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HomeMy WebLinkAbout1997-09-08 City Council (24)TO: FROM: AGENDA DATE: SUBJECT: City of Palo Alto C ty Manager’s Report HONORABLE CITY COUNCIL CITY MANAGER DEPARTMENT:UTILITIES SEPTEMBER 8, 1997 CMR:370:97 APPROVAL OF A STANDARD FORM ENERGY SERVICES CONTRACT REOUEST This report requests that Council approve a standard form contract for energy commodities (electricity and natural gas) and other energy services. Approval of this contract will allow the City staff to work in partnership with the City’s larger commercial electric and gas customers to meet their specific energy services needs in a timely manner. RECOMMENDATIONS This report recommends that the City Council:" 1. Approve the attached Standard Form Energy Services Contracg 2.Authorize the City Manager or her designee to negotiate and execute specific energy services contracts; 3.Authorize the City Manager to amend the Standard Form Energy Services Contract (Standard Contract) as necessary. POLICY IMPLICATIONS Approval of the Standard Contract establishes the following policy guidelines: 1.Larger commercial customers will have the ability to negotiate provision of energy services from the City. CMR:370:97 Page 1 of 4 2. Authority to establish the specific terms, including pricing of services, will be delegated ~ to the City Manager. o Customers must request consideration for a special contractual arrangement in writing to the Utilities Director specifying their objectives. Revenues realized from each contract will, at a minimum, recover all applicable energy services costs over the term of the contract. Pricing arrangements differing from those offered in the current and successor rate schedules will not shift costs to other customers in the short- or long-term. Custom tailored contracts must include sufficient insurance and/or "off ramps" to protect the City or the customer from unanticipated events. The same pricing, terms, and conditions for one customer will be made available to other customers of similar size, service and load characteristics. Approval of this Standard Contract is in response to changes in the industry, is consistent with actions being taken by other municipal utilities and is essential to satisfy requests from several oft he Palo Alto Utilities’ largest customers. ... In the past, the City of Palo Alto Utilities (CPAU), like all other municipal or private utilities, was obligated to deliver energy services to City residents and businesses on demand. In return, customers were obligated to pay fees and rates to compensate CPAU for its expenses. These rates and fees are periodically established by the City Council. Over the years, the City Council has approved several rate schedules governing the pricing of electricity and natural gas, as well as an extensive set of rules and regulations governing the technical requirements to connect the enstomer and the City facilities. The revenue requirement was established through the budget process, and rates were revised and submitted for Council approval accordingly. InMarch 1997, the Council established a policy that provides a timetable for the customer to choose their own electricity supplier beginning January 1, 1998. With the freedom t6 choose, some Customers are requesting more flexibility in pricing structure, different terms of commitment and varying degrees of power quality and service reliability. In addition, and most important, the customers wish to negotiate these terms with CPAU and expect a quick turnaround from Palo Alto to compare offers with proposals from other marketers. Having CMR:370:97 Page 2 of 4 one contract that fully anticipates all potential services to all customers is impractical. Consequently, standard form contract that can be tailored ~o specific customer needs has been developed. Staff believes that the proposed Standard Contracts will; a) allow PAU to be responsive to custorriers’ stated desires for a contractual arrangement that reflects their needs. In addition to a customer’s energy commodity requirements, other customer needs may include deferral of collection of some utility charges; enhanced power quality on site; enhanced distribution facilities; accelerated demand side management on site; rate stability; rate simplicity and aggregation of accounts; and special billing and metering needs. b) help the City retain larger commercial/industrial customers as energy commodity customers and provide PAU with a stable revenue stream; and c) allow staff to "hedge" against commodities price volatility. The specific terms and conditions of energy services will be included as appendices to the contract that is negotiated with each customer. These appendices are required to reflect unique energy service requirements and wishes of the customers. The major provisions of this contract are summarized in Attachment 1. Staff anticipates that at least one large customer will want to utilize the contract soon after the contract is approved. Approval of the Standard Contract will enable the City to enter into custom tailored contracts to help retain energy commodity business and stabilize energy commodity revenues. Staff should be able to match supply purchases to sales made under these contracts and therefore rely less on reserves to stabilize rates. In addition, as stated under policy implications, custom tailored contracts should not shift cost to other customers and therefore would have no fiscal impact on customers electing to remain on the utilities’ standard energy rates. Approval of this contract does not constitute a project and has no environmental impact. CMR:370:97 Page 3 of 4 a)Standard Form Energy Services Comract - Summary of Major Provisions b)Standard Form Energy Services Contract c)UAC report and minutes PREPARED BY:Tom Habashi, Assistant Director of Utilities, Resource Management- DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL: CMR:370:97 Page 4 of 4 ATTACHMENT "A" STANDARD FORM ENERGY SERVICES CONTRACT Summary of Major Provisions The following is a broad summary of some of the dements to be included in the Standard Form Energy Services Contracts. TJ!~RM AND TERMINATION Term - The contract term will be negotiable. Termination - The contract may be terminated by convenience by either party subject to notification. Any fees or charges associated with termination will be negotiated on a case by case basis. USE AND LIMITATION ON USE. Utilities Rules and Regulations - The Customer is subject to the Utilities Rules and Regulation as they may be revised from time to time. General - The contract will allow the parties to specifically identify customer facilities and accounts to be included in the agreement. This provision may allow the utility flexibility regarding aggregation of customer loads for various products and services. ENERGY SERVICE C~ General - The Customer agrees to pay for all charges assessed by the City for energy services. Examples include such items as improvements on the customer’s distribution systems and special metering needs. Energy Charges - Charges will be negotiated with the customer depending upon factors such as customer load shape, length of contract, fLxed versus floating prices, size of customer, etc. Revenues realized will, at a minimum, recover all energy charges. General- The contract requires the customer to pay all taxes, including the Utility Users Tax. Assignment Limitations - The Customer shall not assign or transfer this contract without the prior written consent of the City. The City is not required to grant any assignment or transfer, but in the event of an assignment or transfer, the Customer shall remain liable for the performance or non-performance of an Affiliate to whom the contract is assigned. The final contract will also contain provisions to address issues such as conditions of default, security deposits, indemnification, and exhibits providing a full description and specific terms for each of the products and services included in the contract. ATTACHMENT "B" ENERGY AND ENERGY SERVICES CONTRACT BETWEEN THE CITY OF PALO ALTO AND DEF CORPORATION ARTICLE 1 2 3 4 5 6 7 8 9 io ii 12 13 14 15 16 TABLE OF CONTENTS HEADING SPECIAL TERMS TERM AND TERMINATION. ENERGY AND ENERGY SERVICES EXCEPTIONS TO ENERGY SALES AND SERVICES ENERGY AND ENERGY SERVICES CHARGES TAXES SECURITY DEPOSIT OBLIGATIONS OF THE PARTIES INSURANCE INDEMNITY AND LIMITATIONS WAIVER REPRESENTATIONS AND WARRANTIES ASSIGNMENT DEFAULT’AND REMEDIES FOR DEFAULT NOTICE MISCELLANEOUS PROVISIONS PAGE 1 2 3 4 4 5 6 7 7 8 8 8 I0 I0 13 13 SUMMARY OF EXHIBITS AND ATTACRMENTS SPECIAL TERMS CONFIRMATION SCHEDULE NO. CONFIRMATION SCHEDULE NO. (ENERGY) (ENERGY SERVICES) 970902 bdo 0071265 ENERGY AND ENERGY SERVICES CONTRACT (Physical Contract) THIS ENERGY ANDENERGY SERVICES CONTRACT, dated~, __, is made and entered into by and between the CITY OF PAL0 ALTO and DEF CORPORATION, in reference to the following facts: i. The CITY, the owner ~f natural gas and electric utility distribution systems which are regulated by the City Council, supplies and distributes Energy and Energy Services to Palo Alto residents and businesses at prices which are adopted by resolution and established under rates set forth in the Utility Rules and Regulations. 2. Since 1992, substantial changes in federal and California law have resulted in the deregulation of the natural gas and electric utility industries. In July 1994, the CITY first offered to eligible industrial customers and large commercial Customers an opportunity to acquire Transportation Service without purchasing natural gas from the CITY. On March 24, 1997, the City Council responded to developments prompted by the passage of Assembly Bill 1890 in September 1996 by adopting Resolution No. 7657, which authorizes Direct Transactions between the CITY’s Customers and alternate suppliers of electricity and further authorizes the CITY to develop new energy products and services and engage in such other actions as will benefit the CITY’s Customers. 3. The CITY has introduced Energy Services that will be made available to eligible industrial Customers and large commercial Customers. DEF CORPORATION has been determined to be eligible to receive Energy and Energy Services at one or more of its Facilities. ~ ~ THE PARTIES AGREE as follows: ARTICLE I. ,SPECIAL TERMS 1.1 The special terms that are denoted by initial or full capitalized letters in this Contract and the Confirmation Schedules shall have the meanings set forth in EXHIBIT "~’, unless the context clearly indicates otherwise. The CITY shall have the right, but not the obligation, to adopt standard terms and conditions governing the CITY’s use of its Utility System, and every part thereof, at any time during.the Term hereof by ordinance or resolution, o~ both, as a result of changes in federal, state or local law or policy. 1.2 In the event that the CITY adopts standard terms and conditions that are incorporated in the Utility Rules and Regulations which (i) would materially and adversely affect the rights or obligations of a Party to this Contract, or (ii) would render the performance of this Contract impossible or commercially impracticable, then, upon the request of the Party so affected, the Parties shall in good faith confer and attempt to renegotiate 970902 syn 0071266 the Provisions of this Contract which are affected thereby. 1.3 If the Parties are unable to reach mutual agreement on such renegotiated Provisions within thirty (30) Days after the Day on which a Party’s election to renegotiate is communicated, in writing, to the other Party, either Party will have the right for a period of ten (i0) more Days to terminate this Contract by giving not less than thirty (30) Days writte~ notice of termination to the other Party. Unless otherwise agreed to by the Parties during the course of renegotiations, the Charges in effect and applicable to the’ sale of Energy and the rendering of Energy Services hereunder shall continue in effect during the period of renegotiation and notice under the Provisions of this Article. 1.4 To the degree or extent any special term in this Contract.is, directly, in conflict with the standard terms and conditions adopted by the CITY following the execution of this Contract, the applicable Provision that imposes the higher duty on each Party shall govern. ARTICLE 2.TERM AND TERMINATION 2.1 This Contract shall be binding on the Parties on the Commencement Date, provided, however, the approval of the City Manager hereof will not be deemed legally binding on the CITY, unless and until the City Attorney has approved as to form this Contract. No provision is made for the automatic renewal hereof after the Expiration Date or the Early Termination Date, if this Contract is terminated earlier in aGcordance with its Provisions. 2.2 The Initial Term hereof shall be~( ) years, beginning at a.m. on the Day immediatelY following the Commencement Date, provided, however, the Initial Term may be terminated earlier in accordance with the Provisions hereof. 2.3 The Initial Term may be extended~by the Parties, by mutual agreement, for a period of (__) years, provided, however, any Extension Term may be terminated earlier in accordance with the Provisions hereof. The CityManager, acting on behalf of the CITY and with the approval of the C~ty Attorney, will approve the application of the CUSTOMER to extend the Initial Term, provided that: 2.3.1 The CUSTOMER gives to the Utilities Director, acting on behal~ of the CITY, a written request to extend the Initial Term’upon not less than ninety (90) Days written notice prior to the expiration of the Initial Term; 2.3.2 The CUSTOMER submits any and all documents and information reasonably requested by the CITY in support of the written request to extend the Initial Term~ pays any and all processing and other Charges and complies with all other CITY- established terms, conditions and procedures pertaining to the request to extend the Initial Term; 970902 syn 0071266 2.3.3 The CUSTOMER is not then in default under the Provisions hereof on the Day that the CUSTOMER submits the written request to extend the Initial Term; and 2.3.4 The Parties, by mutual agreement, agree to be bound by all other Provisions, if any, governing the rights and obligations of the Parties during the Extension Term. ARTICLE 3.ENERGY AND ENERGY SERVICES 3.1 Subject to the Provisionshereof, the CITY agrees to sell Energy and render Energy Services to the CUSTOMER, and the CUSTOMER agrees to purchase Energy and receive Energy Services from the CITY, as more fully described in one or more of the Confirmation Schedules. The CITY’s obligation to sell Energy or render Energy Services is expressly conditioned on the right of the CITY to offer or withdraw any kind of Energy or Energy Services now or hereafter offered to any Customer, including the CUSTOMER, during the Term of this Contract, provided, however, the CITY shall continue to offer those Energy or Energy Services which the CITY is committed to sell or render to the CUSTOMER during the Term of~ this Contract. Nothing in this Contract shall be deemed or construed to grant, convey, create, or vest in a Party any estate or interest in the real property or personal property of the other Party, except as may be provided herein. 3.2 The CUSTOMER grants to the CITY, its officers, employees, agents, representatives and contractors the right of ingress and egress over its Facilities to engage in all actions reasonably necessary to facilitate .the sale of Energy and the provision of Energy Services’to its Facilities and engage in all scheduled and nonscheduled alterations, maintenance and repair work on the Utility System, or any portion thereof, that is located at the Facilities. The CITY shall provide the CUSTOMER with reasonable prior notice of any occasion for which ingress is sought, provided, however, the requirement of prior notice shall be waived in the event of an Emergency. 3.3 The CUSTOMER covenants and agrees to maintain at all times during the Term of this Contract its eligibility to purchase Energy and receive Energy Service, including, without limitation, the creditworthiness requirements of the CITY as may be established by the Administrative Services Director. The failure of the CUSTOMER to maintain its eligibility determined according to criteria set forth in the Utility Rules and Regulations shall constitute an Event of Default and shall be a ground for termination of this Contract. 3.4 The procedures for the initiation of the purchase of Energy and the rendering of Energy Services shall be identified by the Parties in one or more of the Confirmation Schedules, to the extent the procedures are not established under the Utility Rules and Regulations. 3.5 The CITY reserves, the right to temporarily or 970902 syn 0071266 3 permanently suspend the sale of Energy or the rendering of Energy Services under the Provisions of this Contract, if the CUSTOMER is in default of any material obligation under this Contract. Any sale of Energy or the rendering of Energy Services to the CUSTOMER after a suspension shall be effected only in accordance with the Provisions of this Contract, including one or more of the Confirmation Schedule, and the Utility Rules.and Regulations. 3.6 As a condition precedent to the sale of Energy by the CITY pursuant to the Provisions of this Contract, the CUSTOMER shall make or cause to be made any and all necessary modifications to the Facilities to the reasonable satisfaction of the Utilities Director, acting on behalf of the CITY. Any such modifications may be set forth in one or more of the Confirmation Schedules. ARTICLE 4.EXCEPTIONS TO ENERGY SALES AND SERVICES 4.1 The CITY shall be temporarily excused from the obligation to sell Energy or render Energy Services, as the case may be, to the CUSTOMER under any of the following conditions: (a) The occurrence of an event of Force Majeure for the period of time that the CITY is temporarily unable to deliver Energy ; (b) The failure of a Transmission Provider~ to temporarily provide Transmission Service to the CITY which results in substantial economic hardship to the CITY; (c) The failure of a Transportation Provider to temporarily provide Transportation Service to the CITY which results in substantial economic hardship to the C!TY; or (d) The failure of the CUSTOMER to perform a~material obligation Which is a condition precedent to the CITY’s obligation of performance. ARTICLE 5.ENERGY AND ENERGY SERVICES C~ARGES 5.1 The Charges for Energy and Energy Services, including, without limitation, Connection Charges, Demand Charges, Energy Charges, Energy Service Charges, Metering Charges, Reservation Charges, Distribution Charges, Storage Charges and Charges for Standby Service, shall be set forth in one or more Confirmation Schedules. .5.2 On or before the fifteenth Day after the end of the Billing Period, the CITY shall submit to the CUSTOMER a billing statement for each Billing Period, in which Energy is sold or Energy Services are rendered to the CUSTOMER. All amounts shall become due and payable within thirty (30) Days of the date of the billing statement. Payment shall be made in United States dollars and delivered or mailed to the Customer Service Center, Department of Utilities, City of Palo Alto, 4th Floor, 250 Hamilton Avenue, Palo Alto, CA 94301 or Post Office Box 1025.0, Palo Alto, CA 94303. 970902 s~2n 0071266 4 5.3 Except as otherwise provided in this Contract or any Confirmation Schedule, a billing statement that is not paid in full within the time permitted hereunder or as may be established under the Utility Rules and Regulations will accrue interest charges on the unpaid balance at the rate established in the Utility Rules and Regulations or at the maximum rate allowed by Law, whichever is lower. 5.4 In addition to the rights of the CITY reserved under this Contract or allowed by Law, if the CUSTOMER fails to pay the billing statements as they shall become due for a consecutive period of three (3) Billing Periods, the CITY, acting by and through the Utilities Director in his Sole Discretion, may suspend sales of Energy and the rendering of Energy Services to the CUSTOMER, assess Charges for Energy and Energy Services set forth in the utility rate schedules under the Utility Rules and Regulations, or undertake such other reasonably necessary action, including, without limitation, imposing security deposit and other financial reporting requirements. 5.5 The CITY acknowledges that the CUSTOMER has requested the CITY to maintain the confidentiality of information, including, without limitation, information pertaining to the CUSTOMER’s Load, Demand and the Charges paid to the CITY, and, to the extent permitted by Law, any such information shall be deemed Confidential Information under this Contract and shall not be disclosed by any Party to a Third Party, unless such disclosure is compelled by Law. If any Third Party seeks access to Confidential Information that is protected from disclosure under this Contract, the Party receiving the request shall inform the other Party in a timely manner in order that either Party or the Parties may initiate timely appropriate legal action to prevent such disclosure. Section 14.4 notwithstanding, damages for breach of this confidentiality by a Party shall be established and awarded after appropriate legal action by the Party injured by such disclosure is instituted. ARTICLE 6. TAXES 6.1 The CUSTOMER shall pay before delinquency and without notice or demand any Tax which is levied, imposed or assessed against the CUSTOMER’s income or the Facilities, or for which the CUSTOMER may become liable under the Provisions hereof, and any payment made under this Article shall not reduce the amount of the Energy Charges, Energy Service Charges or any other Charge that is required to be paid by the CUSTOMER to the CITY, as follows: 6.1.1 The CUSTOMER promptly shall pay any Tax, fine or penalty which may be due and payable to the CITY or any Agency in connection with this Contract and all licenses and privileges. granted hereunder; and 6.1.2 The CUSTOMER promptly shall pay any Tax which is measured by the amount of revenues earned by it, including, 5 970902 syn 0071266 - without limitation, any gross receipts income tax or excise tax levied by the CITY or any Agency with respect to such revenue or gross receipts. 6.2 In the event that the CUSTOMER desires in good faith to contest or .review by appropriate legal or administrative proceedings any Tax specified or reasonably contemplated under the Provisions of this Article 6, the CUSTOMER shall, at least ten (i0) Days prior to the delinquency of any Tax, or within the period of time allowed by Law, give the CITY written notice of its intention to so contest. The CUSTOMER may withhold payment of the Tax being contested if, but only if, nonpayment is permitted during the pendency of such proceedings without the foreclosure of any Tax lien or the imposition of any fine or penalty. The contest shall be prosecuted to completion (whether or not this Contract has expired or terminated) without delay and at the CUSTOMEE’s sole cost and expense. Within ten (I0) Days or the period of time allowed by Law after the final determination of ~the amount due from the CUSTOMER with respect to any contested Tax, the CUSTOMER shall pay the amount so determined to be due, together with all costs, expenses and interest (wheth4r or not this Contract has expired or terminated). The failure to pay any Tax hereunder shall constitute an Event of Default by the CUSTOMER, and the obligation to pay the same shall survive the expiration or earlier termination hereof° ~.3 The CUSTOMER covenants and agrees to indemnify and hold harmless the CITY from and against any cost, expense or damage resulting from such contest or proceeding, and further covenants and agrees to indemnify and hold ha.rmless the CITY from and against any liability, loss or damage resulting from any Tax required to be paid by the CUSTOMER, from any other sums imposed thereon, and from any proceedings to enforce the collection of any Tax for which the CUSTOMER may be liable, provided, however, that the foregoing shall not apply to any contest or other proceeding relating to any Tax imposed by the CITY. 6.4 If the CUSTOMER fails to pay any Tax required to be paid by the CUSTOMER hereunder, the CITY has the right, but not the obligation, on five (5) Days prior written notice to the CUSTOMER following the assessment of any delinquency against the CUSTOMER~ to pay, discharge, or adjust such Tax for the CUSTOMER’s benefit. In such event, the CUSTOMER, upon demand of the CITY, promptly shall reimburse the CITY for the full amount paid, discharged or adjusted by the CITY, together with interest thereon from its due date at the maximum rate of interest allowed by Law until paid. Any receipt showing payment by the CITY on behalf of the CUSTOMER shall be prima fa-cie evidence that the amount of such payment was necessary and reasonable and made by the CITY on the CUSTOMER’s behalf. ARTICLE 7.SECURITY DEPOSIT 7.1 The CITY, acting by and through the CITY Manager,~ may require a security deposit to be posted by the CUSTOMER for any fixed period of time under the following conditions: 6 970902 syn 0071266 (a) Whenever the CUSTOMER has committed a material breach hereof and is in default under this Contract, which the CUSTOMER subsequently cures; (b) Whenever the rights and obligations of the CUSTOMER under this Contract shall be assumed by an Affiliate of the CUSTOMER; or (c) Whenever the CITY, i~ good faith, acting by and through the CITY Manager and the CITY Attorney, determines that the CUSTOMER is unable to perform its material financial and non- financial obligations under this Contract, including, without limitation, the failure to timely pay all Energy Charges and Energy Services Charges and other Charges, and there is a reasonable probability that such condition of insecurity may continue to exist, and the CUSTOMER fails to provide adequate assurances of further performance. If a security deposit is required by the CITY, the CUSTOMER shall comply with such requirements in a timely manner, and a failure thereof shall constitute an Event of Default. The requirements for the posting of a security deposit shall be set forth in the Utility Rules and Regulations. 7.2 In addition to the foregoing, the CITY Manager and the CITY~Attorney, in good faith, may require’ the CUSTOMER to submit one or more financial statements and information in support of the CUSTOMER’s ability to perform, and, in connection herewith, the the requirements of the Utility Rules and Regulations pertaining to the provision of such financial statements shall apply to the Parties. ARTICLE 8.OBLIGATIONS OF THE PARTIES 8.1 The CUSTOMER will use best efforts to construct, maintain, service and repair the Facilities to facilitate the provision of Energy under this Contract. The interconnection of the Utility System, including the CUSTOMER’s Meter(s), shall be effected by the mutual cooperation of the Parties. 8.2 The CITY will use best efforts to construct,maintain, service and repair its Utility system, including the CUSTOMER’s Meter(s), to assure the reliable delivery of Energy to the CUSTOMER. ARTICLE 9. INSURANCE 9.1 During the Term hereof, the CUSTOMER, at its sole cost and expense, shall obtain and maintain or cause to be obtained andmaintained the policies of insurance and the amounts specified in the Confirmation Schedule(s), or if such requirements are not addressed in the Confirmation Schedule(s), in the Utility Rules and Regulations, including, without limitation, workers compensation and employers liability insurance, commercial general liability insurance, and fire all risk replacement cost insurance. 7 970902 syn 0071266 ARTICLE i0. INDEMNITY AND LIMITATIONS i0.I Each Party shall indemnify, protect, defend (with counsel reasonably acceptable to the other Party) and hold harmless the other Party, its council members, directors, officers, employees, partners, principals, contractors, agents and representatives, from and against any and all administrative and judicial proceedings and orders, charges, claims, costs, damages, demands, expenses, fines, judgments, liabilities, losses, penalties, and remedial actions of any kind, including, without limitation, the costs of any Hazardous Materials remedial actions and reasonable attorney’s fees and the costs of defense arising, directly or indirectly, in whole or in part, out of such Party’s activities or such Party’s property described in this Contract and not arising out of the sole negligence or willful misconduct of the other Party. The other Party shall be liable only for the cost of repair to the damaged property arising from its negligence or willful misconduct, but such other Party shall not be responsible for any damages, losses, or liability of any kind occurring by reason of anything done or omitted to be done by any Third Party~ who is not an agent or representative of a Party. ARTICLE ii. WAIVER ii.I The consent by a Party to any act by the other Party shall not be deemed to imply consent or to constitute the waiver of a breach of any Provision hereof or continuing waiver of any subsequent breach of the same or any other Provision, nor shall any custom or practice which may arise between the Parties in the administration of any part cf the Provisions hereof be construed to waive or lessen the right of a Party to insist upon the performance by the other Party in strict accordance with the P~ovisions hereof. 11.2 The CUSTOMER waives any and all claims or causes of action against the CITY, its council members, officers, employees, and agents, which it may now or hereafter have at any time for any economic or non-economic loss or damage suffered by the CUSTOMER as a result of a Curtailment of Energy sold to the CUSTOMER, where the Curtailment is beyond the reasonable control of the CITY, except as such claim or cause of action may arise from the active negligence or the willful misconduct of the CITY, its council members, officers,.employees, or agents. In the event of a Curtailment, the CITY shall use reasonable efforts to obtain Energy from alternate Energy Suppliers. ARTICLE 12.REPRESENTATIONS AND WARRANTIES 12.1 The CUSTOMER represents and warrants: 12.1.1 It is a corporation duly organized and validly existing and in good standing under the Laws of the State of . It has all requisite corporate power and authority to own its property, real and personal, and operate its business as and where it is now being conducted. .- 970902 syn 0071266 12.1.2 It has the power and authority to enter into this Contract and perform its obligations hereunder. The execution, delivery and performance hereof have been duly authorized by all necessary corporate actions and proceedings. This Contract is (and any other instrument, document or writing to be executed and delivered by the CUSTOMER pursuant hereto will be) legal, valid and binding obligations of the CUSTOMER, and enforceable against the CUSTOMER in accordance with the Provisions hereof except as may be limited by applicable Laws. 12.1.3 The execution and delivery hereof and any other instrument, document or writing contemplated hereby by the CUSTOMER will not conflict with or violate or constitute a breach or default under the articles of incorporation or bylaws of the CUSTOMER or the provision of any mortgage, trust, indenture, bond, lien, pledge, release, Contract, guaranty or instrument to which the CUSTOMER is subject. 12.1.4 All information, financial statements, records, reports, resolutions, certifications and other documents or writings which will be submitted by the CUSTOMER pursuant to the Provisions hereof will be true and correct at the time such information, financial statements, records, reports, resolutions, certifications and other documents or writings are submitted or made available to the CITY. 12.1.5 There are no unresolved material claims or disputes between the CUSTOMER and the CITY. There are no actions, suits or proceedings pending or, tQ.the knowledge of the CUSTOMER, threatened against the CUSTOMER that, if adversely determined to the CUSTOMER, would materially and adversely affect the ability of the CUSTOMER to perform its obligations under this Contract. 12.2 The CITY represents and warrants: 12.2.1 It is a municipal corporation duly organized and validly existing and in good standing under the Laws of the State of California. It has all requisite corporate power and authority to own its property, real and personal, and operate its business as and where it is now being conducted. 12.2.2 It has the power and authority to enter into this Contract and perform its obligations hereunder. The execution, delivery and performance hereof have been duly authorized by all necessary actions and proceedings. This Contract is (and any other instrument, document or writing to be executed and delivered by the CUSTOMER pursuant hereto will be) legal, valid and binding obligations of the CITY, and enforceable against the CITY in accordance with the Provisions hereof except as may be limited by applicable Laws. 12.2.3 The execution and delivery hereof and any other instruments, documents or writings contemplated hereby by the CITY will not conflict with or violate any provision of the Charter of the City of Palo Alto or the Palo Alto Municipal Code. 9 970902 syn 0071266 12.2.4 To the extent required by Law, it will obtain the authorization ~of the CPUC or FERC, or both, to provide Energy within and without the jurisdictional boundaries of the city of Palo Alto, and to operate as an energy service provider. ARTICLE 13.ASSIGNMENT 13.1 The CUSTOMER may assign or transfer, pursuant to a merger or sale of all or substantially all of the assets or stock of the CUSTOMER, all of its rights and obligations under this Contract to any Person, so long as the surviving or purchasing entity assumes, in writing, all of the obligations of the CUSTOMER under this Contract, and the CITY, acting by and through the City Manager, confers its approval, which shall not be unreasonably withheld. The CUSTOMER may assign all of its rights hereunder to any Affiliate of the CUSTOMER,. provided that the CUSTOMER gives thirty (30) Days prior written notice to the City Manager and the City Attorney and~obtains the written approval of the City Manager acting within her Sole Discretion. 13.2 Any assignment, transfer, license, conveyance, sale, hypothecation or encumbrance hereof by the CUSTOMER not authorized hereunder shall be null and void., and, at the option of the CITY, acting by and through the City Manager with the approval of the City Attorney, shall constitute a material breach of this Contract and an Event of Default by the CUSTOMER hereunder. 13.3 The CUSTOMER, as assignor, and any Person, including an Affiliate, as assignee, to whom the rights and obligations of the CUSTOMER under this Contract are assigned shall be and remain jointly and severally liable for the performance of all obligations of the CUSTOMER under this Contract. ARTICLE 14.DEFAULT AND REMEDIES FOR DEFAULT 14.1 This Contract may be terminated by the CITY upon the occurrence of a material breach of this Contract and a default by the CUSTOMER under this Contract, and the CUSTOMER fails to cure the same within thirty (30) Days or such longer period of time as is provided below, after receipt of notice thereof from the CITY, or, when the cure reasonably requires more than thirty (30) Days, the failure of the CUSTOMER to commence to cure within such thirty (30) Days and thereafter diligently and continuously prosecute such cure to completion, including, without limitation, any of the following Events of Default: 14.1.1~ Failure to pay any Energy Charges or Energy Services Charges , when due, unless the CUSTOMER in good faith disputes all or any portion of such Energy Charges and Energy Services Charges, in which case the CUSTOMER shall pay only the undisputed portion, if any, until such dispute is resolved; 14.1.2 Failure to pay any Tax, when due, or the failure to perform any other obligation requiring, the payment of money under the Provisions hereof, and the failure continues for a period I0 970902 ~ 0071266 of forty-five (45) Days, unless the CUSTOMER in good faith disputes all or any portion of such Tax, ~in which case the CUSTOMER shall pay only the undisputed portion, if any, until such dispute is resolved; 14.1.3 Failure to observe, perform or comply with any material Provision hereof required to be observed, performed or complied with by the CUSTOMER; 14.1.4 Assignment or transfer of its interest in this Contract, whether voluntarily or by operation of Law, in violation of the Provisions hereof; 14.1.5 General assignment of its assets for the benefit of its creditors; 14.1.6 Filing by or against the CUSTOMER a petition to have the CUSTOMER adjudicated a bankrupt, or a petition for a reorganization or arrangement under any Law relating to bankruptcy or insolvency, unless the same is dismissed within one hundred eighty (180) Days after the same is instituted; 14.1.7 A Person other than the CITY obtains an order or decree in any court of competent jurisdiction enjoining or prohibiting the.CUSTOMER from performing under this Contract, and such order or decree is not vacated within one hundred eighty (180) Days.after the granting thereof, unless the CUSTOMER upon the written demand of the CITY indemnifies the CITY against loss or damage suffered by the CITY aS~ a result of the CUSTOMER’s nonperformance pursuant to.such order or decree; and 14.1.8 Any representation, warranty, or statement made by the CUSTOMER in this Contract that shall p~ove to have been incorrect in any material respect when made. In the event of a default by the CUSTOMER, the CITY shall give notice of default to the CUSTOMER at least thirty (30) Days before any notice of termination shall become effective. 14.2 This Contract may be terminated by the CUSTOMER upon the occurrence of any of the following defaults by the CITY: 14.2.1 Failure to observe, perform or comply with any material Provision hereof required to be observed, performed or complied with by the CITY, and the CITY fails to cure the same within thirty (30) Days, or, when the cure reasonably requires more than thirty (30~- Days, the failure of the CITY to commence to cure within such thirty (30) Days and thereafter diligently and continuously prosecute such cure to completion; 14.2.2 General assignment of its assets for the benefit of its creditors, or the filing by or against the CITY a petition to have the CITY adjudicated a bankrupt, or a petition for a reorganization or arrangement under any Law relating to bankruptcy or insolvency, unless the same is dismissed within one hundred 970902 syn 0071266 11 eighty (180) Days after the same is instituted, unless the CITY upon the written demand of the CUSTOMER indemnifies the CUSTOMER against loss or damage suffered by the CUSTOMER as a result of the CITY’s non-performance pursuant to such order or decree; and 14o2.3 A Person other than the CUSTOMER obtains an order or decree in any court of competent jurisdiction enjoining or prohibiting the CITY from performing under this Contract, and such order or decree is not vacated within one hundred eighty (180) Days after the granting thereof, unless the CITY upon the written demand of the CUSTOMER indemnifies the CUSTOMER against loss or damage suffered by the CUSTOMER as a result of the CITY’s non-performance pursuant to such order or decree. In the event of a default by the CITY, the CUSTOMER shall give notice of default to the CITY at least thirty (30) Days before any notice of termination shall become effective. 14.3 In addition to all other rights and remedies provided by Law or otherwise provided in this Contract, to which the Non-Defaulting Party may resort cumulatively, or in the alternative,- the Non-Defaulting Party may: 14.3.1 Except as otherwise provided herein, keep this Contract in effect and enforce all of its rights and remedies hereunder, including the right to payment of all Energy Charges and Energy Services Charges and Other Charges as they may.become due, or the right to delivery of Energy and Energy Services, by appropriate legal action; .~ 14.3.2 Seek the specific performance hereof by the Defaulting Party or other rights or remedies at law or in equity; and 14.3.3 Terminate for cause this Contract by giving notice .of termination. 14.4 NOTWITHSTANDING ANY OTHER PROVISION OF THIS CONTRACT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PART~FORANY CONSEQUENTIAL, INDIRECT, LIQUIDATED, INCIDENTAL OR SPECIAL DAMAGES OR LOST REVENUE OR LOST PROFITS TO ANY PERSON ARISING OUT OF THIS CONTRACT OR THE PERFORMANCE OR NONPERFORMANCE OF ANY PROVISION OF THIS CONTRACT, EVEN IF SUCH PARTY P~ BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES. THE CITY’S TOTAL LIABILITY FOR ANY CLAIM OR DEMAND OF THE CUSTOMER ARISING OUT OF THIS CONTRACT S~ALL NOT EXCEED THE AMOUNT OF THE ENERGY CHARGES PAID BYTHE CUSTOMER UNDER THIS CONTRACT TO THE CITY PRIOR TO THE DATE OF CLAIM OR DEMAND. 14..6 Neither the CUSTOMER nor the CITYshall be in default in the performance of any obligations under this Contract when a failure of performance shall be due to an event of Force Maj eure. 14.7 Neither the CUSTOMER nor the CITY shall be relieved 12 970902 syn 0071266 of its obligation to perform if such failure is due to causes arising out of its own negligence or due to removable or remediable causes which it fails to remove or remedy within a reasonable time period. 14.8 Either the CUSTOMER or the CITY, if rendered unable to fulfill any of its obligations under this Contract by reason of an event of Force Majeure, will~give .prompt written notice of such fact to the other and shall exercise due diligence to remove such inability with all reasonable speed. ARTICLE IS.NOTICE 15.1 All notices which shall or may be given pursuant to this Contract shall be in writing and delivered by the United States Postal Service, by means of private express delivery systems, or by facsimile transmission, provided a copy of the same is followed by delivery by the. United States Postal Service or by private express deliverY systems, as follows: CITY: Copy to: City of Palo Alto 250 Hamilton Avenue P. O. Box 10250 Palo Alto, CA 94303 Attn.: City Clerk Telephone No.: (650) 329-2571 City of Palo Alto 250 Hamilton Avenue P. O. Box 10250 Palo Alto, CA 94303 Attn.: Director of Utilities Telephone No.: (650) 329-2277 CUSTOMER:DEF CORPORATION 456 Main Street Anytown, ZZ 12345 Attn.: Telephone No.: FAX No.: Copy to:DEF CORPORATION 456 Main Street Anytown, ZZ 12345 Attn.: Telephone No.: FAX No.: Notices hereunder shall be effective addressee.~upon delivery to the ARTICLE 16.MISCELLANEOUS PROVISIONS 16.1 This Contract contains the entire understanding between the Parties with respect to the subject matter herein. 970902 syn 0071266 13 There are no representations, warranties, agreements or understandings (whether oral or written) between the Parties relating to the subject matter hereof which are not fully expressed herein. This Contract may not be amended except pursuant to a written instrument signed by the Parties. This Contract shall be binding upon and inure to the benefit of the successors and permitted assignees of the Parties. The Article headings hereof are inserted for convenience of reference only, are not a part hereof and shall have no effect on the construction or interpretation hereof. This Contract may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. All exhibits, Confirmation Schedules and amendments thereto referred to in this Contract and any addenda, attachments, and schedules which may, from time to time, be referred to in any duly executed amendment to this Contract are by such reference incorporated in this Contract and shall be deemed a part hereof. 16.2 This Contract shall be governed by and construed in accordance with the Laws of the State of California without regard to its conflicts of laws rules or principles. In the event that suit is brought by a Party, ~the Parties agree that trial of such action shall be vested exclusively in the state courts of California, County of Santa Clara, or in the United States District Court, Northern District of California, in the County of Santa Clara. If any Provision is held by a court of competent jurisdiction in a final judicial action to be void, voidable, or unenforceable, such Provision shall be deemed severable from the remaining Provisions and shall in no. way affect the validity of the remaining portions hereof. 16.3 Each Party and its counsel have reviewed this Contract. Accordingly, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the construction and interpretation hereof. 16.4 Time is’ of the essence. For the purposes hereof, the time in which an act is to be performed shall be computed by excluding the first Day and including the last. If the time in which an act is to be performed falls on a Saturday, Sunday, or any Day observed as a official holiday by the CITY, the time for performance shall be extended to the following Business Day. IN WITNESS WHEREOF, this contract is executed by the duly appointed representatives of the Parties on the date first above stated in the city of Palo Alto, County of Santa Clara, California. APPROVED AS TO FORM:CITY OF PALO ALTO Senior Asst. City Attorney City Manager 970902 syn 0071266 14 APPROVED :DEF CORPORATION Director of Utilities By: Its: Taxpayer I.D. No. [Signature to be notarized] SUMMARY OF EXHIBITS AND,ATTACHMENTS EXHIBIT "A"SPECIAL TERMS CONFIRMATION SCHEDULE NO. CONFIRMATION SCHEDULE NO. (ENERGY) (ENERGY SERVICES) CERTIFICATE OF ACKNOWLEDGMENT (Civil Code § 1189) STATE OF ) COUNTY OF ) On notary public , before me, the undersigned, a in and for said County, personally appeared (check one) [ ] personally known to me ([ ] or proved tO me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/ her/their authorized capacity(is), and that by his/her/their signature(s) on the instrument the person(s~, or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. 970902 mjn 0071266 15 EXHIBIT SPECIAL TERMS "Administrative Services Director" means the individual designated as the director of administrative services under Section 2.08.150 of Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the representative of the director of administrative services.’ ’~ffiliate"means (i) any Person or entity that, directly or indirectly, owns, controls or holds with power to vote fifty percent (50%) or more of the outstanding voting securities of the CUSTOMER, (ii) any Person or entity fifty percent (50%) or more of the outstanding voting securities of which is, directly or indirectly, owned, controlled or held with power to vote by the CUSTOMER, (iii) any Person or entity who is a director or executive officer of a Person or.entity which is an affiliate thereof under (i) or (ii), (iv) any Person or entity that, directly or indirectly, through one or more intermediaries, is under common control with the CUSTOMER, or (v) any general partner or limited partner of a Person or entity that, directly or indirectly, owns, controls or holds with power to vote eighty percent (80%) or more of the outstanding voting shares of the CUSTOMER. For the purposes of (iv) above, a Person or entity shall be deemed under common control with the CUSTOMER only if the Person or entity ’that exercises such common control owns, controls or holds twenty-five (25%) or more of the outstanding voting securities..of both the CUSTOMER and any such other Person or entity. "Agency" means any loc~l, county, state or federal governmental body or quasi-governmental body, including, without limitation, the CPUC, the FERC and any joint pqwers agency, but excluding the CITY and any board, commission or council of the CITY. "Ancillary Services" means the Energy Services offered by the CITY to all Customers, including, without limitation, Balancing Service, Backup Generation Service, Load Monitoring Service, Scheduling Coordination Service, Voltage Support Service and Standby Services, as more fully described in one or more Confirmation Schedules to this Agreement. "Average Daily Quantity" or "ADQ" means the quantity of Energy purchased by the CUSTOMER from one or more Energy Suppliers on a daily basis in each calendar month, which the CITY is required to deliver tO one or more of the Delivery Points, as more fully described in one~or more Confirmation Schedules to this Agreement. "Average Demand" means the average metered demand of the CUSTOMER determined over a specified period of time, as described in one or more of the Confirmation Schedules. "Average Monthly Quantity" or "AMQ" means the quantity of Energy purchased by the CUSTOMER from one or more Energy Suppliers on a monthly basis in each calendar year, which the CITY is 970902 syn 0071267 required to deliver to one or more of the Delivery Points, as more fully described in one or more the Confirmation Schedules to this Agreement. "Backup Generation Services" means the Capacity and Energy services provided to a Customer to replace the loss of its generation sources and to cover that portion of Demand that exceeds the supply of generation. "Balancing Service" means a type of Energy Services that is provided by the CITY to accommodate the difference between a Customer’s consumption of the quantity of natural gas that is received at one or more of the Delivery Points and the quantity of natural gas purchased by the CITY on behalf of the Customer for delivery to one or more of the Customer’s Energy Suppliers, as more fully described in one or more of the Confirmation Schedules. "Billing Period" means the period of time between the time and date on which any of the CUSTOMER’s Meters is read for billing purposes, as more fully described in one or more of the Confirmation Schedules. "British Thermal Unit" or "Btu" means the unit of measurement of a quantity of heat or thermal energy measured on a "dry" basis (free of water vapor). One (1) Btu equals the amount of heat or thermal energy required to raise the temperature of one pound of pure water from 58.5 degrees Fahrenheit to:59.5 degrees Fahrenheit at a standard atmospheric pressure of 14.73 pound square inch absolute. "Business’Day",,means any Day, except a Saturday, Sunday, or any Day observed as a legal holiday by the CITY. "Capacity" means (i) in the case of electricity, the total quantity of power that can be transmitted over the applicable portions of the Utility System for a specified period of time, and (ii) in the case of natural gas, the~total quantity of natural gas that can flow through the applicable portions of the Utility System for a specified period of time. "Capacity Constraint" means a physical condition of the applicable portion of the Utility System which impedes the flow of natural gas to one or more of the Delivery Points. "Charge" means any assessment, cost, fee or levy for Energy or Energy Services, other than a Tax. "CITY" means the government of the City of Palo Alto, a chartered city and a municipal corporation duly organized and validly existing under the Laws of the State of California, with a principal place of business located at 250 Hamilton Avenue, Palo Alto, County of Santa Clara. "City Attorney" means the individual designated as the city attorney of the CITY under Section 2.08.120 of Chapter 2.08 of 970902 ~Jn 0071267 2 Title 2 of the Palo Alto Municipal Code, and anY Person who is designated the representative of the city attorney. "City Clerk" means the individual designated as the city clerk of the CITY under Section 2.08.110 of Chapter 2°08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the representative of the city clerk. "City Gate" means the portion of the Utility System at which a Transmission Provider’s power facilities or a Transportation Provider’s natural gas facilities is interconnected. "City Manager" means the individual designated as the city manager of the CITY under Section 2.08.140 of Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the representative of the city manager. "Commencement Date" means the Day on which this Contract is approved by the CITY. "Conduit" means an underground pipe in which electric wires are located or situated. "Confidential Information" means information concerning the CUSTOMER that is designated as ormarked confidential and (I) is protected as a trade secret under the Laws of the state of California or pursuant to a written agreement of confidentiality, (2) pertains to the .business of the CUSTOMER that is known and made available only to the CUSTOMER or its Affiliates, or both, and (3) is considered confidential-and privileged information under the Provisions hereof. It does not mean information that (I) is or may become generally known in the trade or business of the CUSTOMER or its Affiliates, or both, (2) is received by the C~TY in good faith from a Third Party who has the right to disclose such information and who has not received such information, directly or indirectly, from the CUSTOMER or its Affiliates, or both, (3) is in the possession of the CITY or generally known to the CITY prior to the Commencement Date hereof, or (4) is required to be disclosed to the CITY as a condition precedent to any action to be taken by the CITY. "Confirmation" means a written notice confirming the details of a specific Transaction for the purchase of Energy or the rendering of Energy Services as set forth in a Confirmation Schedule. "Confirmation Deadline" means Party receives a Confirmation.) hours after a "Confirmation Schedule" means a written confirmation of a Transaction involving the purchase of Energy or the rendering of Energy Services. "Contract"means this Energy.and Energy Services Contract between the City of Palo Alto and DEF Corporation. 3 970902 ~2n 0071:267 "Contract Price" means the sum total of any and all Energy Charges or any and all Energy Services Charges, or both, pursuant to the execution of a Transaction. "Contract Year" means a period of twelve (12) consecutive Months, beginning on the Commencement Date, and every twelve (12) consecutive Months thereafter. "CPUC" means the State of’California Public Utilities Commission and any successor agency or agencies. "Curtailment" means the act of reducing or interrupting the delivery of natural gas to one or more of the Delivery Points. "Customer" means any Person who receives power or natural gas from an Energy Supplier, including the CITY. "CUSTOMER" means DEF Corporation, a corporation duly organized and validly existing under the Laws of the State of ZZ, with a principal place of business located at 234 Main Street, Anytown, ZZ, its directors, officers, employees, partners, principals, agents and contractors and its successors and permitted assignees. "Day" means any calendar day, unless a Business Day is specified, commencing at a.m. Pacific Standard Time on a calendar day and ending at a.m. Pacific Standard.Time on the following calendar day. "Decatherm" means a unit~f measurement of the energy content of natural gas equal to i0 Therms or 1,000,000 Btu. "Defaulting Party" means a Party who c~mmits a material breach and is in default of this Contract. "Delivery Period" means that period of time beginning on the Day on which Scheduling obligations of the CITY commence and ending on the Day on which Scheduling obligations of the CITY terminate. "Delivery Point" means the place or location of any of the CUSTOMER’s Meters at which Energy is delivered by the CITY to the CUSTOMER pursuant to the execution of a Transaction, as more fully described in one or more of the Confirmation Schedules. "Demand" means the total quantity of natural gas or power, expressed in Therms or Kilowatts, respectively, that the CITY is required to deliver to one or more of the Facilities at a specified period of time, as more fully described in one or more of the Confirmation Schedules. "Demand Charge" means the price charged by the CITY to meet the CUSTOMER’s Demand, as more fully described in one or more of the Confirmation Schedules. 4 970902 ~yn 0071267 "Department of Utilities" means the City of Palo, Department of Utilities, which represents the City of Palo Alto in utilities matters. "Direct Transaction" means the engagement of an Energy Supplier (other..than the CITY acting as an Energy Supplier) by the CUSTOMER to supply Energy or render Energy Services. "Distribution Charges" means the Charges imposed by the CITY for the transportation of Energy from the City Gate to the Delivery Point(s). "Early Termination Date" means the Day on which the termination of the Term for cause becomes effective. "Emergency" means the occurrence of an event not arising by an event of Force Majeure which causes physical conditions of property to pose an imminent threat to the health, safety, or welfare of any Person and which requires the immediate attention of a Party. "Energy" means the quantity of electricity, measured in Kilowatt-Hours, or the quantity of natural gas, measured in Therms, or both, that is delivered by the CITY to one or more of the~ Delivery Points, as more fully described in one or more of the Confirmation Schedules. "Energy Charge" means the price of an Energy product that is delivered to the CUSTOMER, as mQre fully described in one or more of the Confirmation Schedules. "Energy~Servlces" means the Energy-relaged services, that are rendered to the CUSTOMER, as more fully described in one or more of the Confirmation Schedules. "Energy Supplier" means the Person or entity which is engaged in the business of selling electricity or natural gas, or both, to a Customer , as described in one or more of the Confirmation Schedules. "E~ent of Default" means any Provision described in Article 14 which entitles the Non-Defaulting Party to exercise the rights set forth in this Contract, or by Law, upon the occurrence of a default by the Defaulting Party. expires. "Expiration Date" means the Day on which the Term hereof "Extension Term" shall have the meaning set forth in Section 2.3 hereof. "Facilities" means the real property, building facilities, and other improvements and appurtenances thereon occupied by the CUSTOMER, at which one or more of the Delivery Points is located, in existence either at the Commencement Date or during the Term 5 970902 ~Jn 0071267 hereof and not located within the Public Right-of-Way or the Public Utility Easements, to which Energy is dispatched, as more fully described in one or more of the Confirmation Schedules. "FERC" means the Federal Energy Regulatory Commission. "Force Majeure" means the occurrence of any event that has, had or may have a material adverse effect on the design, construction, installation, management, operation, testing, use or enjoyment of the Utility System or the Facilities, which event includes, without limitation, an Act of God, an act of a superior governmental authority, an act of a public enemy, a labor .dispute or strike or a boycott which could not be reasonably contemplated by the Party affected thereby, a defect in manufactured equipment, fire,floods, earthquakes, or any other similar cause. "GAAP" means generally accepted accounting principles consistently applied. "Hazardous Materials" means any substance or material which has been determined by any Agency, including the .CITY, to be capable of posing risk of injury to health, safety, and property, including petroleum and petroleum products and all of those materials and substances designated’ as hazardous or toxic by the United States Environmental Protection Agency, the California Water Quality Control Board, the United States Department of Labor, the California Department of Industrial Relations, the California Department of Health Services, the.Ealifornia Health and Welfare Agency in connection with the Safe Water and Toxic Enforcement Act of 1986, the United States Department of Transportation, the United States Department of Agriculture, the United States Consumer Product Safety Commission, the United States Dep~rtment of Health and Human Services, the United States Food and Drug Administration or any other Agency now or hereafter authorized to regulate materials and substances in the environment. Without limiting the generality of the foregoing, the term "Hazardous Materials" ’shall include all of those materials and substances defined as "toxic materials" in Section 66680 through 66685 of~ Title 22 of the California Code of Regulations, Division 4, Chapter 30, as the same may be amended from time to time. "Improvement"means any addition, alteration, betterment, construction or modification to the Utility System or the Facilities which now or hereafter is constructed within the Public Right-of-Way o~ used by any Party in connection with its rights and obligations under this Agreement. "Initial Term" shall have the meaning set forth in Section 2.2 hereof. "Interstate Delivery" means the transmission of electricity over wires or the transportation of natural gas through pipelines subject to regulation by the FERC. 970902 syn 0071267 6 "Intrastate Delivery" means the transmission of electricity over wires or the transportation of natural gas through pipelines subject to regulation by the CPUC. "Kilowatt" or "KW" means a unit of measurement of power equal to 1,000. watts. "Kilowatt-Hour" or "KWH" ~eans a unit of measurement of power consumption of 1,000 watts for a period of one hour. "LaW’means any administrative or judicial act, decision, bill, certificate, charter, code, constitution, opinion, order, ordinance, policy, procedure, rate, regulation, resolution, rule, schedule, specification, statute, tariff, or other requirement of any district, local, municipal, county, joint powers, state, or federal agency, or any other Agency having joint or several jurisdiction over the Parties to this Contract, in effect either at the Commencement Date or during the Term hereof, including, without limitation, any regulation or order of an official or quasi- official entity or body governing the applicable service provided by the CITY, including the Provisions of this Contract, to which a Customer may be subject or bound. "Letter of Credit" means an irrevocable transferable standby letter of credit issued by a major United States commercial bank or a foreign bank with a United States branch office with such bank having a credit rating of at least "A-" from S&P~or "A3" from Moody’s and being in a form reasonably acceptable to the Party in whose favor the letter of credit is issued. "Load" means the quantity of Energy required by the CUSTOMER over a specific period of time, or the amount of power delivered or required at any specific point on the Utility system. "Load Factor" means the ratio of average Load to Peak Load during a specific period of time expressed as a percentage. "Load Monitoring Services" means services which entail, without limitation, the assessment of the functions, operation and performance of a Customer’s power facilities and a review of the efficiency of electricity consumption over one or more periods of time. "Loop Flow~means the difference between the path or paths on which the Parties have agreed that power will be delivered to the CUSTOMER’and the actual path or paths on which such power is delivered. ~ "Loss" meansthe amount of power expressed as a percentage that is not delivered by the Energy supplier to the CUSTOMER on account of ambient conditions existing at the time of transmission. "Market-based Energy" means Energy, the price of which is established on the open market at the California border (in’ the case of natural gas) or on the NYMEX (in the case of electricity), 7 970902 ~ 0071267 or other comparable index. "Maximum Daily Quantity" or "MDQ~ means the maximum quantity of natural gas that is purchased by the CUSTOMER and is scheduled for delivery each Day by the CITY to one or more of the Delivery Points. "Minimum Daily Quantity" means the minimum quantity of natural gas that is purchased by the CUSTOMER and ’is scheduled for delivery each DaY by the CITY to one or more. of the Delivery Points. "MCF" means a unit of measurement of ~the volume of natural gas equal to 1,000 cubic feet. "Megawatt" or "MW" means a unit of measurement Of power equal to 1,000 KW. "Megawatt-Hour" or "MWH" means a unit of measurement of power consumption of 1,000 KW for a period of one hour. "Meter" means the equipment or instrument that measures the quantity of electricity or natural gas, or both, delivered by the CITY to one or more of the Delivery Points. "Metering Charge" means the Charge(s) for the purchase, installation, testing, maintenance, repair and removal of metering or other similar data gathering equipment related to the energy use of the Customer. : "Mill" means a unit of measurement for the pricing of Energy, expressed in terms of one-tenth of one cent. "MMBtu" means a unit of measurement of the natural gas equal to 1,000,000 Btu. quantity of "Month" means a calendar month, commencing at a.m. Pacific Standard .Time on the first Day of the calendar month and ending at __ a~m. Pacific Standard Time on the first Day of the following calendar month. "Moody’s" means Moody’s Investor Services, Inc. or its successors and assigns. "Multiplier" means a factor which is used to convert a quantity of natural gas measured at one or more of the CUSTOMER’s Meters into heat or thermal energy for billing purposes, and is used to convert the average number of Therms per 100 CF of natural gas consumed over a specified period of time. "Nomination" means the quantity of natural gas ordered by the CUSTOMER for delivery during a specified period of time. "Non-Defaulting Party" means any Party who is not Defaulting Party. 970902 syn 0071267 "NYMEX" means the New York Mercantile Exchange. "Off-Peak Demand" means a level of Demand of the CUSTOMER during a specified period of time of a Day, usually commencing at ii:00 p.m. of the first Day and expiring at 6:00 a.m. of the following Day. "Other Gas" means any combustible gaseous or vaporous mixture which is used to produceheat or thermal energy by burning, including, without limitation, compressed natural gas, liquefied petroleum gas, gas manufactured from coal or oil,. gas produced from biomass, or gas produced at or from a landfill, or a combination of any of the above items; provided, however, natural gas is not considered an Other Gas. "Parties" means the CITY and the CUSTOMER. "Party" means the CITY or the CUSTOMER. "Peak Demand" means a level of Demand of the CUSTOMER during a specified period of time of a Day, usually commencing at 6:00 a.m. and expiring at 11:00 p.m. on the same Day. "Peak Load" means the maximum Load consumed or produced over a specified period of time. "Person" means any individual, for profit.corporation, nonprofit corporation, limited liability company, partnership, limited liability partnership, joint venture,~business trust, sole proprietorship, or other form of business association. "PG&E" means the Pacific Gas and Electric Company, a corporation duly organized and validly existingunder the Laws of the State of Calif0rnia,. its directors, officers, employees, partners, principals, agents and contractors and its successors and permitted assignees. "Poles" mean those poles, to which electric power distribution lines are attached, that are separately owned by the CITY, or are jointly owned by the CITY with Pac Bell or PG&E, or both, pursuant to one or more written agreements. "Provision" means any agreement, circumstance, clause, Condition, covenant, fact, objective, qualification, restriction, recital, reservation, representation, term, warranty, or other stipulation in this Contract or in Law that defines or otherwise controls, establishes, or limits the performance required or permitted by any Party hereto. All Provisions, whether covenants or conditions, shall be deemed to be both covenants and conditions. "Public Right-of-Way" means the areas owned, occupied or used by the CITY for the-purposes of furnishing on a retail basis electricity, natural gas, water, sewer, storm drain, refuse or communications commodity and/or distribution service, and the means of. public transportation, to the general public, including, without 970902 syn 0071267 limitation, the public alleys, avenues, boulevards, courts, curbs, gutters, lanes, places, roads, sidewalks, sidewalk planter areas, streets, and ways, in existence either at the Commencement Date or at any time during the Term hereof. "Public Utility Easements" means the areas occupied or used by the CITY for the purpose of providing Energy to the general public and all Energy Services offered by the Department of Utilities, the rights of which were acquired by easements appurtenant or in gross, or.are other interests or estates in real property, or are the highest use permitted to be granted by the nature of the CITY’s interest in and to the affected real property. This term incorporates all public service easements for utilities that have been recorded by the CITY with the Recorder of the County of Santa Clara, California. "Receipt Point" means a place or location at which electricity or natural gas is received by the CITY from its Energy Supplier. "Reservation Charge" means a fee payable at the outset by a recipient of Energy service based on total entitlement for gas transportation services. "Scheduling" means (i) in reference to the CITY, the act of making power or natural gas available for delivery to or for the account of the CUSTOMER or (ii) in reference to the CUSTOMER, the act of causing the CUSTOMER’s Transmission Provider or Transportation Provider to make available at one of more of the Delivery Points sufficient transmission capacity or transportation capacity to permit such Transmission Provider or Transportation Provider to receive the quantities of power or natural gas that the CITY must make available at one or more of the Dilivery Points. "Scheduling Coordination Services" means the arrangement of the delivery of Energy to a CUSTOMER by an Energy Supplier who acts through a Third Party. "Shrinkage" means the loss of a small percentage of the volume of natural gas that is transported and delivered to one or more of the Delivery Points. "Sole Discretion" means, whenever a Provision rests in the "S01e Discretion" of an individual representing a Party to this Contract, then that individual must base a decision upon factors as is deemed appropriate by that individual, and that individual shall not be required :to state any reason for the decfsion. The other Party affected by the decision may not compel a contrary or different decision on any such matter, and notwithstanding any other Provision hereof, the individual exercising the "Sole Discretion" shall not be liable to the other Party for any effect of the decision. "S&P"means the Standard & Poor’s Rating Group, a division of McGraw-Hill, Inc., or its successors and assigns. 970902 ~n 0071267 10 "Standby Services" means support service that is available, as needed, to supplement a Customer to replace normally scheduled power. "Storage Charges" means a Charge for the service in which natural gas in received by the seller of the service and held for the account of the Customer for redelivery at a later time. "Tax"means any assessment, charge, imposition, license, or levy (including any utility users tax) in effect either at the Commencement Date or during the Term hereof and imposed by any Agency, including the CITY. "Term" means the Initial Term or the Extension Term, or both, whichever may be applicable. "Therm" means a unit of measurement of the heat or thermal energy content of natural gas. One (I) therm equals i00,000 Btu. "Third Party" means any party other than the CITY or the CUSTOMER. "Transaction" means any agreement or amendment thereto by the Parties for the purchase of Energy or the rendering of Energy Services, or both, as set forth in one or more Confirmation Schedules. "Transition Cost Recovery Charge" means the cost that is assessed or levied by the CITY, in.order to recover the expenses and liabilities associated with the uneconomic investment in electric generation facilities of any such Person and that, directly or indirectly, would affect an ongqing Transaction; provided, however, any such cost will be appiied in a non- discriminatory manner and made applicable to all similarly situated parties. "Transmission Provider" means any Third Party that provides Transmission Service. "Transmission Service" means the scheduling of the Interstate Delivery or Intrastate Delivery, or-both, of power. "Transportation Provider" means any Third Party that provides Transportation Service. "Transportation Service" means the scheduling of the Interstate Delivery or Intrastate Delivery, or both, of natural gas. "Utilities Director" means the individual designated as the director of utilities under Section 2.08.200 of Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the representative of the director of utilities. "Utility Rules and Regulations" means the compendium of ii 970902 syn 0071267 utility ~rules, regulations and rate schedules prepared by the Department of Utilities and adopted by ordinance or resolution of the Council pursuant to Chapter 12.20 of the Palo Alto Municipal Code. "Utility System" means the CITY’s electric power and natural gas distribution systems, including, without limitation, all substations, distribution towels, generators, transformers, busses, wires, poles, vaults, conduits, capacitors, resistors, pipes, valves, fittings, and risers that are used to deliver Energy to Customers. "Voltage Support Services" means the technical assistance rendered to a Customer in monitoring the quality and quantity of a direct electric current passing through an electrical circuit, including, without limitation, an electrical conductor. "Year" means a calendar year, unless a Contract Year is specified, commencing at a.m. Pacific Standard Time on the first Day of the calendar year and ending at Pacific Standard Time on the first Day of the following calendar year. In additional to the foregoing, other Special Terms are defined throughout the Contract and the Confirmation Schedules. 12 970902 syn 0071267 CONFIDENTIAL INFORMATION CONFIRMATION SCHEDULE NO. FOR ACQUISITION OF ENERGY SERVICES’ All Provisions of this Confirmation Schedule No.are deemed Confidential Information and’subject to the Provisions of the Energy and Energy Services Contract, as may be amended from time to time. Seller:The City of Palo Alto Buyer: Buyer’s Address: Buyer’s Telephone No. Type of Energy Services: Facsimile No. Term of Energy Services Schedule: Billing Period: Energy Services Charge(s): AdditiOnal Terms & Conditions: 970902 bdz 0071269 CONFIDENTIAL INFORMATION CONFIRMATION SCHEDULE NO. FOR PURCHASE OF ENERGY- (Electricity and/or Natural Gas) All Provisions of this Confirmation Schedule No.are deemed Confidential Information and subject to the Provision-----s of the Energy and Energy Services Contract, as may be amended from time to time. Seller:The City of Palo Alto Buyer: Buyer’s Address: Buyer’s Telephone No. Quantity of Energy: Facsimile No. Term of Energy Schedule: Billing Period: Energy Charge (s) : Additional Terms & Conditions: Delivery Point (s) : ~TTACHMENT "C" EXCERPT FROM JULY 9, 1997 UTILITIES ADVISORY COMMISSION MINUTES Item 8. b. Generic Contracts Mr. Habashi: In our discussions with our large customers, we have received several requests from some of them wh0 have at least expressed interest in working with Palo Alto in signing a long-term, multi-year agreement for providing services. We felt that it would be appropriate that we do in the electric utility what we have done on the telecommunications side. That is, to put together a genericagreement that we can share with you and share ~ith the City Council. Once we receive approval from both, the city manager, would be able to sign on any agreements or deals we can work out with individual customers. That is what is before you tonight. We do not have the.generic agreement ready yet. We anticipate that it will be ready in a couple of weeks, maybe less. We anticipate taking it to the City Council on August 4th. We are here to answer your questions. Commissioner Johnston: I feel it is going to be essential to do’ this. From where we are, I have always felt that I did not have a very good feel for what the contract would look like. It is good to see that there will be a part on this and a part on that, but when it comes right down-to the energy charges and whether it will be based on index or get a real kind of a feel for that, in essence, if there is a pretty good framework around’what that is, then that is great. We would have some boilerplate, but if you don’t have something a little bit tighter around the energy charges, then there is so much flexibility that I don’t know that there is much point in having any oversight on it at all. It is a little like a blank check. ~: But ~ach customer is asking for something different as far as an MoD charge. When we negotiate a cost, some want a shorter term and some want a longer term, some want to extend the transition charge, MINUTES UAC:970907EX:MIN DRAFt P~ge 49 ~ . - or some may want a certain percent increase per year..~ach one~s~ to-be different, each one of these is specialized, and that is why’the contract leaves that open for negotiation. ~=q_m~ioner Johnston: Right, and I understand that, and it is going to be necessary to do that, but at the same time, if there are literally no bounds around this thing at all, it makes me want to go back to what Ariel was talking about before, which is that if you do not really have any control, then keep your hands way away from it so you are not perceived to have had any oversight of it. I know you are not asking for any UAC approval here, but if we were given something along these lines that said you should get UAC approval for this process, I am not saying it is.wrong, but I feel that we really should not get involved in the approval, because we do not know what we are giving approval on. Mr. Habashi: We are actually talking about this issue internally, which is, what are the appropriate guidelines that staff will have to use when they go out to negotiate a contract. Generally, my thinking is that there are ~hree basic guidelines. One is that the customer asks for what they want, and have it made clear in writing before we initiate any discussions with them. Two, any financial arrangements that will be made with the customer will have no impact on all the other customers, so that we are not out there to give discounts in order to keep the customer. Three, any contract will have-sufficient offerings to give some flexibility both for the custome~ and to the city to get out of it if something completely untoward were to happen. Those are three basic guidelines that I have shared with Ed, and he is comfortable with them. We are using them in any discussions with customers°and in anything else that we do in the future. Certainly~ we will be glad to hear any additional guidelines. Commissioner Johnston: I think something like that is exactly the kind of policy that might be appropriate to come before the UAC. We are not going to have anycustomers who are not pulling their own weight. It is not going to be the policy to get market share by selling below our cost, for example. If that was the policy, those are certainly things that we could review. If the question comes up, of course, do we want answers .... policies if . But if you are going to have those policies and you do not mind making them public, then having a discussion about them certainly would be appropriate. ~_~~i~: I will need to discuss this with Ed and see if we can put it together and bring it back to the commission. n: Let me suggest one which I know of in the aerospace MINUTES UAC:~709OTEX:MIN DRAFT Pag© 50 industry. That is, you say to your supplier, promlse me that no one else gets a better deal. It is like the most favored nation trade agreements. There is no explicit enforcement, typically, except that you make this promise, and if you hear that someone else got a better deal, you go back to the supplier and say, how about so-and-so? How come he got a better deal? That might well be one of these fairness sorts of things that someone might well want to write into a contract and ask you for. Could you live with that? Mr. Habashi: I must say I am not clear on what you are suggesting. Commissioner Gruen: What the purchaser says is, Mr. Supplier, tell me that no one else got a better deal for comparable quantities of the same thing. And the supplier says, yes, I can tell you that no one else got a better deal, and that if someone else gets a better deai, I will make it available to. you, too. It doesn’t go any further than that, and people argue about it if you~do not live up to it and they hear about it~, one way or another. In something as diverse as the aerospace industry, where everyone is changing jobs all the time, you hear about it. I have seen people do that in the computer industry where I have worked. You ask for a positive statement that no one else got it, and then if someone else does, I’ll get it. Chairman Grimsrud: My sense on that, however, is that each product might be so different that you cannot ~say that someone else got a better deal. It is either contract length, or it is reliability, etc. ~Qmmissio~..er Gruen: And people go to great lengths to make their contracts different for just that reason. ’ : It is not like buying a 737 or a computer. mr. Habash~: My assumption .is that if you have two customers coming to us asking for two identical things .m products ’and services -- same terms, same everything, we most likely are going to give them the same price. They would get exactly the same price. mm’ssioner Grue~!: That is a good thing to do from a public policy standpoint, but if you are thinking of things to put in your list of things about how you are going to deal with that customer, that is the kind of thing you could include. There are other industries that do that. Certainly, the electrons are all the same. I suspect there will be a fair amount of commonality. Maybe what it will really come down’to is, you will say, they signed up for three years rather than for two MINUTES UAC:970907EX:MIN DRAFf P~¢ 51 years, and that is why they got a better price. Then you could say, you could have a better price if ~ signed up for three years. Mr, Habashi: What you are asking for is a notice clause. CQmmissi’oner Gruen: Yes, and that is appropriate for a public agency from a policy standpoint as well as being an easy way of making people feel good about the agreement they have signed. Chairman Grimsrud: Why do we have this section in here on stranded cost °payments? Is that something we feel obligated to put in a contract? It seems like we are negotiating a price with them, and stranded costs are in there. Why should they care whether stranded costs are included in that price or not, unless what you are saying is, in a regulated environment that PG&E is still in, they have to pay a little CPC or something like that. Mr. Mr~zek: They are paying us a transition cost also, and are obligated to pay us the stranded cost. Chairman Grimsrud: Okay, but that is for people who leave us, but this is a contract we are entering into with someone who is going to remain with us. ~. Mr. Habashi: Stranded costs generall~ will be paid by those who leave us and by those who stay within a four-year period. So everyone is going to pay stranded costs. What this clause is probably going to be in there for, and again, we have not seen the complete document yet, but it is basically to get an agreement from the customer’s side that they understand that there issuch a thing as stranded costs and they are obligated to pay them. Irrespective of the financial arrangements that we work out with them, the stranded cost is there and it is their responsibility to pay it, so the contract we sign with them does not relieve them from the obligation to pay the stranded cost. It is somehow incorporated in the price-that we offer them, assuming that price is different from what we have in . Chairman Grimsru~: But if we have a threeoyear contract, they have to buy at 60 mils per kilowatt hour, and who cares whether stranded cost is in there or not? I guess what you are saying is that if they get out of that contract, they are still going to have to pay it. ~_~L~_~: Remember, there will be a termination clause allowing either one of us to get out. When that happens, at least we will have an agreement from them that they are obligated to pay that. . ~ NtINUTES UAC:970907EX:MIN DRAFT PaEe ~2 Chairman ~rimsrud: Will they be allowed to resell ~his power? ~_~~: My thinking is that the retail-customers do not want to engage themselves in the business of reselling power. Most of them really do not want that. They have other business that they are doing. Chairman Grimsrud: I don’t know if w~ would want to restrict that or not. I was just wondering about that. Mr. Habashi: If they can make money off of it, more power to them. Commissioner Gruen: I think Fred and I may each know of a case where people do resell power. That is where some large organization buys the power and resells it to the residents or, in my case, to leaseholders. That is a kind of routine sort of thing, and I pay every month for. resold power. I am sure that the guys who are reselling it will want the opportunity to do that. So are there some conditions that you want to put on that? I .know of a case where we rent space in a building, and the guy who ran the building bought the power and resold it to us in our office. ~: Right now, our rules and regulations do not ~allow a customer to resell power. : How about an apartment house? An apartment house is not allowed to sub-meter. ’ ’: How? Are they allowed to have a flat cost for each apartment? ~~T~: It is up to the apartment owner to put that in their bill, but they cannot sub-meter and charge a metered rate to each apartment. Chairman Grimsrud: Along with the pricing provisions, I assume there could be reliability and high quality provisions in a subsection. ~~E~: Precisely. For all practical purposes, the contract would be with a customer maybe earlier, but high quality and reliability and nothing else.Then we would deal with it when we get that. Ch ’r’ r : agreement. So this is, as you said, just a bare bones Yes, a bare bones type of agreement. We want you to be MINUTES UAC:97090?EX:MIH DRAFT P~e 53 aware that this is another product that we wang to take to our customers. They are asking for it, and this is a way to have customer retention. We want you to be aware of what we are doing. Any input is appreciated. an r’ r d: My sense is that where it really becomes an asset in terms of customer retention (and I don’t know if we can review it) but where you provide (sounds like "meat"l) in terms of options, in terms of pricing, all these things, high.quality and reliability, am sure you guys are putting out all of those options. (Right) Again, it gets back to my question about customer retention strategy. Even that gets to be an issue when it comes to the public forum. So here am in my first meeting wondering what the heck we are going to be doing for the next three years. ~ommissioner Gruen: I think that what Paul is suggesting is a good thing, that is, that you write down the business guidelines that you have about whatever it may be, maybe putting in the one I suggested, maybe not, but you write those down, and we will say, yeah, that sounds like a good set of rules, and the council says, yeah, that sounds like a good set of rules, because I have the sense that if someone asked Tom what are.your rules internally, what are you allowed to offer us, Tom could answer that. .~ Mr. Habashi: It is most likely, and’~that was my plan, to have these guidelines that offer some earlier to be part of the staff report (??) do some~of the contracts. Probably the easiest thin~ for us to do is to give you a copy of that staff report next month. I think you are going to be meeting after the council meeting, which is on August 4, and you meet on August 6. We could provide you with a copy of that. ~ommissioner Gruen: Would you like to do it the other way around? Should we change our August meeting to the last week in July? ~/_~; Our concern is that we wanted to get this to the council prior to their vacation. ~_~sioner Gruen~_ So would you like us to meet on July 30th so that you could do that, so that we could say yes, we agree with this? ~: If the commission so desires, we can see if there !s an available time. You will have the staff report three days prior to the council meeting so that you could review it, and if you did have a concern~ you could present that to the council, or you can change your meeting date. MINUTES UAC:9?0907EX:M~NDRAFTPag© 54 ~_E~oner Gruen: It is really an offer to you. W~uld you like us to be able to endorse your report? Mr. Mrizek: absolutely. We certainly want the commission to endorse that report, ¯ " net Gruen: Would you like to provlde it enough in advance that we can have a vote and say yes~ we agree with this? Chairman G~.~msrud: I am not sure it is that important. When Chairman Sahagian returns, perhaps we could take that up then. Commissioner Gr_~: We do not have to decide that tonight, but I certainly want to express willingness to do that. Commissioner Johnston: I don’t think it is so critical. We are trying to get this in the works. If it turns out that we have some added suggestions, there is no reason why this cannot be modified in the future. I do not see it as being the important contract that is going to commit us for a long time so that we owe it to the council to have our full~review first. Chairman .Grimsrud: That completes this item. Thank you very much, Tom. MINUTES UAC:970907EX:MIN DRAFT PaSo ~5 ; ~.