Res 1898 12/21/1976RESOLUTION NO.O 66,
RESOLUTION APPROVING AGREEMENT WITH WEST TEXAS
UTILITIES COMPANY FOR SALE OF WATER AT LAKE KEMP-
LAKE DIVERSION FOR ELECTRIC GENERATING PLANT.
BE IT RESOLVED BY THE BOARD OF ALDERMEN OF THE CITY OF
WICHITA FALLS, TEXAS, THAT:
That certain agreement, a copy of which is attached hereto,
between the City of Wichita Falls, Wichita County Water
Improvement District Number Two and West Texas Utilities
Company, providing for the sale of water at Lake Kemp-
Lake Diversion for an electric generating plant, is hereby
approved, and the Mayor is authorized to execute the same
for the City of Wichita Falls.
PASSED AND APPROVED this the 21st day of December,
1976.
Y O R ' 67/1/ ()11
ATTEST:
City Clerk
r
THE STATE OF TEXAS
COUNTY OF WICHITA
THIS AGREEMENT, made and entered into this clay of
iJ , by and between the City of Wichita Falls, Wichita County, Texas, a Municipal
Corporation, acting by and through its Mayor hereunto duly authorized by its Board
of Aldermen, and the Wichita County Water Improvement District Number Two, acting
by and through the President of its Board of Directors, hereunto duly authoriz ; herein-
after collectively called Seller, and West Texas Utilities Company, a private corporation,
incorporated under the laws of the State of Texas, acting by and through its officers
hereunto duly authorized, hereinafter referred to as Company.
WITNESSETII :
WHEREAS, Company proposed to construct and operate a power plant,
switchyard, electric and communication lines, pipelines and other facilities in con-
nection with such power plant, on land to be purchased by Company either adjacent
or near to the Lake Kemp-Lake Diversion system located in Baylor, and Archer
Counties, Texas, or at some site remote therefrom, the power plant to be of such
size as to have a total generating capacity of about 2, 000 megawatts of electricity
which will consume up.to, but not more than 20, 000 acre-feet of water per year; and
WHEREAS, Company would require an adequate water supply for gener-
ating, cooling and other purposes necessary for the operation of such plant; and
WHEREAS, Seller is desirous of said power plant being constructed and
of furnishing such water supply for use in connection with said power plant, the con-
struction and operation of such power plant constituting a material benefit to Seller
and being a sufficient consideration for the obligation undertaken by Seller;
NOW, THEREFORE, in consideration of the premises and of the mutual
benefits and advantages hereinafter set out, the parties agree as follows:
A.Company shall have first rights during the life of this contract to take from
the Lake Kemp-Lake Diversion system, except from the canals which are •
a part of the system, all water reasonably necessary or desirable in Company's
T
judgment for operation of Company's power plant, consuming up to but not more than
20, 000 acre-feet per year, subject to the availability of such water after Seller meets
the following prior commitments for Lake Kemp-Lake Diversion water: 45, 000 acre-
feet annually for irrigation and oil well water flooding purposes withdrawn by Wichita
County Water Improvement District Number Two; 2, 200 acre-feet per year for fish
hatchery operations withdrawn by Texas Parks & Wildlife Department; and the reser-
vation of 50, 000 acre-feet of storage for the City of Wichita halls.
B.Seller further grants to Company the right to circulate water through and
to withdraw water from the Lake Kemp-Lake Diversion system in connection with
the operation of said power plant. Company is hereby granted the right to go upon
Lake Kemp and Lake Diversion and into the water thereof, and to do any and all things
reasonably necessary in order to properly circulate said water through and withdraw
water from said Lakes, including the right to dredge in the Lakes and to do any and
all other things reasonably necessary or desirable in Company's judgment to effect-
uate proper circulation and withdrawal of water including the installation of intake and
discharge structures out in the lake and the necessary piping and other facilities in-
cident thereto, and to hereafter maintain and operate same. It is to be understood
that plans for all modifications and/or improvements to be clone in or upon Lakes Kemp
or Diversion shall be furnished to the City's Director of Public Utilities, or his suc-
cessor, the General Manager of the Water District, or his successor and Seller's
respective governing bodies. Such plans shall conform to good engineering and water
conservation practices. Such modifications or -improvements shall in no way interfere
with Seller's ability to fulfill the above described prior water commitments of the
Seller. Company shall have the duty to erect and maintain signs or other devices
warning of any danger to third persons upon any facility or portion of the power plant
operation which is located upon or in Lake Kemp and Lake Diversion or other property
of Seller. Provided, however, that the foregoing sentence :hall :Hare :o
of Seller only and shall no: serve to enhance or establish ,he :i;,; ' 0; C.o ;y :oiii:\'
any such third party. Company agrees to indemnify and hold Seller harmless from
any and all claims, suits or causes of action arising by virtue of the construction,
operation and maintenance of any of such Company facilities which are located upon or
in the Lake Kemp-Lake Diversion system o: other property of Seller except for
Seller's sole negligence. Everything dredged from the bottom of the lake, so as to
effectuate such circulation or withdrawal, will be removed by Company and handled
and disposed of to Seller's satisfaction at Company's expense.
C.Seller grants to Company the right of using water from the Lake Kemp-
Lake Diversion system for generation of electric power during the life of this con-
tract, subject to prior commitments in Paragraph I, Subparagraph A. of this Agree-
ment. All contracts hereafter made and entered into by Seller (either jointly or
severally) with other parties for water rights for said Lakes shall be subject to and
subordinate to Company's rights hereunder.
D.Seller warrants that it has and will maintain in force for the life of this
contract legal title to the water sold hereunder and all permits, contracts, licenses
and legal agreements necessary to maintain legal title to the water sold hereunder.
It is understood and agreed that the terms of this contract are subject to Seller's
rights under present ownership of land and easements.
E.In the event it is determined by the Company that Seller does not have
sufficient water at any time to furnish the water contemplated by this agreement, Com-
pany shall have the right to introduce water of equal or better quality into the Lake
Kemp-Lake Diversion system from other sources for use in Company's operations,
and Company shall have the right to withdraw, circulate, and use such other water,
or an amount equivalent thereto, in addition to such water as Company may purchase
from Seller hereunder.
F.Company further shall have the right to use water from other sources which
may be taken and/or transported directly to said power plant, without being introduced
into the Lake hemp-Lake Diversion system, for Company's own use for plant process
by lake circulation
purposes as distinguished from water for cooling purposes/along with, in addition to,
or instead of said water from the Lake hen.p-Lai:e Diver_ion _: .
to Seller therefor. If tins situation occurs and, if Company dctm'mines t:.at it no longer
needs and is not using the 20, 00U acre-feet annually, this contract shall be modified
by mutual agreement as to such quantity and the Seller shall have the right to sell such
released quantities to other users.
3-
Ii.
Company will purchase water from the Lake Kemp-Lake Diversion system
in such quantities as it desires for operating its power plant up to, but not more than,
20, 000 acre-feet of water per year beginning at such time as the actual use of water
for the production of electricity begins upon completion of the first generating unit.
Prior to such time, Company agrees to pay to Seller an annual standby charge, from
the date of execution of this contract, payable in substantially equal monthly install-
ments by the 10th of each month, in advance, as shown on Schedule A. below.
Schedule A. Effective Period Annual Amount
Calendar Year 1976 None
Calendar Year 1977 S 300, 000. 00
Calendar Year 1978 30u, 000. 00
Calendar Year 1979 290, 000. 00
Calendar Year 1980 200, 000. 00
Calendar Year 1981 200, 000. 00
Calendar Year 1982 k 9, 000. 00
Calendar Year 1983 200, 000. 00
Calendar Year 1984 300, 000. 00
Calendar Year 1985 300, 000. 00
Calendar Year 1986 300, 000. 00
Stchedulc 13.Minimum annual charges shall begin when water is actually
consumed for the production of electricity upon completion
of the first generation-unit or January 1, 1987, whichever
is sooner, in the following amounts and time schedule:following
1. Date of completion of first
gcncration unit or January 1,
1987, whichever is sooner, and
for each of the next five years S 500, 000. 00
2. For each of the next five years 750, 000. 00
3. For all years thereafter until
end of contract 1, 000, 000. 00
Schedule C. For water actually consumed, Company shall pay Seller at
Base Rate
the/i +e- of twenty-three (234) cents per one thousand (1, 000)
gallons. The Base Rate for water purchased pursuant to this
agreement shall be adjusted on January J of each calendar
year-subsequent to the calendar year 1987 by an amount
determined by multiplying such Base Rate by an Adjustment
Factor. Such Adjustment Factor shall be calculated by divid-
ing the weighted average price paid per one thousand gallons
4-
of water actually pur,:leased and consumed in the generation
of electrical power by the use of fossil fuels (in quantities in
excess of 1, 000 acre feet per year but no more than 30, 000
acre feet per year) during the immediately preceding calendar
year within the State of Texas, by the weighted average price
paid per thousand gallons of water consumed for the same pur-
range of
pose, in the same% ;:d:ll quantities in the State of Texas
during the calendar year 19SG. Only the purchase and con-
sumption of water from third parties from man-made lakes
will be considered in arriving at the weighted average. For
purposes of computing the weighted average price paid, the
price paid pursuant to this Agreement shall be excluded.
Amount due for water actually consumed under Schedule C. above shall be due and pay-
able by the 10th of each month following the month of consumption. By the 10th day of
the 13th month after the first generating unit is producing electricity and annually
thereafter, if the amount billed for the preceding twelve (12) month's period, is less
than the annual minimum amount as specified on Schedule B. above, then the difference
will be billed in addition to the preceding month's actual consumption.
Water used during construction, prior to the time of actual use of water for
the production of electricity, shall be paid for at the same rate as water consumed for
the production of electricity, in addition to the standby payments herein provided, ex-
cept that no minimum charge shall be required.
It is agreed that the amount of water consumed by way of direct circulation
through the lakes for cooling purposes, or otherwise consumed as a result of being
drawn from and returned to the lakes, will be calculated and specified by the Consult-
ing Engineer responsible for the design of each generating unit in the power plant, and
such calculations shall be the basis for payment for water so consumed. All of er
water consumed for power plant purposes will be lneturvd or will e n'.isu ed by a
method mutually agreeable to Seller and Company.
In case of differences between Company and Seller as to the amount of raw
water consumed, same shall be left up to the i • > PublicteDetectorofIu_lic Ltilities for the City
of Wichita Falls, the General Manager of the Water District and Company Generation
Engineer, and if they disagree, they will select a competent consulting engineer and
5-
his decision as to the amount of water consumed will be binding on both Company and
Seller. All fees and expenses of said consulting engineer shall be shared equally by
Seller and Company. Each party shall have the right to make reasonable inspection
of the other's records in order to ascertain the amount of water consumed hereunder.
All amounts due and payable under Paragraph II shall be due and payable
to the respective sellers in Wichita County, Texas. Fifty percent (5D ) of the amount
due shall be payable to Wichita County Water Improvement District Number Two and
fifty percent (50q,) of the amount due shall be payable to the City of Wichita Falls,
unless otherwise modified by the Sellers.
III.
Seller hereby grants to Company easements and rights-of-way, together with
rights of ingress and egress across adjacent lands of Seller, for the life of this con-
tract and any extensions thereof for water intake structures and water discharge struc-
tures, for water intake and discharge canal or canals and/or pipelines, pumping equip-
ment, cables, and for dredging water intake and discharge canals, or ditches out into
the lake and/or any other facilities necessary or desirable in the opinion of Company in
order to take or transport water from the lakes to Company's power plant site and/or
return said water from the power plant site back into the lakes, and intake and discharge
structures will be placed in such locations as may be reasonably necessary to properly
operate the facilities described. It is understood the dredging for water intake and dis-
charge may extend out into the lake such distance as is necessary for proper plant
operation. Seller further grants to Company easements and rights-of-way along, upon
and across Seller's land in the Lake Kemp-Lake Diversion area, together with rights
of ingress and egress across adjacent lands of Seller for the life of this contract and
any extensions thereof for construction, installation, operation and maintenance of such
roads, railroads, water pipelines, fuel pipelines and transmission and distribution lines
and facilities as may be necessary or desirable in Company's judgment for the construc-
tion and operation of said power plant facilities. Plans for all snc.h h.;p ov ;'.:en:s or
modifications to the Lake (s) or Seller's land shall be furnished to the City's Director
of Public Utilities, or his successor, and the Water District's General Manager, or
his successor, and approved without delay by Seller's respective governing bodies.
G-
Such approval shall not be unreasonably r:it1i'held. Such easements and rights-of-way
unreasonably
shall not,/interfere with Seller's canals, structures or equipment or Seller's operation
of said Lakes.
IV.
This agreement shall continue for a term of Sixty (00) years from the date
hereof; provided, however, that Company at its option, may, by written notice to
Seller one (1) year prior to expiration of the initial term hereof, extend its rights under
this contract for an additional term of Ten (10) years.
V.
This contract is binding on the Seller and also is binding on the Company,
its successors and assigns, and either party hereto may comuci specific performance
thereof. Company may assign its rights under this contract to others in whole or in
part, so that its assignees assume, pro rata, Company's obligations to Seller and
succeed to Company's rights under this contract, and, upon such assignment of its
rights, Company shall be relieved of further liability to make payments under this
contract to the extent that its assignee (s) fulfills its obligations under ibis contract.
VI.
trigCompanyaCompnshallhavetherighttoterminate,} o C C011ii'aCC upon written n e
at any time. If Company-Leruiinates this contract prior to Janu 1070, a cancel-
lation payment equal to SS00, 000 will be'paid4o the > rs. If Company terminates
this contract after January 1, 1070, C•", any shall gay--O1.1,lr; a cancellation payment
equal to the standby and%• minimum charges in Paragraph I1, Schedule . arid/or B. •
of this coil' 'a which would otherwise have become due and payable during the followl„,
enty-four (24) month period.
VI
Company shall have the right to terminate this con-
tract upon written notice at any time . If Company terminates
this contract by virtue of (a) the Co:• a.ny ' s inability to obtain ,
after reasonable efforts and diligence , all necessary govern-
7-
mental approval for the contemplated construction and opera-
tion of an electric generating power plant or (b) some other
condition or occurrence which makes such contemplated construc-
tion and/or operation in h.Le—o.r impossible , then the Company
shall pay Seller a cancellation payment of $300 , 000 in addition
to the remaining payments scheduled to become due during the
calendar year of termination. If the Company terminates this
contract for any other reason , the cancellation payment shall be
equal to the standby and/or minimum charges in Paragraph II ,
Schedule A. and/or B . of this contract which would otherwise have
become due and payable during the following twenty-four (24)
month period .
III.
If the ability of either party to this Agreement to perform any covenant,
agreement or requirement hereof shall be delayed, interrupted or prevented by any
act, order, regulation or decree, by or of any governmental entity (other than that
of the parties herein collectively referred to as Seller), act of God, strike or other
concerted act of workmen, fire, flood, ex-plosion, act of military, sabotage or war,
pipeline or equipment failure or other cause beyond the reasonable control of the party
concerned, then such delay, interruption or failure shall no: constitute default here-
under or give rise to any cause of action for damages resulting therefrom and both
parties will be excused from all contractual obligations hereunder for the duration of
such delay, interruption or failure. If either party alleges the occurrence of force
majeure to excuse non-performance hereunder, such party shall notify the other in
writing of the commencement and cessation thereof and shall exercise due diligence
to overcome same and resume performance.
8-
VIII
If Seller is unable to furnish all of the water needed
by Company (up to 20 , 000 acre-feet per year) during any annual
period, the Company shall pay the lesser of the following
amounts : (a) the Minimum Annual Charge or (b) the amount due
for the water actually consumed during such annual period plus
100 ,000 .
IX
1II:
In order to make this contract fully binding both Selicr and Company hereby
certify that each has enacted such resolutions as may be required by law authorizing
the execution of this contract by its officials heretofore stated.
WITNESS THE SIGNATURE of the City of Wichita Falls, Texas, a Municipal
Corporation, by its Mayor, hereunto duly authorized, and attested by its City Secretary;
Wichita County Water Improvement District Number Two, acting by and through the
President of its Board of Directors, and attested by the Secretary of its Board of Dir-
ectors, hereunto duly. authorized and West Texas Utilities Company, a Texas Corpor-
ation, acting by and through its corporate officers, hereunto duly authorized and under
its corporate seal, in duplicate originals, this the day of
19
THE CITY OF WICHITA FALLS, TEXAS
ATTEST:
BY
CITY CLERK MAYOR
CITY ATTORNEY
WICHITA COUNTY WA'T'ER IMPROVEMENT
DISTIIICT NUM HER TWO
9-
r' . -'
ATTEST:
13Y
SECRETARY OF THE PRIISMI:NT CjI: 'HIE
BOARD OF DIRECTORS 130ARD OF DIRECTORS
ATTORNEY
SELLER"
WEST TEXAS UTILITIES CO:\IPAN-Y
ATTEST:
13Y
SECRETARY
PRESIDENT
ATTORNEY
COI\IPANY"
10--
1