A resolution approving certain changes to contracts with certain Customers of the Metropolitan Government's district energy system, certain change orders to the Metropolitan Government's contract with Constellation Energy Source, certain additional customer contracts, and related matters.

WHEREAS, by Bill No. BL2001-921, the Metropolitan Government approved a form of initial customer contract for the Metropolitan Government's district energy system for certain existing customers of the system, and the Metropolitan Government proposes to approve a change to such form of contract fixing customer costs for maintenance and repair of the distribution system in substantially the form attached as Exhibit A to this Resolution; and

WHEREAS, the Metropolitan Government proposes to market available system heating and cooling services and to enter into certain agreements with other prospective private and public customers of the system pursuant to contracts and to that end proposes to approve a change to the form of contract for existing customers to create a form of contract for new customers in substantially the form of the document attached as Exhibit C to this resolution; and

WHEREAS, the Metropolitan Government proposes to abandon certain improvements to the system permitted by the contract with Constellation Energy Source that have previously been approved and to replace them with substitute permitted improvements, within the same cost limitations as previously authorized;

WHEREAS, the Metropolitan Government proposes to streamline the approved forms of initial and additional customer contracts to accommodate small customers;

NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY AS FOLLOWS:

SECTION 1 The approved form of initial customer contract is permitted to be amended as set forth in Exhibit A.

SECTION 2 The amount in Annex B of each initial customer contract, for each private customer, shall be the amount set forth in the table for such customer set forth in Exhibit B under the heading "Total EDS Allocation".

SECTION 3 The Metropolitan Government may enter into a customer contract with an existing system customer either in the form originally approved or in the amended form as set forth in this resolution.

SECTION 4 The form of initial customer contract previously approved by the Metropolitan Government may be amended to read as set forth as Exhibit C to this resolution and such amended contracts are hereby approved for execution and filing on behalf of the Metropolitan Government with any new customer of the system and the Metropolitan Government may include in such contracts provisions for customer payment for costs of line extensions and interconnections.

SECTION 5 The Service Charge to be inserted in any new customer contract authorized by this Resolution shall be that amount that is projected to be ten percent less than the cost to the customer if the customer provided the services itself (provided that in no event shall the amount so determined be less than the Metropolitan Government's marginal cost of generating and delivering the services being purchased), as determined and certified by the Metropolitan Government's Project Administrator and approved by the Director of Finance, whose signature on a customer contract shall conclusively bind the Metropolitan Council as to the validity of the amount so determined.

SECTION 6 The "Service Commencement Date", as defined in the Contract for the Design and Construction of an Energy Generation Facility, Improvement of an Energy Distribution System, and Long Term Operation and Management of the Nashville District Energy System (the "Design, Construct, Operate Contract"), between the Metropolitan Government and Constellation Energy Source, Inc., may be extended by up to one hundred twenty days.

SECTION 7 Section 4.08 of the Design, Construct, Operate Contract may be amended to change the reference to 12 months to any longer period up to 18 months and to change the reference to $1 million to any greater amount up to $3 million.

SECTION 8 The Metropolitan Government is authorized to accept an assignment from Nashville Thermal Transfer Corporation ("NTTC") of NTTC's right to receive revenues from contracts between NTTC and its customers and (ii) rights and obligations of NTTC under such contracts, and to undertake to perform such obligations.

SECTION 9 The permitted inclusions in the scope of work set forth in Section 4.12 of the Design, Construct, Operate Contract, may be amended as set forth in Exhibit D.

SECTION 10 To accommodate small customers, the Metropolitan Government may enter into Agreements in the form set forth in Exhibit A and Exhibit C, but modified to provide for customers to pay flat and/or escalating monthly fees for services, or similar arrangements, with such fees reasonably estimating the cost of providing service to such customers without the need for metering service. Such fee shall be determined and certified by the Metropolitan Government's Project Administrator and approved by the Director of Finance whose signature on such Agreement shall conclusively bind the Metropolitan Government as to the amount determined and the contract modifications. For the purposes of this Section 10, small customers are defined as those requiring contract capacities of less than or equal to 40 tons of chilled water and/or 400 pph of steam.

SECTION 11 This resolution shall take effect from and after its adoption, the welfare of The Metropolitan Government of Nashville and Davidson County requiring it.

EXHIBIT A

Section 2.2(b) of the form of initial customer contract may be amended to read as follows:

(b) Pass Through Charges and Credits - an amount equal to the Customer's Pro Rata Portion of the following: charges permitted under Section 2.9, costs that are pass through costs or adjustments under a System Operating Agreement (other than pass through costs attributable to maintenance and repair of pipes and tunnels comprising the distribution system), and any other unforeseen and unbudgeted costs incurred in administering the System (provided that in no event shall the Supplier's administrative costs exceed the Incremental Costs), credits for expenses paid out of insurance proceeds, and any other applicable credits or cost reductions. In lieu of paying the Customer's Pro Rata Share of costs attributable to maintenance and repair of pipes and tunnels comprising the distribution system as a pass through cost, the Customer shall pay, in addition to the Customer's Pro Rata Share of $150,000 per year already included in the Base Steam/Chilled Water Facilities Fixed Operating Charges, escalated as set forth in the Initial System Operating Agreement or such other operating agreement as may then be in effect, the amount per year set forth in Annex B under the heading "Customer's Allocation of EDS Maintenance Costs", escalated at the same rate.

Section 2. Annex B of the form of initial customer contract may be amended to add the following:

Customer's Allocation of EDS Maintenance Costs

The Customer shall pay in each year the following amount: __________________.
This amount shall be escalated in accordance with Section 14.04 of the Initial System Operating Agreement or in accordance with such other operating agreement as may then be in effect.

EXHIBIT B

Table of EDS Allocations

EXHIBIT C

Form of Firm Energy Supply Contract
For Additional System Customers

EXHIBIT D

Form of Amendment to Contract for the Design and Construction of an Energy Generation Facility, Improvement of an Energy Distribution System, and Long Term Operation and Management of the Nashville District Energy System, between the Metropolitan Government and Constellation Energy Source, Inc.

Section 4.12 of the above-referenced contract is amended to read as follows:

Section 4.12. Additional Inclusions in Scope of Work. The Contractor and Metro have agreed on a general scope of work which includes the following: (i) improvements to and extensions of the existing distribution system, including connections to the EGF and new customers, (ii) improvements to customer systems to improve thermal efficiency, (iii) State distribution system improvements, (iv) metering for buildings connected to the System, (v) changes in pumping requirements and associated equipment, including projects to hydraulically isolate certain buildings from the EDS, (vi) electrical substation modifications, (vii) site preparation, including demolition, environmental abatement and utility relocation, (viii) additional boiler or chiller capacity and (ix) engineering and related matters. The foregoing work has an estimated cost of $8,000,000, which is not included in the Fixed Construction Price. Such work shall be done by change order and all or any portion of such work may be done up to but not exceeding the estimated cost under the authorization of this contract pursuant to Metro Council's initial contract authorization.

Sponsored By: Amanda McClendon, Jim Shulman

LEGISLATIVE HISTORY
Referred to:	Budget & Finance Committee Public Works Committee
Introduced:	May 21, 2002
Adopted:	May 21, 2002
Approved:	May 24, 2002
By: