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SERVICE AGREEMENT/INTERLOCAL AGREEMENT GAS DISTRIBUTION .( ~- , a SERVICE AGREEMENT THIS SERVICE AGREEMENT, made and entered into this 20th day of April, 1993, by and between the Municipal Gas Authority of Florida, an entity existing by Interlocal Agreement, hereinafter referred to as "MGAF" or "Authori ty," and the Ci ty of Cl earwater, Florida whose address is 400 North Myrtle, Clearwater, Florida, 34615, hereinafter referred to as "Member." WITNESSETH: WHEREAS, Member is a municipal corporation authorized and existing under the laws of the State of Florida and, as such, comes wi thin the meaning of the words "Publ i c Agency" as def ined by Section 163.01(3)(b), Florida Statutes; and WHEREAS, MGAF is an entity formed by Interlocal between Publ ic Agencies authorized by and existing provisions of Chapter 163, Florida Statutes; and WHEREAS, Member has become a party to said Interlocal Agreement by adoption of Resolution number 92 - 72 on the 3rd day of December, 1992; and WHEREAS, Member owns or operates a local natural gas distribution system by which it delivers gas to the ultimate consumer, possesses or wi 11 possess an Allotment on Pipel ine Supplier and has assigned or hereby agrees to assign such Allotment to MGAF pursuant to paragraph 11 (a) of said Interlocal Agreement; and Agreement under the WHEREAS, MGAF, upon approval by FERC of the restructuring tariff of Pipeline Supplier resulting from FERC Docket No. RS92-16, (!t/~ I I will contract with Pipeline Supplier on behalf of its Members for transporta ti on servi ce under Pipe line Supp Ii er' s Rate Schedul e FTS-1 (and, at the appropriate time, Rate Schedule FTS-2) and Rate Schedule NNTS, and upon the effective date of those rate schedules and thereafter will perform services pertaining to the acquisition, aggregation, transport, nomination and scheduling, sale, and delivery of gas, on a full requirements basis, for the local distribution system owned or operated by Member and pertaining to the administration, including Relinquishment, of the assigned Allotment and related matters; NOW, THEREFORE, ln consideration of the mutual benefi ts, obligations, forbearances, and undertakings herein contained, the parties agree as follows: 1. DEFINITIONS. Except where otherwise defined herein or where the context of this Agreement requires otherwise, the definitions in the FERC Gas Tariff, Third Revised Volume, of Pipeline Supplier, as same may be amended from time to time, are incorporated herein by reference. As used herein, the let ters, words or phrases: (a) "Allotment" shall mean the right, the service agreements incorporating the right, and the service capacity thereby allotted to transmit gas on a firm basis on Pipeline Supplier for a definite term to delivery points located within or without the State of Florida, including all associated rights and entitlements, such as, for example, receipt point entitlements, -2- I I pool ing point enti t 1 ements, storage capaci ty, no-noti ce servi ce entitlement, et cetera; (b) "Authority Gas Supply" shall mean gas owned by MGAF or available to MGAF by contract between MGAF and a Third Party; (c) "Commodi ty Charge" shall mean a charge to be paid by Member associated with the actual volume of gas provided by MGAF; (d) "Customer" shall mean a legal entity other than a Member to which MGAF provides gas or gas services; (e) "Delivery Point" or "Point of Delivery" shall mean the place on Pipeline Supplier's pipeline where the Member or a Customer takes delivery and control of gas; (f) "Demand Charge" shall mean a charge to be paid by Member associated with MGAF's provision of Firm Gas up to Members' MDCQ; (g) "Existing Contract Gas Supply" shall mean a supply of gas which Member is contractually obligated to purchase at the time that MGAF becomes the full requirements supplier of Member; (h) "FERC" shall mean the Federal Energy Regulatory Commission or any successor agency or body, including the Congress, which has authority to regulate the rates and services of Pipeline Supplier; (i) "FERC Gas Tariff" shall mean the effective tariff of Pipeline Supplier on file at the FERC, as same may be changed from time to time; (j) "Firm Gas" shall mean gas or gas service which MGAF 1S contractually obligated to sell, deliver, or provide to Member; -3- I I (k) "Gas" sha 11 mean natura 1 gas, inc 1 uding gas produced from an oil well or gas well and the residue gas remaining after any processing or treating of such gas, of a quality which complies with the General Terms and Conditions of Pipeline Supplier's FERC Gas Tariff; (1) "Gas Day" shall mean a peri od of 24 consecutive hours beginning and ending at 4:00 P.M. Eastern Daylight Time and shall be referred to by the calendar day on which it begins; (m) "Gas Year" shall mean a period of twel ve months commenc~ng on the Gas Day of October 1 and ending at the conclusion of the Gas Day of the next succeeding September 30; (n) "Interlocal Agreement" shall mean the agreement dated October 1, 1992, and any amendments thereto, whereby MGAF was created; (0) "Interruptibl e Gas" shall mean gas or gas servi ce which MGAF has no contractual obligation to sell, deliver, or provide and which Member has no contractual obligation to accept or pay for, unless actually requested by Member and delivered by MGAF; (p) "Maximum Annual Contract Quantity" or "MACQ" shall mean the largest quantity of Firm Gas which MGAF may be contractually obligated to deliver to a Member during a Gas Year; (q) "Maximum Daily Contract Quantity" or "MDCQ" shall mean the largest quantity of Firm Gas which MGAF may be contractually obligated to deliver to a Member during a Gas Day; (r) "Member" and "Members" shall mean the signatory to -4- -' I I this Agreement or all or some of the Members of MGAF, as the context requires; (s) "MGAF Tariff" shall mean the duly adopted tariff of MGAF, as same may be changed from time to time, setting forth the rates and terms and conditions of service of MGAF, which shall be kept on file at MGAF's principal office and copies of which shall be made available to all Members; (t) "MMBTU" shall mean one million British Thermal Units; (u) "Month" or "Monthly" shall mean a period beginning on the first Gas Day and ending on the last Gas Day of the calendar month; (v) "Nominated Daily Quantity" or "NDQ" shall mean the quantity of gas which Member requests MGAF to deliver during any particular Gas Day up to Member's MDCQ; (w) "No-Notice Service" or "NNS" shall mean the maximum quantity of gas which Member may take over or under its NDQ, up to its MDCQ, without being subject to imbalance penalties; (x) "Pipeline Supplier" shall mean the Florida Gas Transmission Company pipeline system; (y) "Relinquishment" shall mean the release by a Member or Thi rd Party to the use of a Member or Thi rd Party, ei ther permanent I y or temporari I y, of fi rm transportation capaci ty on Pipeline Supplier; (z) "Third Party" shall mean any person or legal entity which is not a party to this Agreement; -5- I I (aa) "Weighted Average Cost of Gas" or "WACOG" shall mean the average cost of a unit of gas provided by MGAF, determined by dividing the total price paid for all quantities of gas by MGAF (plus any related costs incurred) during the period of calculation by the total number of such units provided by MGAF during the same period. 2. ALLOTMENT. Member has assigned, or hereby agrees to assign, to MGAF its Allotment, present and future. Subject only to the limitations imposed by the Interlocal Agreement or by this Service Agreement, MGAF will own and manage such Allotment consistent with its obligations hereunder and with the terms and conditions of the FERC Gas Tariff of Pipeline Supplier. If, in the judgment of MGAF, it is required by the FERC Gas Tariff of Pipeline Supplier, Member shall provide to MGAF for forwarding to Pipeline Supplier the necessary financial data (as specified in Section 16.A of the General Terms and Condi tions of the FERC Gas Tari ff of Pipeline Supplier). In addition, Member shall guarantee the obligations of MGAF to the extent of Member's share of the total Allotment, which share will be calculated by dividing Member's MDCQ (shown on Schedule A hereto) by the sum of the MDCQs of all Members (shown on the respective Schedule As appended to their Service Agreements with MGAF). MGAF shall maintain an Allotment account for each Member, which shall ref I ect Member's Allotment and any increases and/or decreases in the Member's Allotment. The balance of the Allotment account shall be reassigned to the Member upon -6- I I termination of membership in the manner provided herein or 1n the Interlocal Agreement. 3. SOURCES OF GAS SUPPLY. The gas to be provided to Members shall be supplied from either Existing Contract Gas Supply or Authority Gas Supply, or both, as those phrases are defined herein. In supplying gas to a Member which has Existing Contract Gas Supply contract(s) in force, the first quantities supplied shall, to the extent such quanti ties are avai I abl e under the then existing contract(s), be deemed to be Existing Contract Gas Supply until the requirement to take and purchase gas under such existing contract(s) has been satisfied. All quantities of gas in excess of Existing Contract Gas Supply shall be deemed to be Authority Gas Supply. Anything herein to the contrary notwithstanding, in all transactions involving Existing Contract Gas Supply, the relationship between Member and MGAF shall be that of principal and agent. MGAF shall administer the Existing Contract Gas Supply contract(s) according to its terms as an agent for the Member and shall charge the Member with all costs incurred in performance of the contract(s) plus a surcharge designed to recover administrative costs which shall be established by the MGAF Tariff. The Existing Contract Gas Supply shall be deemed to be a transitional source of supply and shall be replaced by Authority Gas Supply as such existing contracts terminate. Existing Contract Gas Supply which exceeds the supply requirements of the Member may be charged to the Member or used for Authority Gas Supply at the discretion of MGAF -7- I I or, with the concurrence of Member, sold, transferred, or relinquished to other parties. 4. PURCHASE AND SALE OF GAS. Subject to the other provisions of the Interlocal Agreement and this Agreement, MGAF agrees to sell and have del i vered to Member and Member agrees to purchase and receive from MGAF its entire supply of gas up to, but not in excess of, the MDCQ herein stated upon the terms and for the rates from time to time established by the MGAF Tariff. The MGAF Tariff shall adhere to and incorporate the following principles, to which Member hereby agrees, to-wit: (a) Transportation Reservation Charqes. Member shall pay, in its Demand Charge, its proporti ona te share of the total reservation (and reI ated) charges incurred by MGAF under its transporta tion contract (s) wi th Pipe line Supp Ii er and/ or wi th Thi rd Parties, incl uding, but not I imi ted to, TCR Fixed Charges, GRI Surcharges, ACA Surcharges, non-assignable filing fees, fixed storage charges, and the like, which share shall be calculated as follows: (1) The reservation charges incurred for No-Notice Service shall be charged to Member in the same proportion that the No-Notice Service credited to Member's Allotment account (plus or minus any No Notice Service acquired from or transferred to any Member and/or Third Party) bears to the total amount of No-Notice Service credited to all Members' Allotment accounts (plus or minus any No Notice Service acquired from or transferred to any Member and/or Third Party); and -8- I I (2) All other transportation-related fixed charges (exclusive of those related to Rate Schedule FTS-2) relating to the Member's MDCQ as set forth on Schedule A hereto shall be charged to Member in the same proportion that Member's MDCQ (exclusive of any MDCQ attributable to Rate Schedule FTS-2) bears to the total MDCQs of all Members (exclusive of any MDCQ attributable to Rate Schedule FTS-2), with the costs and/or benefits associated with participation in the temporary ReI inquishment and/ or Al ternate Delivery Point programs to be assigned in the manner provided in paragraphs 8 and 10, respectively, below. (3) All transportation-related fixed charges related to the provision of service under the FTS-2 Rate Schedule wi 11 be paid for onl y by those Members whi ch are phase I I I participants and shall be charged to such Members in the same proportion that each such Member's MDCQ attributable to Rate Schedule FTS-2 bears to the total MDCQs attributable to Rate Schedule FTS-2 of all such Members. (4) If, by reason of additional expansion or otherwise, Pipeline Supplier offers firm transportation service(s) at a reservation charge different from that now offered or that proposed in Pipel ine Suppl ier' s Phase I I I expansion proceeding under Rate Schedule FTS-2 and if some Member(s) contracts for such capaci ty, which is assigned to MGAF, all reservation charges related to the provision of such service(s) will be paid for only by those Member(s) which contract for same and shall be charged to a participating Member in the same proportion that such Member's -9- I I MDCQ attributable to such new service(s) bears to the total MDCQ attributable to such service(s) of all such participating Members. (b) Other Transportation Charges. Additional transportation charges incurred to transport gas to Member, including in-kind fuel charges, shall be charged to Member on the same basis as incurred by MGAF. (c) Commodity Charges. Member shall take and pay for, or if not taken, pay for in its Commodity Charge a supply of gas equal to its NDQ and for any additional gas actually taken. Member shall be charged MGAF's Weighted Average Cost of Gas multiplied by its NDQ or the amount actually taken, whichever is greater, except: (1) Gas obtained or obtainable from Member's Existing Contract Gas Supply shall be deducted and charged as provided ~n paragraph 3 above; (2) Member shall not be charged for gas not taken as a result of MGAF's failure to tender delivery; (3) Member shall not be charged for failure to take its NDQ to the extent MGAF does, in fact, utilize the gas elsewhere within or without its membership or avoids taking and paying for the gas which Member failed to take so that Member's failure to take its NDQ does not increase MGAF's WACOG; and (4) Gas taken by Member in quantities less than or in excess of its NDQ may be subject to penalties which shall be charged as provided in subparagraph (e), below. (d) Gas Reservation and Variable Charges. Costs / if any, incurred by MGAF to assure availability of a quantity of gas -10- I I sufficient to supply the Members' aggregate MDCQ shall be recovered as an element in the WACOG. In addition, all variable costs, incl uding variabl e storage costs, incurred by MGAF to secure Authority Gas Supply shall be recovered as an element in the WACOG. (e) Penalties. MGAF shall use its best efforts to minimize penal ties by bal ancing receipts and del i veries of gas among its Members and Customers. However, Member shall be charged wi th penal ties incurred as a resul t of imbal ances between the quanti ty of gas nominated, pl us or minus its No-Notice Service Allotment, and the quantities of gas actually taken by Member to the extent MGAF or Member fails to offset, balance, or otherwise avoid them. Penalties incurred by MGAF which are not attributable to the action or inaction of a particular Member shall be recovered as an element in the WACOG. (f) Taxes. Member shall be charged with any Federal, state, or local sales, use, consumption, or similar tax, charge, or franchise fee which may be levied on any sale, exchange, or transfer of gas to which Member is a direct party. All such taxes or charges levied on transactions which occur prior to delivery of gas to Members shall be recovered as an element in the WACOG. (g) Interruptible Gas. If requested by Member, MGAF shall make its best ef fort to suppl y Interruptibl e Gas, to the extent capacity is available on Pipeline Supplier, on a first requested-first served basis. (h) No-Notice Service. Member's No-Notice Service Allotment shall be handled between MGAF and Member in the same -11- I I manner it is handled between MGAF and Pipeline Supplier under the latter's FERC Gas tariff. (i) Projects. In the event MGAF undertakes pro jects invol ving capi tal outl ay in which some, but not all, Members participate, the MGAF Tariff shall be designed so that the burdens and benefits of the project are restricted to the Members which participate in it. (j) Rate Stabilization Reserves. MGAF may create and fund from MGAF Tariff rates reserves for the purpose of stabilizing rates. (k) Other Reserves. MGAF may create and fund with MGAF Tariff rates other reserves which are consistent with sound business practice. (1) Capital Expenditures. MGAF may raise funds through MGAF Tariff rates for acquisition of capital items necessary and useful for its normal function of buying, selling, brokering, and transporting gas such as, for example, office facilities, office equipment, and vehicles, the aggregate cost of which does not exceed five percent (5%) of the budget in any fiscal year. Major pro jects invol ving capi tal expendi ture, such as, for exampl e, acquisition of gas supply reserves, storage facilities, peak shaving plants, or pipeline facilities, shall require authorization through supplemental agreement among the participating Members. (m) Administrative Charqes. In addition to the foregoing charges which MGAF may from time to time implement, Member shall pay in its Commodity Charge a fee to recover MGAF's -12- I I operating and administrative costs, including, but not limited to, salaries and other employee benefits, legal, accounting, and other prof essi ona 1 services, supp lies, minor capi tal expendi t ures as defined above, insurance and indemnity costs, and reserves; provided, however, that to the extent that administrative or like charges are incurred on behalf of an identifiable Member, such as, for example, the posting fee for Relinquishment, such Member shall reimburse MGAF directly for such charges. (n) Not-For-Profi t Status. The foregoing rates and charges shall be established with the objective of MGAF operating on a not-for-profit basis and shall be adjusted, if necessary, at reasonable intervals no less frequently than three years to produce that result. S. MAXIMUM DAILY CONTRACT QUANTITIES. The MDCQ shown on Schedule A hereto equates to the firm transportation entitlement of Member on Pipeline Supplier prior to the assignment of same to MGAF. Subject to paragraph 6 below, Member may for any given Gas Day nominate, at its primary Delivery Point(s), up to its MDCQ for that Gas Day, plus or minus any temporary Relinquishments effective for that Gas Day, and shall be entitled to receive Firm Gas in the amount nominated at such Delivery Point(s). In the event that through permanent Relinquishment or otherwise, MGAF's firm transportation entitlement on Pipeline Supplier attributable to Member increases or decreases, the MDCQ shown on Schedule A hereto will be revised accordingly. At Member's request, MGAF will assist -13- I , Member in attempting to secure a changed transportation entitlement on Pipeline Supplier. 6. NOMINATED QUANTITIES. Member shall, wi thin the time periods set forth in the MGAF Tariff, provide MGAF with a written nomination prior to each month specifying, by Delivery Point(s), the daily quantities, in MMBTU, of Firm Gas for each Gas Day during the ensuing month, which will constitute Member's NDQ. Such nomination may not exceed Member's MDCQ for that Gas Day, plus or minus any temporary Relinquishments effective for that Gas Day. Member's NDQ may be revised in the manner and upon the notice specified in the MGAF tariff. For informational purposes, Member will also provide to MGAF, ninety (90) days prior to each October 1, its best estimate of the Member's daily requirements for the ensuing twelve (12) months, which estimate shall be updated by Member no less frequently than quarterly thereafter. 7. NO-NOTICE SERVICE. The NNS quantity, which is shown on Schedule A hereto (as such may be revised from time to time to reflect changes in the NNS in accordance with Section 3 (or any successor) of Rate Schedule NNTS in the FERC Gas Tariff of Pipeline Supplier) equates to the No Notice Transportation Service entitlement of Member on Pipeline Supplier prior to the assignment of same hereunder to MGAF. The NNS quantity represents the amount by which Member's actual receipts may deviate from its NDQ; provided, however, that Member's actual receipts may not exceed its MDCQ. MGAF will assist Member in its efforts to change its NNS entitlement. -14- I , 8. TEMPORARY RELINQUISHMENT OF CAPACITY. MGAF may, wi th the consent of the Member, participate in the temporary Relinquishment program described in Section 18 (or any successor) of the General Terms and Conditions of the FERC Gas Tariff of Pipeline Supplier. The costs or benefits, as the case may be, from participating in such program, except in the case of Temporary Repackaged Relinquishments (as described in Section 18.F (or any successor) of the FERC Gas Tariff of Pipeline Supplier), will be assigned directly to the participating Member(s); provided, however, in the event that it is not possibl e to identi fy wi th accuracy the capaci ty reI inquished wi th the costs or benefits at tributabl e thereto, then MGAF will allocate the costs or benefits in a fair and equitable manner between and among the participating Members. In the case of Temporary Repackaged Relinquishments, the benefits from participating in such program will be allocated to the participating Member(s) on the basis of a ratio, the numerator of which will be the quantity of Repackaged capacity of each participating Member and the denominator of which will be the aggregate quanti ty of Repackaged capaci ty of all participating Members. MGAF shall use its best efforts to relinquish capacity made available for Relinquishment, but its failure to do so, for whatever reason, shall not affect Member's obligation to pay demand charges. 9. PERMANENT RELINQUISHMENT OF CAPACITY. There shall be no increase or decrease in a Member's Allotment as the resul t of participation in the permanent Relinquishment program of Pipeline -15- I r , Suppl ier wi thout pn.or wri t ten consent from the participating Member. The effect of a permanent Relinquishment will be to change the participating Member's MDCQ by a like amount. 10. ALTERNATE DELIVERY POINT(S). MGAF may, with the consent of the affected Member(s), nominate gas for delivery at Alternate Del i very Point (s), consistent wi th the terms and condi tions of Section 9.B (or any successor) of Rate Schedule FTS-l of the FERC Gas Tariff of Pipeline Supplier. The costs and benefits of such nominations will be assigned directly to the Member whose capacity is moved to or from an Alternate Delivery Point; provided, however, in the event that it is not possible to identify with accuracy the capacity moved with the costs and/or benefits attributable thereto, then MGAF will allocate the costs and/or benefits in a fair and equitable manner between and among the Members with such capacity. 11. CURTAILMENT OF SUPPLY. In the event Pipeline Supplier issues an order curtailing transportation capacity which affects an area in which a Member or Customer of MGAF ~s located, MGAF shall implement the order in a manner consistent with Pipeline Supplier's tariff requirements and, to the extent possible, as though the Member or Customer were a direct customer of Pipeline Supplier. Any penalties incurred by MGAF as a result of the violation by a Member or Customer of a curtai lment order issued by Pipel ine Supplier shall be charged to the Member or Customer violating the order. MGAF may adopt its own procedure and condi tions for curtailment of gas supply supplemental to and not inconsistent with -16- I 1 the FERC penalties orders. 12. FORCE MAJEURE. In the event that either party is rendered unable, wholly or in part, by force majeure to carry out its obligations under this Agreement, other than to make payments due hereunder, subject to such party giving notice and full parti cuI ars of the force ma jeure in wri ting or by el ect rani c transmission to the other party as soon as possibl e after the occurrence of the cause relied upon, the obligations of the party giving such notice, to the extent affected by such force majeure, shall be suspended during the continuance of any inabi I i ty so caused, but for no I anger period. The force majeure condi tion causing the inability shall be remedied as far as possible with all reasonable dispatch, except that settlement of strikes or lockouts shall be entirely within the discretion of the party having the di f f i cuI ty. The words "force ma jeure" as used herein shall mean an Gas Tariff of Pipeline in the MGAF Tariff for Supplier and may establish viol ation of its curtai lment occurrence not wi thin the control of the party and which by exercise of due di I igence, such party is unabl e to prevent or overcome including, but not limited to: acts of God; strikes, lockouts, and other industrial disturbances; acts of the public enemy; wars; blockades; the necessity for making repairs or alterations to plants, facilities, machinery, or lines of pipe; pI anned or unpl anned outages of Pipel ine Suppl ier or any other transporter's pipeline system or the physical inability of Pipeline Supplier or any other transporter's pipeline system to receive or -17- I I deliver gas; required maintenance and regulatory compliance as required by the Department of Transportation or any other governmental agency; insurrections; riots; epidemics; landslides; lightning; earthquakes; fires; storms; hurricanes; floods; washouts; arrests and restraints of governments and people; present and future valid orders, decisions, or rulings of any governmental authority having jurisdiction; civil disturbances; explosions, breakage, or accident to machinery or lines of pipe; line freezes; inabi 1 i ty of a party to acqui re, or de 1 ays in acqui ring, at reasonable cost and after the exercise of reasonable diligence, where necessary, servitudes, rights of way grants, permits, licenses, permission, or materials; and any other cause or causes which, by the exercise of due diligence, such party is unable to prevent or overcome. Notwithstanding any other provision herein to the contrary, an interruption of del i veries of an interruptibl e transportation service relied upon by MGAF to effectuate deliveries to Member shall not constitute a force majeure event unless the interruption is caused by an event of force majeure as defined above. 13. BILLING. MGAF shall foll ow the following procedures wi th respect to invoices and bills to Members: (a) Invoices. MGAF shall render an invoice in writing with supporting data to Member in accordance with the MGAF Tariff for all charges for gas and services furnished or rendered during the preceding month, including any penalties incurred and credits earned, interest, and adjustments or corrections of prior invoices. -18- I , When information necessary for invoicing purposes is in the control of Member, Member shall furnish such information to MGAF on or before the third working day of each month. (b) Estimated Data. In the event that supporting data 1S not available to MGAF 1n a sufficiently timely manner to render an invoice by the day of each month designated in the MGAF Tariff, MGAF may bill Member based on nominated volumes and estimated data, subject to later correction based on actual supporting data, which correction will be made as soon as possible in the ensuing months' invoices. (c) Avai I abi I i ty of Records. Both MGAF and Member shall have the right to examine all books, records, and charts of the other at reasonable times to the extent necessary to verify the accuracy of any invoice, charge, or computation made pursuant to this Agreement. (d) Ad iustment of Error. In the event error is discovered by ei ther party in any invoi ce wi thin twenty-three months after it has been rendered by MGAF, such error shall be adjusted, with interest from date of payment, within thirty days. If no claim of error has been made by either party with respect to any invoice within twenty-three months from the date rendered, the invoice shall be deemed conclusively to be correct. (e) Computations. All computations wi th respect to pricing cal cuI ations and reimbursements shall be made to the nearest one-hundredth of one cent, with the invoice being rounded to the nearest one cent. -19- I , 14. PAYMENT. Unless otherwise agreed, Member shall pay MGAF by wire transfer of federal funds on or before the fifth working day after receipt of a wri t ten invoice by mai I, courier, or facsimile electronic transmission. An account not paid when due with funds immediately available to MGAF shall accrue interest from the due date. A disputed account shall be paid when due despite the dispute. If, upon resolution of the dispute, it is determined that Member overpaid, MGAF shall reimburse the overpayment with interest within thirty days. 15. INTEREST. The rate of interest appl icabl e to transactions which by this Agreement bear interest shall be established from time to time in the MGAF Tariff at a non-usurious, commercially feasible rate. 16. RATE COVENANT. Member shall establ ish, maintain, and collect rates and charges for gas service on its gas system so as to provide sufficient revenues, together with available gas system reserves, to enable Member to pay all accounts payable to MGAF by Member under this Agreement and all other lawful charges against or liens on the revenues of Member's gas system. 17. DEFAULT IN PAYMENT. The failure of Member to make any of the payments to MGAF for which provision 1S made in this Agreement shall constitute a default on the part of Member. Upon any such default, MGAF may, immediately and without notice, bring any suit, action or proceeding in law or in equity against Member, including mandamus and action for specific performance, as may be necessary or appropriate to enforce any covenant, agreement, or obligation to -20- I I make any payment for which provision is made in this Agreement and, after forty-five (45) days written notice to Member, may discontinue providing all or any portion of Member's gas supply. If non-payment continues for a period of more than sixty (60) days, membership in MGAF may be terminated in accordance with paragraph 13 of the Interlocal Agreement. 18. OTHER DEFAULT BY MEMBER. In the event of a failure of Member to establish, maintain, or collect rates or charges adequate to provide sufficient revenue to enable Member to pay all amounts due to MGAF under this Agreement, or a failure of Member to take its gas supplies from MGAF in accordance with the provisions of this Agreement, or a default by Member under any other covenant, agreement, or obligation of this Agreement, MGAF may, immediately and without notice, bring any suit, action, or proceeding in law or in equi ty against Member, incl uding mandamus, injunction, and action for specific performance, as may be necessary or appropriate to enforce any covenant, agreement, or obligation of this Agreement. If Member continues in any such default for a period of more than ninety (90) days after written notice to correct the same has been del i vered to Member, its membership in MGAF may be terminated 1n accordance wi th paragraph 13 of the Interlocal Agreement. 19. DEFAULT BY MGAF. In the event of a default by MGAF under any covenant, agreement, or obligation of this Agreement, Member may bring any sui t, action, or proceeding in I aw or in equi ty, against MGAF, immediately and without notice, including mandamus, -21- I I injunction, and action for specific performance, as may be necessary or appropriate to enforce any covenant, agreement, or obligation of this Agreement. 20. WAIVER, ELECTION, AND ABANDONMENT OF REMEDY. Failure of either party to take action in the event of a default shall not be deemed a waiver of any succeeding or future default whether of like kind or different. Use of one remedy available to a party in the event of a default by the other shall not preclude concurrent or subsequent use of another remedy available to the party. If any proceeding taken on account of a default is discontinued or abandoned, the parties shall be restored to their former positions and rights under this Agreement. 21. TITLE AND POSSESSION. Title to and possession of gas delivered to Member from Existing Contract Gas Supply shall be, at all times, in either Member or the gas supplier under the contract as determined by the contract and shall not be deemed to be in MGAF at any time. Title to and possession of gas delivered to Member from Authority Gas Supply shall pass from MGAF to Member at the outlet valve of the meter at the Delivery Point(s) specified in Schedule A. Until such delivery, MGAF shall be deemed to be in control of, to have title and possession of, and to be responsible for Authority Supply Gas. 22. WARRANTY AND INDEMNITY OF TITLE. MGAF hereby warrants that it has, or will have, title to all Authority Supply Gas delivered to Member free and clear of all claims and encumbrances at the time of delivery. MGAF will, and hereby does, indemnify -22- I I Member and save it harmless from all suits, actions, debts, accounts, damages, costs, losses, and expenses (incl uding reasonable attorney fees) arising from or out of adverse claims of any or all persons to the gas or to royalties, taxes, license fees, or charges thereon, which are applicable prior to the title to the gas passing to Member. Member shall, and hereby does, indemnify MGAF and save it harmless from any and all taxes, license fees, or charges upon, or relating to, the gas from and after the time title to the gas passes to Member. 23. GOVERNMENTAL REGULATIONS. This Agreement shall be subject to all valid, applicable, and effective laws, orders, rules, regulations, and directives of all duly constituted Federal, State, and local governmental authorities having jurisdiction. 24. BUDGET. MGAF shall adopt and furnish to Member at least sixty (60) days prior to the commencement of a Gas Year an operating budget for such Gas Year, which budget shall include projected costs of gas to Members. Neither the estimated cost of gas nor the budget generally shall have any binding effect upon MGAF insofar as a Member is concerned, but all Members shall be informed promptly whenever it is apparent that the overall operating expense will exceed the overall budget projection by more than fifteen percent (15%). The budget shall be in a form which complies with all budgeting and accounting standards prescribed for fiscal management of municipal or special district proprietary activities by the Auditor General of the State of Florida and all -23- I I other governmental agencies having jurisdiction over a Member of MGAF. 25. PROJECTS. If the Board of Directors of MGAF resolves to undertake a project involving investment of capital, other than the minor capital expenditures authorized in paragraph 4(1) and establishment of reserves authorized in paragraphs 4(j) and (k), it shall establish a separate budget or budgets, subsidiary to the budget provided for in paragraph 24 above, for the cost of developing the project, including planning costs, and shall provide funding through separate supplemental contracts between MGAF and those Members (and other parties) interested in pursuing the project. Except as herein provided, no Member shall be required to pay an expense, incur a financial burden, or otherwise participate, directly or indirectly, with respect to such a project unless the Member has first become a party to such a supplemental contract. All Members shall be afforded an opportunity to participate on an equitable basis in any project. One of the purposes for which such a project may be utilized is to provide Authority Supply Gas. Such projects may be financed with indebtedness for payment of which revenues or products of the project or participating Member's credi t or both may be pI edged and to which the rate covenant contained in paragraph 16, above, may be subordinated. When a project is operational, if less than all Members are participants, MGAF shall maintain a separate, subsidiary operating budget on each such project which will demonstrate the financial relationship between the project and MGAF's general operating budget. -24- I I 26. TERM. This Agreement shall constitute a binding obligation between the parties from and after its execution by the last party to execute it for a term of twenty-five (25) years thereafter; provided, however, that Member may elect to terminate this Agreement and its membership in MGAF at the end of the initial three (3) years and on each successive three-year anniversary thereafter, by delivering a written notice of such election to MGAF no later than twelve (12) months prior to the proposed termination date. Upon expiration of this Service Agreement by whatever means, the parties' obligations under this Agreement and any supplemental agreements, their respective accounts, and all other matters between them shall be wound up in accordance with paragraph 12 of the Interlocal Agreement, and Member's membership in MGAF shall cease. 27. NOTICES. Except as herein otherwise specifically provided, any notice, request, demand, statement, or invoice provided for in this Agreement, or any notice which a party may desire to give the other, shall be in wri ting and shall be considered to be delivered as of the day transmitted if telecopied and as of the third day following the day of transmittal if mailed by Uni ted States mai 1, wi red, or couri er expressed to the other party at the following addresses, or such other addresses as a party may hereafter furnish the other party in writing, to-wit: (a) Notices to MGAF - Addressee: Municipal Gas Authority of Florida Address: 1500 E. Highway 50, P.O.Box 771275 -25- .. I Winter Garden, Florida, 34777 - 1275 Attention: Larry E. Asmus Telecopy No: (407) 877 - 3893 Telephone No (407) 656 - 2834 (b) Notices to Member - Addressee: Clearwater Gas System City of Clearwater, Florida Address: 400 North Myrtle Avenue Clearwater, Florida, 34615 Attention: Charles S. Warrington, Jr. Tel ecopy No: (813) 462 - 6636 Telephone No: (813) 462 - 6630 When a signature is necessary to the effectiveness of a document or notice which has been delivered by wire or telecopy, the original with signature shall be transmitted by United States mail or courier delivery within twenty-four (24) hours thereafter. 28. DAILY OPERATIONAL COMMUNICATIONS. Each party shall appoint from time to time, and furnish to the other party written notice of the name, mailing address, telephone number, and telecopy transmission number of, an employee or agent with authority to give and receive notices and directives regarding daily operational decisions which shall be contractually binding upon the parties. Notices and directions between such employees or agents may be transmitted orally when the exigencies require, provided they are promptly confirmed by a written communication. -26- j I 29. ADDITIONAL MEMBERS. It ~s understood that other Public Agencies which meet the criteria for membership set forth in the Interlocal Agreement may become additional Members of MGAF from time to time. Such additional Members shall be offered a service agreement substantially the same as this Agreement and any amendments thereto. Equalization of Members' capital investment, including working capital, on an equitable basis whenever practicable and appropriate, may be required by MGAF. The Board of Directors of MGAF shall have full discretion to determine to what extent, under what conditions, and on what terms an additional Member may be required to pay an entry charge designed to protect the economic interests of existing Members. 30. RULES AND REGULATIONS. Service hereunder shall be in accordance with such other service rules and regulations from time to time promulgated by MGAF which are not inconsistent with this Agreement. 31. AMENDMENTS. This instrument in conjunction with the Interlocal Agreement expresses the entire agreement between the parties and shall not be amended or modi fied except by wri t ten agreement executed by both parties. 32. ASSIGNMENT. This Agreement is personal to the parties and may not be assigned in whol e or in part wi thout the prior written consent of the other party. 33. APPLICABLE LAW. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Florida. -27- .\ I .1 34. DEFINED WORDS. Use of capitalization of words in addition to that required by normal rules of punctuation ~s intended to indicate a specifically defined word, and it ~s intended that the defined word have the meaning accorded to it ~n paragraph 1 above. 35. TITLES AND SUBTITLES. Ti t 1 es of the paragraphs and subparagraphs are placed herein for convenient reference only and shall not to any extent have the effect of modifying, amending, or changing the express terms and provisions of this Agreement. 36. SEVERABILITY. If any provision or portion of this Agreement is held to be void, invalid, or illegal for any reason, it is the intent of the parties that the remaining provisions of this Agreement shall nevertheless be binding and effective. 37. PROVISION OF SERVICES. MGAF has undertaken to provide Members with various services, as specified in this Agreement. In order to render these services, MGAF will either retain the necessary employees and/or contract with a non-affiliated entity for that purpose. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in their respective names on the signatory page by their duly authorized officers on the day and year written immediately below the signatures. -28- 1 Signatory Page Service Agreement Dated April 20, 1993 Between Municipal Gas Authority of Florida and City of Clearwater, Florida City of Clearwater, Florida Title: Wright By: By: Name: Office: Chairman Date: Date: April 20, 1993 :::~e~ Rita Garvey~ Title:MaYOr-COmmiSSion~ Attested: By: ~~d.d. (l1&~ rY h 'a E. Goudeau - f' Title: City Clerk Approved as to BY:~ orrectness: Title:City Attorney -29- I I SCHEDULE A Page 1 of 2 Pages To: Service Agreement Dated April 20,1993, Between Municipal Gas Authorityof Florida and City of Clearwater, Florida. MONTH PO 1# 16204 ,16205,16206 FTS-1 MMBTU NNTS MMBTU TOT AL MDCQ MMBTU October 6996 500 7496 November 9219 1000 10219 December 9219 1000 10219 January 8719 1500 10219 February 8719 1500 10219 March 9219 1000 10219 April 9219 1000 10219 May 4152 500 4652 June 4152 500 4652 July 4152 500 4652 August 4152 500 4652 September 4152 500 4652 ;. I I SCHEDULE A Page 2 of 2 Pages To: Service Agreement Dated April 20, 1993, Between Municipal Gas Authorityof Florida and City of Clearwater, Florida. RECEIPT POINT NOMINATIONS MMBTU - WITH 3% FUEL POI ZONE OCT NOV-MAR APRIL MAY-SEPT 611 1 2778 3790 3790 1726 23062 2 3320 4526 4526 2060 10258 3 1622 2210 2210 1006 M:\06130\0216FMG.DF8