1.05,Instrument Air System
Provider will operate and maintain all of the equipment and systems on this drawing so long as Customer has
replaced the used air compressors("Used Air Compressors")with new equipment prior to the Commissioning
Date. If Customer fails to replace the Used Air Compressors with new equipment,Customer will operate and
maintain the Used Air Compressors.
6. Multatech Enizineering,Incorporated Drawing No.P 1.07,Turbine Intake and Exhaust System
Provider will operate and maintain all of the turbine intake air equipment and systems on this drawing including
the evaporative coolers,air filters,intake air silencers and exhaust system from the turbine to the Turbine Heat
Recovery Unit. Customer will operate and maintain all of the exhaust system equipment and systems on this
drawing starting at the Turbine Heat Recovery Unit including the diverter dampers, bypass exhaust stack,
bypass exhaust stack air silencer,turbine heat recovery unit,heat recovery unit circulating pump,and primary
exhaust stack.
7. Multatech Engineering,Incorporated Drawing No.P 1.08,Turbine Engine Unit Lube Oil System
Provider will operate and maintain all of the equipment and systems on this drawing.
8. Multatech Engineering,Incorporated Drawing No.E7.01,One Line Diad
Provider will operate and maintain all of the equipment and systems on this drawing up to the existing EDS
Building,which include the neutral ground assemblies,generator vacuum circuit breakers,generator terminal
box with differential CTs, 480V transformers, and turbine generator control room MCCs. Customer will
operate and maintain the circuit breakers in the EDS Building.
9. Miscellaneous Systems
Customer will operate and maintain:
• Plant distributed control system
• Plumbing and sewer systems
• Fire protection systems—(Provider is responsible for testing and maintenance of the gas detection alarm
that is part of the turbine generator system)
• Communications systems
• Security systems
• All other building systems and services for the structure,roofing,interior and exterior walls,
architectural systems,etc.
• Landscaping and yard maintenance
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C:\WINDOWS,TEMP\AGMf FOR ENERGY SERVICES V 12DOC
10. Other Responsibilities of Customer
Design,bid specifications,bidder selection,construction management and commissioning of the
Project
• Appointment of liaison or contact person to provide construction progress reports to Provider
• Provide the digester gas supply to the Project
11. Air Ouality Permit and Regulatory Responsibilities of Provider
NSPS Requirements under Subpart A-Turbine Construction and Operation
• Subpart A Notifications(days after occurrence):
• Notice of start of construction(30)
• Notice of start-up(15)
• Notice of performance testing(30)
• Submittal of performance testing results to agencies(60)
• Subpart A:performance testing(60 after start-up)
• Subpart A: quarterly excess emissions reports
• Attend turbine pre-test meeting with TNRCC (schedule at least 45 days prior to test)
• Submit turbine upset/maintenance records and notifications,as required
• Conduct quarterly(or semi-annual)turbine emissions evaluations to verify compliance with permit
mass and concentration limits(permit allows change to semi-annual evaluations after compliance is
demonstrated)
12. Air Quality Permit and Regulator�Responsibilities of Customer
• Preparation and maintenance of PI-8 engine operating limitations(before turbines achieve full load
operation)and compliance with engine operating limitations,as required by TNRCC Permit No. 7553
• NSPS -Turbine Construction and Operation
Subpart GG : Sampling and testing of the fuel being fired in each turbine
• Prepare and submit site emissions inventory
• Construct and maintain all necessary turbine testing facilities(platforms,ports,etc.)
• Submit upset/maintenance notifications for sources other than the turbines
• Prepare and maintain all site records of the following(two year retention)*:
Copy of permit
Complete records of all emissions testing/evaluations
Monthly fuel use records(Natural gas,digester gas,distillate)
Monthly on-line operating records for turbines,engines and flare
Fuel sampling records
Copies of reports forwarded to regulatory agencies
Quarterly NSPS excess emissions reports
All upset/maintenance records and notifications
• Acquisition and maintenance of site Federal Operating Permit
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C:`WINDOWS\TEMPUGMf'FOR ENERGY SERVICES V 12.DOC
• Maintenance of compliance with TNRCC Permit No. 7553
• Permitting and regulatory compliance for all air pollution sources other than the two stationary gas turbines
* Provider will also maintain a copy of the permit and records forwarded to Customer by Provider.Records relating to fuel
for and operation of engines, flares and combustion sources other than the turbines are the responsibility of the Customer.
4
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C:,WINDOWS,TEMPWGMT FOR ENERGY SERVICES V 12.DOC
ATTACHMENT B
Payment of Professional Enemy Services Charges
The Professional Energy Services Charges to be paid by Customer in accordance with the Agreement are as follows:
Components of Professional Eneray Services Charges
The Professional Energy Services Charges shall be comprised of the following components and each monthly invoice
shall show the amount of each component:
Consulting Component
Customer will pay Provider$837,984 for consulting services related to the Project.The consulting services included an
assessment of the feasibility and economic benefits of the Project,engineering design review,review of the connection
to the transmission grid,identification of the potential and the requirements associated with selling electric power,and
assessment of the potential value of renewable energy credits. The fee for these consulting services shall be financed
and included in the Fixed Component set forth below.
Fixed Component
The Fixed Component is identified below by reference to each 12-month period after the Commissioning Date and each
successive anniversary date thereof that the Agreement is in effect. The amount identified is the amount that Customer
shall pay Provider for the Fixed Component each month during the yearly period identified. For example,the amount
identified as"year V is the amount of the Fixed Component that Customer shall pay Provider each month during the first
12-month period following the Commissioning Date. The amount identified as "year 2" is the amount of the Fixed
Component that Customer shall pay Provider each month during the first 12-month period following the first anniversary
of the Commissioning Date.
year 1 $71,327 per month year 11 $84,077 per month
year 2 $73,204 per month year 12 $86,600 per month
year 3 $75,137 per month year 13 $89,198 per month
year 4 $77,128 per month year 14 $91,873 per month
year 5 $79,179 per month year 15 $94,630 per month
year 6 $81,292 per month year 16 $97,468 per month
year 7 $83,467 per month year 17 $100,393 per month
year 8 $85,708 per month year 18 $103,405 per month
year 9 $88,017 per month year 19 $106,507 per month
year 10 $90,394 per month year 20 $109,702 per month
Variable Components
Commodities:
The Variable Component for Commodities will be the actual costs incurred by Provider for provision of Commodities
to the Property as Customer's agent as described in Section 3(d)(i). The rate for any electricity purchased by Customer
from sources other than the electricity obtained from the System shall be the applicable General Time of Use Curtailable
("GTUC")rate or the equivalent rate in effect at the time purchased by Provider and passed through to Customer.
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C WINDOWS TEMP\AGMT FOR ENERGY SERVICES V 12.DOC
Sharing of Revenues From Parties Other than Customer:
Provider will pay to Customer ten percent(10%)of any gross revenue(exclusive of applicable sales taxes)realized by
Provider from the sale of generation from the Project to third parties. The Customer's share of these monetary benefits
will be credited to the invoice for Professional Energy Services Charges monthly in arrears. Provider will pay for any
incremental natural gas costs for any power sold to the grid.
Provider will pay to Customer ten percent(10%)of any gross revenue(exclusive of applicable sales taxes)realized by
Provider from the sale of renewable energy credits from the Project. If Provider uses any of these renewable energy
credits for its own benefit, the monetary benefit of the renewable energy credits will be valued as if sold on the open
market. The Customer's share of these monetary benefits will be credited to the invoice for Professional Energy Services
Charges monthly in arrears.Provider will have the right to offset any amounts that may be owed to Customer pursuant
to this paragraph by any amounts that Customer may owe Provider under this Agreement,such as Professional Energy
Services Charges and Termination Charges.
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ATTACHMENT C
Output and Delivery Standards
1. Subject to Section 2 below,after the fust six months following the Commissioning Date,Provider will maintain
the System such that both of the turbines are available to be operated 96% of the total number of hours of possible
operation in each calendar year(the"Output Standard"). Hours that the System is not available for operation due to the
fault of Customer,Force Majeure Events or other factors out of the control of Provider,such as outages associated with
the Used Air Compressors,heat recovery systems,distributed control system,or other plant support systems will not be
considered in calculating whether the Output Standard has been achieved. This information will be reconciled at the end
of each calendar year. Provider shall compensate Customer$250.00 (adjusted annually upon each anniversary of the
Commissioning Date of this Agreement based on the Consumer Price Index for gas and electricity as published by the
United States Department of Labor,Bureau of Labor Statistics,Consumer Price Index Table 1)per turbine for every hour
less than the Output Standard that the turbines are not available for operation(excluding the first six months following
the Commissioning Date). Any compensation due Customer pursuant to this paragraph will be credited to the Variable
Component of the monthly Professional Energy Services Charge within 45 days of reconciliation. Customer will
compensate Provider$125.00 per turbine for every hour that the turbines are available for operation in excess of the
Output Standard. Payments due Provider will be subtracted from any revenue due the Customer generated from the sale
of generation or renewable energy credits as described on Attachment B. If the Customer has not received any revenue
from the sale of generation or renewable energy credits for that year,the payment due Provider pursuant to this paragraph
is zero dollars for that year. Under no circumstances will any payments due Customer pursuant to this Section 1 exceed
in any calendar year the aggregate sum of Two Hundred Thousand Dollars($200,000).
2. If,after the fust six months following the Commissioning Date,the System is not available for operation more
than 2%of the total hours of possible operation during any calendar year due to an unplanned outage resulting from a
negligent or intentional act or omission by Provider,Provider shall compensate Customer$250.00(adjusted annually
upon each anniversary of the Commissioning Date of this Agreement based on the Consumer Price Index for gas and
electricity as published by the United States Department of Labor,Bureau of Labor Statistics, Consumer Price Index
Table 1) per turbine for every hour that the turbines are not available for operation (excluding the first six months
following the Commissioning Date)in any calendar year. This calculation will be made at the end of each calendar year
and any compensation due Customer pursuant to this paragraph will be credited to the Variable Component of the
monthly Professional Energy Services Charge within 45 days of reconciliation and any excess will be paid directly to
Customer. Under no circumstances will any payments due Customer pursuant to this Section 2 exceed in any calendar
year the aggregate sum of Two Hundred Thousand Dollars($200,000).
3. If,as a result of the annual reconciliations pursuant to Sections 1 or 2 above,Customer is due payments under
both Sections 1 and 2 above,Provider will only be obligated to pay Customer the larger of the payments due pursuant
to Sections 1 and 2 above and under no circumstances,will such payments be cumulative.
4. From and after the Commissioning Date,in the event of an unplanned outage at the System(an"Unplanned
Outage"),Customer shall notify Provider in writing as soon as reasonably possible(an"Outage Notice")and Provider
shall,at Provider's sole cost and expense(other than costs and expenses resulting from the following,which shall be the
sole responsibility of Customer: (i)the fault of Customer,(ii)Force Majeure Events,(iii)other factors out of the control
of Provider,such as outages associated with heat recovery systems,distributed control system, or other plant support
systems, (iv) the unavailability, for any reason, of a replacement System, or any part thereof, or (v) the Used Air
Compressors),take such corrective actions to cure such Unplanned Outage(including replacement of the System,or any
part thereof,if reparative actions do not restore the System to its fully functional status)as Provider shall deem necessary
or appropriate. Provider agrees to cure the Unplanned Outage within 30 days of receipt by Provider of the Outage Notice
if such Unplanned Outage involves both turbines,or within 45 days of receipt by Provider of the Outage Notice if such
Unplanned Outage involves only one turbine. If such Unplanned Outage is not cured within the time periods set forth
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in this section,the Parties shall negotiate in good faith for a period of five(5)business days to reach some other mutually
acceptable remedy. If the Parties shall fail to reach a mutually acceptable remedy, either Party may terminate this
Agreement upon written notice to the other Party; provided, however, PROVIDER'S SOLE LIABILITY TO
CUSTOMER FOR ANY TERMINATION ARISING OUT OF ITS PERFORMANCE OF THIS ATTACHMENT C,
WHETHER SUCH TERMINATION IS BASED ON A CLAIM OF NEGLIGENCE,INTENTIONAL MISCONDUCT
OR PRODUCT OR STRICT LIABILITY OR OTHERWISE, SHALL BE LIMITED TO ANY ACTUAL,DIRECT,
INCREMENTAL COSTS INCURRED BY CUSTOMER, INCLUDING BUT NOT LIMITED TO, COSTS
INCURRED IN (I)REPAIRING OR REPLACING THE SYSTEM, OR ANY PART THEREOF; (II) THE COST
DIFFERENTIAL IN OBTAINING A REPLACEMENT PROVIDER OF THE PROFESSIONAL ENERGY
SERVICES;AND/OR(III)THE COST DIFFERENTIAL IN OBTAINING ANY REPLACEMENT POWER(LESS
ANY COMPENSATION PAID TO CUSTOMER PURSUANT TO SECTIONS 1 OR 2 ABOVE); PROVIDED
FURTHER,HOWEVER,PROVIDER'S LIABILITY TO CUSTOMER SHALL NOT EXCEED THE FOLLOWING
AMOUNTS,UNDER ANY CIRCUMSTANCES: (I)TERMINATION OCCURING PRIOR TO THE FIRST YEAR
ANNIVERSARY OF THE COMMISSIONING DATE SHALL NOT EXCEED $500,000; (11) TERMINATION
OCCURING AFTER THE FIRST YEAR ANNIVERSARY BUT PRIOR TO THE SECOND YEAR ANNIVERSARY
OF THE COMMISSIONING DATE SHALL NOT EXCEED$750,000; (11I)TERMINATION OCCURING AFTER
THE SECOND YEAR ANNIVERSARY BUT PRIOR TO THE THIRD YEAR ANNIVERSARY OF THE
COMMISSIONING DATE SHALL NOT EXCEED $1,000,000; (IV) TERMINATION OCCURING AFTER THE
THIRD YEAR ANNIVERSARY BUT PRIOR TO THE FOURTH YEAR ANNIVERSARY OF THE
COMMISSIONING DATE SHALL NOT EXCEED$1,250,000;OR(V)TERMINATION OCCURRING AFTER THE
FOURTH YEAR ANNIVERSARY BUT PRIOR TO THE TWENTIETH YEAR ANNIVERSARY OF THE
COMMISSIONING DATE SHALL NOT EXCEED$1,500,000;
5. Each Party will give 30 days notice,if possible,to the other Party when scheduling planned outages. Planned
outages with less than 30 days notice will require written approval by the other Party. Planned outages will not be
scheduled for site historic peak electricity consumption periods defined as the months of April, May, October and
November. Normally,planned outages will be performed on one unit at a time. Planned outages with both units out of
service simultaneously will require written approval by the other Party.
6. The Parties further agree that the remedies set forth in Section 8 of the Agreement shall not apply to a breach
by Provider of this Attachment C and that the remedies set forth in this Attachment C shall be Customer's sole and
exclusive remedy for a breach of this Attachment C or termination of this Agreement based thereon.
7. WAIVER OF CONSEQUENTIAL DAMAGES. IN NO EVENT WILL PROVIDER BE LIABLE TO
CUSTOMER IN CONTRACT,TORT,PRODUCTS OR STRICT LIABILITY OR ON ANY OTHER BASIS,FOR
ANY SPECIAL,INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY NATURE,WHICH SHALL INCLUDE,
WITHOUT LIMITATION,SUCH ITEMS AS: (I)INDIRECT OPERATING COSTS,(II)OVERHEAD COSTS,(III)
LOSS OF PROFITS OR REVENUES,(IV)FINES AND PENALTIES,(V)COSTS OF CAPITAL,(VI)LOSS OF USE
OF MONEY,(VII)OTHER BUSINESS INTERRUPTION COSTS OR LOSSES,OR(VIII)COSTS ASSOCIATED
WITH INSOLVENCY,FAILURE,OR DISSOLUTION OF A BUSINESS ENTITY.
8. Customer will provide digester gas to the fuel gas compressor units(TGC 1&2)at design conditions. If the
quality of the digester gas ever falls below the minimum standards recommended by the turbine manufacturer,natural
gas will be substituted at Customer's expense until the digester gas is proven to be within recommendations again.
Customer and Provider will sample and test the digester gas to determine suitability as turbine fuel and to satisfy the
requirements of the TNRCC Permit No.7553. Provider will utilize the digester gas in the gas turbine generators(TGU
1&2)and supplement with natural gas, if desired by either Party,to achieve base load on both units. The cost of the
natural gas will be passed through to Customer if Customer uses all of the power. If Customer does not need all of the
power that can be produced by the gas turbine generators(TGU 1&2),Provider can elect to generate excess power and
sell the excess power to other parties and Customer and Provider will share in the revenues received from any such sales
24
C:\WINDOWS\TEMP\AGMT FOR ENERGY SERVICES V 12.DOC
as more specifically described in Attachment B attached hereto.Provider will pay for that portion of natural gas used
to generate power for sale to other parties.
25
C:,WFNDOWSMMP'WGMT FOR ENERGY SERVICES V 12.DOC
ATTACHMENT D
Property and Project
The Property is located at the City of Fort Worth Water Department, Village Creek Wastewater Treatment
Plant,4500 Wilma Lane,Arlington,Texas 76012.
The Project to be constructed on the Property is two (2) digester gas fueled turbine generators,Project No.
PE 42-070420160110.
26
C:\WINDOWS\TEMP\AGMT FOR ENERGY SERVICES V 12.DOC
CITY OF FORT WORTH - VILLAGE CREEK PROJECT
PROFESSIONAL ENERGY SERVICES AGREEMENT
BY AND BETWEEN
CITY OF FORT WORTH
AND
LONE STAR ENERGY SERVICES, INC.
DATEDI'll 2000
i
C:�WINDOWSUEMPWGMT FOR ENERGY SERVICES V 12.DOC
City of Fort Worth, Texas
"agar and caundl Communication
DATE REFERENCE NUMBER LOG NAME _ PAGE
12/19/00 **C-18397 60GAS 1 of 2
SUBJECT APPROVAL OF CONTRACT WITH LONE STAR GAS ENERGY SERVICES, INC. FOR
OPERATIONS AND MAINTENANCE OF THE VILLAGE CREEK WASTEWATER
TREATMENT PLANT GAS TURBINE POWER GENERATION SYSTEM
RECOMMENDATION:
It is recommended that the City Council authorize the City Manager to execute a 20-year contract with
Lone Star Gas Energy Services, Inc. (Lone Star) for the operations and maintenance of the Village
Creek Wastewater Treatment Plant Gas Turbine Power Generation System.
DISCUSSION:
On July 14, 1998 (M&C C-16891), the City Council authorized execution of an engineering agreement
with Multatech Engineering for the design and construction management of the addition of digester gas
fired turbine engine generators at the Village Creek Wastewater Treatment Plant. In July 2000,
additional contracts were awarded to Archer Western Construction and Solar Engines, Inc. to begin
construction and installation of the new turbine engine generators. Construction is underway and
should be complete by July 1, 2001.
In conjunction with this project, City staff has determined that outsourcing the operations and
maintenance for the power generation system could provide for significant benefits to the City and has
negotiated with Lone Star, a subsidiary of TXU Energy Services, as an experienced power generation
provider, to provide this service at the power generation plant.
The benefits of outsourcing the operations and maintenance include:
a) A reduction of overall risk associated with operating and maintaining the system; and
b) Guarantees on the availability of the system reducing overall energy costs due to system
outages; and
c) Eliminating an area of operation from City operations that is not part of the water department's
core business; and
d) Contracting with an experienced energy provider may allow for new streams of revenue in the
future from the selling of excess energy without increasing estimated operation and
maintenance costs; and
e) Complete elimination of current outdated internal combustion engines as a backup system to
new turbine generator system.
As part of the overall agreement, Lone Star has agreed to pay for any capital costs necessary to
potentially sell any excess power generated at the Village Creek Wastewater Treatment Plant back to
the energy grid. Since there is a potential for significant capital expenditures to Lone Star, the term of
the contract for operations and maintenance of the power generation plant has been set for 20-years
and coincides with the estimated useful life of the system. Although the contract is for a long-term
arrangement, it may be terminated by the City in any year by the City Council choosing not to
appropriate funds necessary to fund the contract in any upcoming budget year.
City of Fort Worth, Texas
*V61yor Anil oun"R Communication
DATE REFERENCE NUMBERLOG NAME PAGE
12/19/00 **C-18397 60GAS 2 of 2
SUBJECT APPROVAL OF CONTRACT WITH LONE STAR GAS ENERGY SERVICES, INC. FOR
OPERATIONS AND MAINTENANCE OF THE VILLAGE CREEK WASTEWATER
TREATMENT PLANT GAS TURBINE POWER GENERATION SYSTEM
The monthly costs of the contract for the 20-year term is as follows:
Year 1 $71,327 per month Year 11 $ 84,077 per month
Year 2 $73,204 per month Year 12 $ 86,600 per month
Year 3 $75,137 per month Year 13 $ 89,198 per month
Year 4 $77,128 per month Year 14 $ 91,873 per month
Year 5 $79,179 per month Year 15 $ 94,630 per month
Year 6 $81,292 per month Year 16 $ 97,468 per month
Year 7 $83,467 per month Year 17 $100,393 per month
Year 8 $85,708 per month Year 18 $103,405 per month
Year 9 $88,017 per month Year 19 $106,507 per month Ai
Year 10 $90,394 per month Year 20 $109,702 per month
Lone Star has committed to 4% M/WBE participation for the initial year, with annual reviews during the
budgeting process.
Funding for this contract is budgeted on an annual basis. As previously stated, the contract has a
funding out clause that provides that the contract will terminate if the City fails to budget for ensuing
years.
FISCAL INFORMATION/CERTIFICATION:
The Finance Director certifies that funds are available in the current operating budget, as appropriated,
of the Water and Sewer Fund.
MG:k
Submitted for City Manager's FUND ACCOUNT CENTER AMOUNT CITY SECRETARY
Office by: (to)
fiovED
Mike Groomer 6140 CITY COUNCIL
Originating Department Head:
DEC 19 2000
Dale Fisseler 8207 (from)
PE45 539120 0705002 '
Additional Information Contact: city 5@Crficary
t t"Ll of Fort loom ,
Dale Fisseler 8207