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RES 20-21-LCU010 ALL SIGNED LAS CRUCES UTILITIES BOARD RESOLUTION NO. 20-21-LCUOIO A RESOLUTION APPROVING THE NATURAL GAS SUPPLY AND SERVICE AGREEMENT BETWEEN THE BOARD OF COMMISSIONERS FOR THE CITY OF LAS CRUCES UTILITIES, ON BEHALF OF THE CITY OF LAS CRUCES AND NEW MEXICO STATE UNIVERSITY. The Board of Commissioners for the City of Las Cruces Utilities, on behalf of the City of Las Cruces, is informed that: WHEREAS, for more than 50 years, the City of Las Cruces ("City") has provided natural gas service to New Mexico State University ("NMSU"); and WHEREAS, the entities have maintained a good working relationship benefiting both entities and the community; and WHEREAS, the primary term of the 2018 Agreement dated November 18, 2018, ends on September 1, 2020, but will continue in effect on a month-to-month basis thereafter until one party notifies the other of its intent not to renew or renegotiate, or until a successor agreement becomes effective; and WHEREAS, Utilities staff, the City's external energy Legal Counsel, and the City Attorney's Office have worked with NMSU on a new Natural Gas Supply and Service Agreement ("Agreement"), Exhibit "A", which is attached and made a part of this Resolution; and WHEREAS, Utilities staff recommends approval of the Agreement, which will be effective beginning on September 1, 2020, through August 31, 2023. NOW, THEREFORE, Be it Resolved by the Board of Commissioners for the City of Las Cruces Utilities, on behalf of the City of Las Cruces: M THAT the Agreement, attached hereto as Exhibit "A" and made part of this Resolution, between the LCU Board and NMSU is approved. LCU FY20 06/20 Rev. 4 LCU Board Resolution No. 20-21-LCU010 Page 2 of 2 (II) THAT City staff is hereby authorized to do all deeds necessary in the accomplishment of the herein above. DONE AND APPROVED this 131h day of August 2020. APPROVED: By Board Chair ATTEST: Secretary VOTE: Chair Little: Moved by Vice-Chair Archuleta: Commissioner Bencomo: Seconded by Commissioner Carmichael: Commissioner Hardee: Commissioner Johnson: Commissioner Sorg: APPROVED AS TO FORM: Sr. Assistant City Attorney LCU FY20 06/20 Rev. 4 EXHIBIT "A" NATURAL GAS SUPPLY AND SERVICE AGREEMENT This Agreement is entered into on this_ day of August, 2020 and is effective as of September 1, 2020 between the Board of Commissioners for the City of Las Cruces Utilities on behalf of the City of Las Cruces ("Seller") and the Board of Regents of New Mexico State University ("Buyer"). WHEREAS, Seller owns and operates a natural gas distribution system in and around the City of Las Cruces, New Mexico; and WHEREAS, Buyer provides natural gas utility service to its university buildings and facilities, including a gas-fired co-generation facility; and WHEREAS, Seller and Buyer wish to enter into a Natural Gas Supply and Service Agreement that will replace the 2018 Natural Gas Supply and Service Agreement between the parties, the primary term of the 2018 Agreement expires on September 1, 2020. NOW, THEREFORE, for valuable consideration, the parties agree as follows: SECTION 1. DEFINITIONS Unless another definition is expressly stated, the following terms and abbreviations, when used in the Agreement and in all exhibits related to this Agreement, are intended to and will mean as follows: 1.1. "British Thermal Unit" ("Btu") One (1) Btu shall mean one British thermal unit and is defined as the amount of heat required to raise the temperature of one (1) pound of water from fifty-nine degrees Fahrenheit(59°F)to sixty degrees Fahrenheit(60°F)at a constant pressure of fourteen and seventy- three hundredths pounds per square inch absolute (14.73 psia). 1.2. "Cubic foot of gas" shall mean the amount of gas required to fill a cubic foot of space when the gas is at an absolute pressure of 14.73 pounds per square inch absolute and at sixty degrees Fahrenheit (600F). 1.3. "Day" shall mean a period of 24 consecutive hours commencing and ending at 8:00 a.m., MCT, adjusted for Daylight Savings Time when appropriate. 1.4. "Dth" (Dekatherm) shall mean a quantity of gas containing one million (1,000,000) BTU. 1.5. "Distribution Gas" shall mean the natural gas delivered to Buyer via the low pressure system for consumption at Buyer's facilities other than the Central Plant. 1.6. "Gas Price Premium"means$0.025 per Dth through August 31, 2023, and thereafter the premium above index that Seller incurs. 1 of 9 2020 NMSU K May 6 2020 Revised 7-23-2020 M) 1 33167395v.1 1.7. "Hedge" shall mean products or pricing options made available by Seller's Supplier for the purpose of protecting against price fluctuation within the normal business activities of buying or selling natural gas. 1.8. "Index" means the price for the applicable Month published under the heading "Monthly Bidweek Spot Gas Prices ($/MMBtu) in Inside FERC's Gas Market Report, a publication of S&P Global Platts, a division of S&P Global, for the applicable Month under the column "Index" for "El Paso, "San Juan". In the event such publication no longer publishes, the parties shall mutually agree on a substitute publication or pricing mechanism. 1.9. "Mcf"shall mean one thousand (1,000) cubic feet. 1.10. "Month" shall mean a period commencing on the first Day of the corresponding calendar month and ending on the first Day of the next following calendar month. 1.11. "Plant Gas" shall mean the natural gas delivered to Buyer's Central Plant on Sweet Street which currently includes the gas turbine and boiler facilities. 1.12. "Supplier" shall mean those entities with which Seller has natural gas supply contracts. 1.13. "Transporter" shall mean El Paso Natural Gas Company, L.L.C. Seller's only interstate natural gas pipeline. 1.14. "Year" shall mean a period of twelve (12) consecutive Months beginning at 8:00 a.m. on the first day of the first Month. SECTION 2. QUANTITIES 2.1. Seller hereby agrees to sell and to deliver and Buyer hereby agrees to purchase and to receive Buyer's total natural gas requirements for use by Buyer on its main campus. 2.2. Buyer's Maximum Daily Quantity ("MDQ") for Plant Gas and Distribution Gas, together, is the maximum quantity of gas that Seller is obligated to deliver to Buyer on any Day and shall vary by Month as specified on Exhibit "A". Buyer may exceed its MDQ by 10% without notifying Seller. Buyer must request permission to exceed 110% of MDQ on a given day by notifying Seller. If Buyer's monthly usage exceeds 110% of the MDQ multiplied by the days of the Month, such excess quantities shall be termed Overrun Quantities. Buyer shall pay the applicable overrun rate for such quantities as specified herein. Exhibit "A" may be updated by mutual agreement of both Buyer and Seller. 2.3. On any Day, Buyer may take less than the MDQ, provided that, in the event Buyer anticipates using less than 50% of MDQ for a period of three (3) Days or more, Buyer shall so notify Seller. In addition, Buyer shall provide no less than seven (7) days notice to Seller of Buyer's scheduled 2of9 ME 1 33167395v.1 maintenance outages, and Buyer shall notify Seller as soon as possible of any unscheduled outages which impact the amount of Plant Gas purchased. 2.4. Seller will supply Buyer with quantities above the stated MDQ, but Seller also reserves the right to pass through to Buyer its proportionate share of additional natural gas and transportation charges, penalties or similar fees paid by Seller to its natural gas suppliers and/or transporters that are incurred as a direct result of Buyer's usage above the stated MDQ. SECTION 3. RATES AND CHARGES 3.1. For all Overrun Quantities, Buyer shall pay its proportionate share of additional natural gas and transportation charges, penalties or similar fees paid by Seller to its natural gas suppliers and/or transporters that are incurred as a direct result of Buyer's usage above the stated MDQ. w 3.2. In the event Buyer reduces its Plant Gas purchases in any Month to a level below 50% of its MDQ multiplied by the days in the Month, Buyer shall pay Seller thereafter no less than a monthly minimum fee in each Month. The minimum fee shall be a portion of the firm interstate transportation purchased by Seller calculated as follows: $36,000 x (1-(monthly usage/(MDQ x number of days in the Month)). 3.3. All Plant Gas Except for Overrun Quantities delivered and taken by Buyer under this Agreement in any Month shall be billed and paid for at a rate consisting of the following components: A. Cost of Service charge as stated on City of Las Cruces Utilities Tariff Sheet for "Natural Gas High Volume Service" or superseding tariff sheet(s); B. Transportation charges billed to Seller by Transporter; C. The cost of fuel assessed by Transporter; D. Commodity Cost that shall be either (1) Index Price plus the Gas Price Premium; or (2) The applicable hedged price as designated by Seller for specific volumes for a specific period of time as requested by Buyer. 3.4. All Distribution Gas delivered and taken by Buyer under this Agreement in any Month shall be billed and paid for at a rate consisting of the following components: A. Cost of Service charge as stated on City of Las Cruces Utilities Tariff Sheet for "Natural Gas Industrial Service" or superseding tariff sheet(s); B. Transportation charges billed to Seller by Transporter; C. The cost of fuel assessed by Transporter; D. Commodity Cost that shall be either 3of9 ME1 33167395v.1 (1) Index Price plus the Gas Price Premium; or (2) The applicable hedged price as designated by Seller for specific volumes for a specific period of time as requested by Buyer. 3.5. Buyer's representative shall coordinate all hedging activities, if any, with Seller's representative. Such coordination will be documented in writing by Buyer's request to Seller to fix the price of a specified quantity of natural gas for purchase by Buyer; the request shall specify the quantity to be purchased by Dth by Month, the time period covered, and the pricing method, e.g., fixed price. Once Seller confirms the transaction with its Supplier, Buyer's request becomes irrevocable, and the Buyer shall pay that specified price for all specified quantities. SECTION 4. BILLING AND PAYMENT 4.1. Bills for service hereunder shall be paid at or mailed to the office of the Seller in the Month following the Month in which service was rendered. Bills are due and payable in full twenty-two (22) days after the date of mailing or electronic transmission and will be considered past due the day after the due date stated on the bill. All payments must be received by the due date and paid by 5:00 PM or electronically by 11:59 PM to be recorded as paid on time. Seller will assess a late payment penalty fee for nonpayment one day after the due date of two and one half percent(2.5%) of any overdue balance. 4.2. Seller will issue "Past Due and Subject to Shutoff' notices for any invoices not paid by the due date. The Shutoff Notification Notice will indicate the payment due date before service(s) will be shutoff. SECTION 5. TERM 5.1. This Agreement shall become effective upon execution, but the effective date shall be September 1, 2020, and it shall remain in effect through August 31, 2023. This Agreement shall continue in effect on a month-to- month basis thereafter until one party notifies the other of its intent not to renew or renegotiate, or until a successor agreement becomes effective. SECTION 6. QUALITY OF GAS 6.1. The quality of natural gas delivered under this Agreement shall be natural gas of the quality and characteristics as received by Seller from Transporter with such additional odorants added as Seller deems necessary. SECTION 7. TERMS AND CHARACTER OF SERVICE 7.1. The character of service rendered to Buyer by Seller shall be considered firm to the extent that firm transportation capacity and natural gas supply 4of9 ME 1 33167395v.1 is available under Seller's firm transportation agreement with the Transporter and under its agreement with Seller's Supplier. Seller shall use due diligence in maintaining gas service to Buyer. 7.2. During periods of emergency or during construction or maintenance, at its sole option, without liability, Seller may require buyer to reduce or suspend, in total or in part, Buyer's consumption of natural gas. Seller shall notify Buyer's designated representative at least seven (7) days prior to schedule service interruption, except in the event of an emergency interruption, in which case notice shall be given as soon as possible. Seller will use due diligence to eliminate the condition responsible for any such reduction or suspension of natural gas consumption. At such time as Seller determines that such condition requiring reduction or suspension of natural gas consumption no longer exists, Seller shall promptly notify Buyer that Buyer may resume its consumption of natural gas. No penalty will be assessed to Buyer if the service interruption is caused by Seller. Notice under this Section may be given orally if confirmed in writing by facsimile within forty-eight (48) hours. 7.3. Buyer shall consume all of the gas purchased hereunder for University- related purposes and shall not resell such gas. SECTION 8. DELIVERY OF GAS 8.1. All natural gas delivered shall be measured in 1,000 cubic foots units(Mcf) at standard conditions at fourteen and seventy-three one hundredths (14.73) pounds per square inch absolute base pressure, sixty (60) degrees Fahrenheit base temperature and six tenths (0.6) specific gravity. 8.2. Seller shall deliver gas at pressures according to the following: A. Distribution System: Seller will maintain at the major points of delivery into the University-owned distribution system a regulated service pressure within ten percent (10%) of the pressure requested by the Buyer. Seller shall not be required to maintain more than fifty- five (55) pounds per square inch gauge unless prior mutual agreement is obtained. For purposes of protecting Buyer's facilities, pressures shall not exceed one hundred twenty-five (125) pounds per square inch gauge. B. Co-generation System: Seller will maintain at the major point of delivery into the Buyer's co-generation facility a regulated service pressure of not more than two hundred thirty (230) pounds per square inch gauge or less than one hundred ninety (190) pounds per square inch gauge unless otherwise mutually agreed. For purposes of providing service to the Buyer's co-generation facilities, pressure on the Seller's system has been designed for a maximum allowable operating pressure of three hundred and fifty five (355) pounds per square inch gauge. 5of9 ME1 33167395v.1 SECTION 9. POINT OF DELIVERY 9.1. The point of delivery shall be the outlet of Seller's meter or regulator, whichever is farthest downstream, at the following locations: A. Southwest corner of University Avenue and Espina Street; B. Intersection of Espina Street and Stewart Street; C. Co-generation and boiler facility on Sweet Street; D. All other minor gas delivery points located both on and off the main campus; and E. Any other point of delivery located on or near Seller's existing natural gas system provided that Buyer shall bear the cost of installation of any facilities. SECTION 10. METERING 10.1. All meters installed by Seller shall remain Seller's property and shall be maintained by Seller. Buyer shall provide sufficient space for the installation of such measurement equipment at location mutually agreed upon by both parties. Buyer shall provide all on-campus easements necessary for the installation of facilities to provide services under the terms of this Agreement. Buyer may, at its option and at its sole expense, install, maintain, and operate downstream from any delivery point metering equipment to check the quantity and quality of the natural gas delivered by Seller. The parties and their agents shall have free access to the premises for the purpose of reading meters, maintaining the equipment, and all activities related to providing services under the terms of this Agreement. However, Buyer and its agents shall at no time perform any act whatsoever upon Seller's equipment without Seller's express consent. 10.2. Any meter shall be accurate at the time of installation and the accuracy thereof may be verified by tests by Seller at reasonable intervals thereafter or upon Buyer's request. Copies of all test results shall be forwarded by Seller to Buyer. Before any tests shall be made, Seller shall notify Buyer of the date of testing and such tests shall be made in the presence of representatives of both parties, if so desired. Any corrections or adjustment of any meters found to be inaccurate shall be promptly made. The expense of any test requested by Buyer shall be borne by Buyer if the measurement equipment is found to be in error not more than two percent (2%). 10.3. Buyer shall not be liable for any undercharges on bills paid more than six (6) months prior to any test of metering equipment. 10.4. Seller shall have the right to change its metering and regulating equipment from time to time for maintenance purposes and to install remote meter 6of9 ME 1 33167395v.1 reading devices or other equipment Seller deems necessary for monitoring Buyer's delivery of natural gas. Buyer agrees to allow Seller the right to install electric power supply for electronic metering devices in close proximity to metering equipment as Seller deems necessary. SECTION 11. FORCE MAJEURE 11.1. If either party is unable in whole or in part by force majeure to carry out its obligations under this Agreement other than to make payments due hereunder, then the obligations of such party, so far as they are affected by such force majeure, shall be suspended during the continuation of any inability so caused but for no longer period. Such cause shall as far as possible be remedied with all reasonable dispatch; however, no party shall be required against its will to adjust any labor dispute. Such party shall give notice in full particulars of such force majeure event in writing to the other party as soon as reasonably possible after the occurrence of such event. 11.2. The term "force majeure"shall mean acts of God, strikes, lockouts or other industrial disturbance, acts of the public enemy, wars, weather events, earthquakes, fires, restraints of government, civil disturbances, explosion, breakage or accident to machinery or lines or pipe, the necessity for maintenance of or making repairs or alterations to machinery or lines of pipe freezing of wells or lines of pipe, partial or entire failure of wells, curtailment, interruption or other unavailability of transportation, and any other causes, whether of the kind herein enumerated or otherwise, not within the control of the party claiming suspension and which, by the exercise of due diligence, such party is unable to prevent or overcome. Notwithstanding anything to the contrary contained herein, force majeure shall also include interruption or cessation of deliveries of gas by third parties to Seller resulting solely from force majeure events. SECTION 12. SUCCESSOR AND ASSIGNS 12.1. The Agreement shall be binding on and inure to the benefit of the successors and assigns of Seller and Buyer, provided that the other party agrees in writing to the assignment, which written approval shall not be unreasonably withheld. SECTION 13. NOTICE 13.1. Any notice, demand or request required or authorized under this Agreement shall be deemed properly given to or served on Seller if in writing and mailed to: Jorge Garcia Utilities Director City of Las Cruces (575) 528-3636 P.O. Box 20000 (575) 528-3619— Fax Las Cruces, NM 88004 (575) 526-0500—24 Hour Dispatch 7of9 ME 133167395v.I Any such notice, demand or request shall be deemed properly given to or served on Buyer if in writing and mailed to: Patrick Chavez Director, Utilities and Plant Operations Facilities and Services New Mexico State University P.O. Box 30001, MSC 3545 (575) 646-5956 Las Cruces, NM 88003 (575) 202-6423 - Cell Each party shall have the right to change the name of the person to whom or the location to which the notices are to be given or served by notifying the other party, in writing, of such change. SECTION 14. MISCELLANEOUS 14.1. The terms and conditions herein contained constitute the entire agreement between the parties and shall supersede all previous discussions and understandings whether oral or written, between the parties with respect to the subject matter hereof. All respective rights and obligations of the parties shall be governed by the laws of the State of New Mexico. The captions in this Agreement are for convenience of reference only, are not an integral part of this Agreement, and are not to be considered in the interpretation of any part hereof. 8of9 ME 1 33167395v.1 SECTION 15. SEVERABILITY 15.1. Should any provision or provisions of this Agreement be declared void or illegal by any court of competent jurisdiction, then such void or illegal provision or provisions shall be severed from this Agreement,and all other provisions hereof shall remain in full force and effect. BOARD OF REGENTS OF NEW MEXICO STATE UNIVERSITY Andrew J Olgilally signed by Andrew J Burke Dale:2020.07M By: Burke 19:24:05-WOO' Andrew J. Burke, Senior Vice-President of Administration and Finance BOARD OF COMMISSIONERS FOR CITY OF LAS CRUCES UTILITIES By: William M. Little, Board Chair APPROVED: 7By. Robert A. Cabello, Assistant City Attorney Senior 9 of 9 ME1 33167395v.1 Natural Gas Supply and Service Agreement effective as of September 1,2020 between the Board of Commissioners for the City of Las Cruces Utilities on behalf of the City of Las Cruces and the Board of Regents of New Mexico State University Exhibit A Buyer's Maximum Daily Quantity (MDQ) (Dth) Yr/Month Monthly MDQ 20-Sep 45,000 1500 20-Oct 48,000 1548 20-Nov 50,000 1667 20-Dec 55,000 1774 21-Jan 60,000 1935 21-Feb 60,000 2143 21-Mar 52,000 1677 21-Apr 50,000 1667 21-May 45,000 1452 21-Jun 45,000 1500 21-Jul 45,000 1452 21-Aug 45,000 1452 21-Sep 45,000 1500 21-Oct 48,000 1548 21-Nov 50,000 1667 21-Dec 55,000 1774 22-Jan 60,000 1935 22-Feb 60,000 2143 22-Mar 52,000 1677 22-Apr 50,000 1667 22-May 45,000 1452 22-Jun 45,000 1500 Exhibit A— Page 1 of 2 ME 1 33167395v.1 Yr/ Month Monthly MDQ 22-Jul 45,000 1452 22-Aug 45,000 1452 22-Sep 45,000 1500 22-Oct 48,000 1548 22-Nov 50,000 1667 22-Dec 55,000 1774 23-Jan 60,000 1935 23-Feb 60,000 2143 23-Mar 52,000 1677 23-Apr 50,000 1667 23-May 45,000 1452 23-Jun 45,000 1500 23-Jul 45,000 1452 23-Aug 45,000 1452 Exhibit A—Page 2 of 2 ME 133167395v.1 ATTACHMENT "A" Clay of LaS Cruces"' MOUNTAINS OF OPPORTUNITY MEMORANDUM To: Jorge A. Garcia, Ph.D., P.E., Utilities Director From: Mario Puentes, Gas Business Analyst Initials: Date: July 27, 2020 File #: Subject: NMSU Natural Gas Supply and Service Agreement This memo relates to the recently negotiated Natural Gas Supply and Service Agreement (Agreement) between The Board of Commissioners for the City of Las Cruces Utilities (LCU Board) and New Mexico State University (NMSU or University). The Agreement replaces the 2018 Natural Gas Supply and Service Agreement, of which its primary term ends on September 1, 2020. Background The City of Las Cruces (City) has provided natural gas service to NMSU for more than 50 years. Prior to 1996 NMSU used natural gas primarily to generate steam and for space heat up until December 1996. In December of 1996 NMSU placed into service its electricity producing natural gas fired turbine as part of a Co-Generation (Co-Gen) system. To serve this load required tapping into the City's high-pressure pipeline system to meet the turbine's minimum pressure requirement of 190 pounds per square inch. The turbine produces electric power for exclusive use by the University. Power generation creates a significant amount of exhaust related heat, such heat is recycled to make steam to power-up the compressor driven water chilling system. Additionally, the steam is also used for space-heating by distributing it throughout the campus via a network of steam pipes. Thus, three valuable outputs are produced by NMSU's Co-Gen system: electricity, steam, and chilled water. The Co-Gen system significantly increased the amount of gas the University uses. Keeping the University as the single largest consumer of natural gas in the city. In the previous three City fiscal years it has averaged 589,000 dekatherms annually. This is about 18% of the City's average total annual consumption of 3,200,000 dekatherms. Mr. John Gregg of the law firm McCarter & English drafted the 2015 Agreement and has reviewed the minor modifications made to the 2018 and 2020 versions. The existing Agreement has worked well for both the City and University and neither party has indicated encountering difficulty or concern managing it. This feature makes, other than minor, changes to the new Agreement unnecessary. Jorge A. Garcia, Ph.D., P.E., Utilities Director Page 2 of 2 NMSU NGS and Service Agreement July 27, 2020 Key provisions of the Agreement: Term The Primary Term of the Agreement is September 1, 2020, through August 31, 2023, and will continue on a month-to-month basis thereafter. Quantity The Agreement provides the University's total natural gas requirements for use on its main campus. Price and Rate The rates for providing natural gas services (cost of service) are governed by the LCU Board approved tariff. The cost of gas price is based on the monthly index price, for the applicable month, published by Platt's in its Inside FERC's Gas Market Report, El Paso, San Juan. Plus, the index premium that currently is $0.025 per dekatherm. Plus charges assessed by El Paso Natural Gas Co. for transportation services. Hedge NMSU can elect to put a hedge on its commodity price; the Agreement requires that NMSU's representative specify the quantity to be purchased, the time period covered, and the pricing method; e.g., fixed price. Once the City locks in the requested parameters with its Supplier, the University's request becomes irrevocable, and the University shall pay that specified price for the specified quantities. Recommendation The Agreement gives the University flexibility in the type and timing of any hedge it puts on its gas supply. Both entities will continue the contractual relationship with an acceptable level of certainty regarding supply availability and, in return, the City can rely on a predictable revenue stream. This certainty is helpful to both parties towards their strategic planning activities. Therefore, I recommend that the LCU Board approves this Agreement. Approved: I ) Disapproved: ❑ Jorge A. Garcia, Ph.D., P.E., Utilities Director Date cc: Delilah A. Walsh, Assistant Utilities Director Initials: { � � City of Las Cruces MOUNTAINS OF OPPORTUNITY LAS CRUCES UTILITIES BOARD OF COMMISSIONERS ACTION FORM For Meeting of August 13, 2020 (Adoption Date) TITLE: A RESOLUTION APPROVING THE NATURAL GAS SUPPLY AND SERVICE AGREEMENT BETWEEN THE BOARD OF COMMISSIONERS FOR THE CITY OF LAS CRUCES UTILITIES, ON BEHALF OF THE CITY OF LAS CRUCES AND NEW MEXICO STATE UNIVERSITY. BACKGROUND: The City of Las Cruces ("City") has provided natural gas service to New Mexico State University ("NMSU") for more than 50 years. The Parties have maintained a good working relationship, which has benefited both entities and the community. In December of 1996 NMSU placed into service its electricity producing natural gas fired turbine as part of a Co-Generation (Co-Gen) system. Service to this load required tapping into the City's high-pressure pipeline system to meet the turbine's minimum pressure requirement of 190 pounds per square inch. The turbine produces electric power for exclusive use by the University. Power generation creates a significant amount of exhaust related heat, such heat is recycled to make steam to power-up the compressor-driven water chilling system. Additionally, the steam is also used for space-heating by distributing it throughout the campus via a network of steam pipes. Thus, three valuable outputs are produced by NMSU's Co-Gen system: electricity, steam, and chilled water. Utilities staff, the City's external energy Legal Counsel, and the City Attorney's Office have worked with NMSU on a new Natural Gas Supply and Service Agreement, which is attached and made part of Resolution No. 20-21-LCU010 as Exhibit "A". The Natural Gas Supply and Continue on additional sheets as required Name of Drafter: Department: Phone: Mario Puentes Utilities 528-3552 Account Number: Amount of Expenditure: Budget Amount: N/A N/A N/A Strategic Plan Goal / Objective / Strategy Addressed: Natural Gas 0 & M: To provide natural gas to ratepayers and surrounding communities, so they can experience a safe and dependable supply of natural gas. Performance Bud et Goal / Objective Addressed: N/A Department Signature Phone Department Signature Phone Utilities �� !'� 528-3512 Bud et W4101 541-2300 Assistant Legal 541-2128 City Manager �jtA�_ 541-2271 City Manager 541-2076 LCU 5/18 Rev.4 , of �� v LCU Board Action Form Page 2 Service Agreement's primary term is September 1, 2020, through August 31, 2023, it replaces the 2018 Agreement. Staff recommends the Board of Commissioners for the City of Las Cruces Utilities, on behalf of the City of Las Cruces ("LCU Board") approve the Agreement effective September 1, 2020. SUPPORT INFORMATION: 1. LCU Resolution No. 20-21-LCU010. 2. Exhibit "A" - Natural Gas Supply and Service Agreement. 3. Attachment "A" - Memo from Mario Puentes, Gas Business Analyst, to Jorge A. Garcia, Director of Utilities dated July 27, 2020. BOARD OPTIONS: 1. VOTE "YES" - Will approve Resolution 20-21-LCU010 and approve the Natural Gas Supply and Service Agreement between the LCU Board and NMSU. 2. VOTE ""NO" - Will reject Resolution 20-21-LCU010 and not approve the Agreement. The City will provide NMSU natural gas service on a month-to-month basis. Staff would request strategic guidance. (Continue on additional sheets as required) 6",�4 City of Las Cruces° * MO 9 NTAI t] OF OPPORTUNITY LAS CRUCES UTILITIES BOARD ACTION FORM AND RESOLUTION ROUTING SLIP The purpose of this Routing Slip will help ensure the highest quality of work is presented to the LCU Board of Commissioners for action on the Resolution. As the drafter of a Las Cruces Utilities (LCU) Board Action Form (BAF) and Resolution (RES) you are responsible to ensure all documents submitted for the Utilities Director's approval are without errors. Please identify a Utility associate to review the entire BAF/RES packet, including any Exhibits and/or Attachments; followed by your Deputy Director. The FINAL COMPLETE BAF/RES packet is required no later than 8:00am 15- working days before the Board Meeting. The additional time is required to obtain all final signatures from City Hall and create the agenda packet in order to distribute to the Board Members. For Meeting of: August 13, 2020 Resolution: 20-21-LCUOIO (Date) UTILITY STAFF REVIEWERS PRINT NAME INITIALS DATE 1. Drafter Mario Puentes ZP• ZpZv 2. Office Manager, Senior Alma Ruiz 3. Administrative Assistant Peggy Risner �A'5��� 4. Assistant Utilities Director Delilah Walsh 7/28/2020 P�OR v � LCU BAF/RES ROUTING SLIP FY20 06/2020 R2