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Execution Copy CONFIDENTIAL
Master Services Agreement
between
The City of Elgin, Illinois
and
Direct Energy Services, LLC
This Master Services Agreement (the "Agreement") is entered into as of June 5, 2012,
("Effective Date") between DIRECT ENERGY SERVICES, LLC ("DIRECT ENERGY") and
the CITY OF ELGIN, ILLINOIS ("GA"). DIRECT ENERGY and GA are at times referred to
individually as"Party" or collectively as"Parties." Capitalized terms not defined in the Sections
of this Agreement shall have the respective meanings ascribed to them in Exhibit A, hereto,
"Definitions."
WHEREAS, DIRECT ENERGY is certified by the Illinois Commerce Commission
("ICC") as an Alternative Retail Electric Supplier ("ARES") to sell retail electric power and
other related services to consumers and governmental aggregation programs in the State of
Illinois.
WHEREAS, the Parties desire to enter into certain transactions associated with DIRECT
ENERGY'S provision of retail electric power and other related services (collectively, "Retail
Electric Services") necessary to serve the electric accounts of Aggregation Members within the
electric service territory of the Local Utility in which GA's Governmental Aggregation program
is located.
E WH REAS, DIRECT ENERGY provides, among other things, Retail Electric Services
to municipal corporations and county boards acting as Governmental Aggregators under
authority conferred by, inter alia, Section 20 ILCS 3855/1-92.
WHEREAS,GA, in entering this Agreement, is acting on behalf, and has the authority to
act on behalf,of the City of Elgin, Illinois.
WHEREAS, GA has established a Governmental Aggregation program whereby GA, as
Governmental Aggregator, will arrange for the provision of Retail Electric Services to certain
eligible inhabitants that do not opt-out of the Governmental Aggregation program.
WHEREAS, by this Agreement, DIRECT ENERGY desires to enter into a relationship
with GA whereby DIRECT ENERGY shall provide the Retail Electric Services necessary to
serve the Aggregation Members of GA's Governmental Aggregation.
WHEREAS, GA is or will be duly authorized to act for the Aggregation Group to choose
the Retail Electric Services hereunder; and
NOW, THEREFORE, the Parties, intending to be bound hereby and in consideration of
the mutual promises and covenants herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, agree as follows:
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ARTICLE 1.
PROVISION OF SERVICE
1.1 Obligations and Duties
(a) Authority to Choose DIRECT ENERGY as Exclusive Provider. GA, as
Governmental Aggregator, is or will be authorized to arrange from DIRECT ENERGY the Retail
Electric Services for and on behalf of the Aggregation Members of the Aggregation Group
pursuant to the terms of this Agreement and the Operation Plan set forth in Section 1.7 below
herein. DIRECT ENERGY shall be the sole and exclusive provider of Retail Electric Services
for those Aggregation Members of the Aggregation Group. GA shall not enter into any type of
electric power supply arrangement with an ARES other than DIRECT ENERGY on behalf of its
Eligible Consumers for the provision of Retail Electric Services during the Term of this
Agreement. During the Term of this Agreement, GA shall not in any way encourage or in any
way attempt to persuade Eligible Consumers to opt-out of the Aggregation Group or attempt to
persuade Aggregation Members to discontinue their service with DIRECT ENERGY, other than
notifying Eligible Consumers of their right to "opt-out."
(b) Opt-Out Provisions. DIRECT ENERGY, with the reasonable cooperation of GA,
will be responsible for administering the initial and ongoing "opt-out" procedures to Eligible
Consumers. GA and DIRECT ENERGY shall cooperate in the developing, review, approval,
printing, posting and issuance of all opt-out correspondence to assure that the initial opt-out
notices with the agreed upon pricing, terms, and procedures can be sent out by DIRECT
ENERGY to the Eligible Consumers at the earliest time practicable, but no later than 28 days
before the applicable Local Utility enrollment submission deadline, unless the parties mutually
consent in writing to a different date. DIRECT ENERGY shall, at its sole expense, send to
Eligible Consumers an initial "opt-out mailer" by regular mail to afford such customers the
opportunity to participate or not to participate in the Governmental Aggregation program (the
"Initial Opt-Out Notice"). The Parties contemplate that the opt-out mailers apprising Eligible
Consumers of the Term will be sent at a time sufficient to enable enrollment of customers in the
Governmental Aggregation program prior to the first month of electric power flows of the Term.
DIRECT ENERGY may from time-to-time mutually agree with GA to conduct additional opt-
out mailings during the Term of this Agreement. All communications with customers shall
comply with applicable statutes, rules and regulations. If an Eligible Consumer in receipt of an
Opt-Out Notice does not opt-out of the Governmental Aggregation program in accordance with
the procedures set forth in the Opt-Out Notice, then that Eligible Consumer will become an
Aggregation Member.
(c) New Customer Accounts. DIRECT ENERGY shall facilitate the addition of New
Customer accounts to the Governmental Aggregation program during the term of this
Agreement. All New Customer accounts shall be serviced at the same rate as is available to all
Aggregation Members. GA and DIRECT ENERGY shall cooperate in good faith to identify, not
less than once per calendar quarter, potential New Customers, including potential customers who
have established new electricity service through the Local Utility in the Governmental
Aggregation area during the preceding calendar quarter, and to inform such potential new
customers of the availability of the Governmental Aggregation program.
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(d) Re-Joining the Aggregation Group. DIRECT ENERGY shall assist Eligible
Consumers who have opted out, and Aggregation Members who have withdrawn from the
Governmental Aggregation program, to rejoin at a later date. All accounts of Aggregation
Members who rejoin the Governmental Aggregation program shall be serviced at the same rate
as is available to all Aggregation Members.
(e) Administration and Assignment. DIRECT ENERGY shall be responsible for the
administration of the accounts of the Aggregation Members. DIRECT ENERGY will build and
maintain a database of all Aggregation Members. The database will include the name, address
and Local Utility account number for each Aggregation Member and may include other pertinent
information as agreed upon by GA and DIRECT ENERGY. Subject to the requirements of
Article 12 of this Agreement, to the extent applicable, upon reasonable request by GA, the
database(s)will be provided by DIRECT ENERGY to GA no more than on a quarterly basis, and
GA will have the right to access the information in the database(s) on a more frequent basis to
the extent reasonably necessary for auditing purposes.
1.2 Electric Power Supply. DIRECT ENERGY shall make all arrangements necessary to
provide sufficient electric power supply to the Delivery Point of the Local Utility, as defined in
Section 1.3 hereof, to serve the requirements of the Aggregation Group. If DIRECT ENERGY
has arranged for firm service for the delivery to the Delivery Point of the Local Utility, the
Parties acknowledge that any failure or interruption after the Local Utility's Delivery Point,
including any failure or interruption in distribution service to the Aggregation Group, is solely
the responsibility of the Local Utility and DIRECT ENERGY shall not be responsible for any
such failure or interruption, including any losses or costs to GA or the Aggregation Group as the
result of such interruption by the Local Utility.
1.3 Delivery Point. The "Delivery Point" for applicable Retail Electric Services supplied by
DIRECT ENERGY to the Aggregation Group shall be the point of interconnection between the
independent system operator's transmission facilities and the transmission facilities of the Local
Utility Company, or any interface with the Local Utility for direct redelivery to the Aggregation
Group by the Local Utility.
1.4 Responsibility for Delivery Costs. DIRECT ENERGY will be responsible for obtaining
or providing firm transmission service up to the Delivery Point, and shall be responsible for all
costs, liabilities, taxes, losses and charges of any kind incurred associated with delivering electric
power to the Delivery Point. It is the Parties' understanding that after the electric power is
delivered to the Delivery Point, the Local Utility shall provide the electric distribution service
from the Delivery Point to the Point of Sale, and the Aggregation Members shall be responsible
for the costs of the distribution service provided by the Local Utility. Responsibility for all costs,
liabilities, taxes, losses and charges of any kind after the Delivery Point is governed by the Local
Utility's distribution tariff.
1.5 No Financial Responsibility. GA as Governmental Aggregator has no financial
responsibility under this Agreement whatsoever to any other person or entity, including without
limitation Direct Energy, the Local Utility, any independent system operator, Eligible Consumers
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or Aggregation Members. GA's sole and only responsibility is that associated with securing and
maintaining its status as a governmental aggregator.
1.6 No GA Obligation to Provide Services. The parties acknowledge and agree that GA is
not responsible to provide, and this Agreement shall not be construed to create any responsibility
for GA to provide, the Retail Electric Services to any person or entity, including without
limitation, Direct Energy, the Local Utility, any independent system operator, Eligible
Consumers or Aggregation Members.
1.7 Other Assistance. DIRECT ENERGY will endeavor to assist GA with other matters as
mutually agreed to by the parties.
1.8 Plan of Operation and Governance. GA shall have adopted an ordinance as required by
Section 20 ILCS 3855/1-92(a), developed a plan of Operation and Governance ("Operation
Plan") as required by Section 20 ILCS 3855/1-92(b), and provide a copy of each to DIRECT
ENERGY. GA shall comply with all material terms of the Operation Plan, which Operation Plan
shall comply with the requirements 20 ILCS 3855/1-92(b), and all rules and regulations as may
be applicable. GA may not amend or revise the Operation Plan during the Term to affect
DIRECT ENERGY'S obligations under this Agreement, except with DIRECT ENERGY'S prior
written consent. In the event of any inconsistency between the terms of this Agreement and the
terms of the Plan of Governance, the provisions of this Agreement apply.
1.9 Press, Media and Consumer Communications. The Parties agree that all media press
releases and communications (oral and written) to Eligible Consumers and Aggregation
Members ("Consumer Communication") regarding this Agreement shall be accurate. Without
limiting the foregoing, all such media press releases and Consumer Communications which
include information as to alleged monthly or annual savings resulting from the Retail Electric
Services when compared to Local Utility standard service will conform to provisions of Section
8.2(d) hereof. Prior to issuing a media press release or a mass mailing to Eligible Consumers or
Aggregation Members the GA shall provide Direct Energy the opportunity to provide proposed
comments thereto. Direct Energy shall have two business days from the receipt of such a
proposed media press release or mass mailing to provide proposed written comments thereto to
the City.
1.10 DIRECT ENERGY agrees that during the Term of this Agreement, GA may issue
solicitations and may enter into negotiations with other power suppliers (which may include but
is not limited solely to DIRECT ENERGY) in order to arrange for new power supply to be
available at the end of the term of this Agreement and to arrange for a seamless transition for
Aggregation Members between suppliers at the end of the Term of this Agreement. DIRECT
ENERGY further agrees to cooperate with GA and any new supplier in a timely manner to help
facilitate such a transition. This cooperation shall include but not be limited to the provision by
DIRECT ENERGY of a list of customers who, according to Direct Energy's records, are
participating in the Governmental Aggregation program at the time any such request is made.
1.11 Direct Energy agrees to provide on a monthly basis to GA or GA's designated consultant
the customer counts and consumption information for all Aggregation Members.
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ARTICLE 2.
CUSTOMER& USAGE INFORMATION
2.1 Customer Information. GA shall, with the assistance of the DIRECT ENERGY, pursuant
to the applicable law and the Local Utility's Tariff Rate GAP, obtain the Customer Information
from the Local Utility.
2.2 Notices and Customer Information from Local Utility. GA shall promptly forward to
DIRECT ENERGY the Customer Information received from the Local Utility and each Party
will promptly provide to the other Party any notices received by that Party from the Local Utility
concerning the accounts of Eligible Customers or Aggregation Members.
2.3 Submittals to Local Utility. GA shall, with the assistance of DIRECT ENERGY, submit
to the Local Utility (a) all forms required by the Local Utility's Tariff Rate GAP, including
warrants that GA is properly authorized to operate the Governmental Aggregation program and
that it will maintain the confidentiality of Customer Information and use such information only
for purposes of this Governmental Aggregation program, (b) a list of Eligible Customers who are
not Aggregation Members because they have elected to opt out of the Governmental
Aggregation program, and(c) a list of all Aggregation Members.
2.4 Moves and Default. Aggregation Members that move from one location to another
within GA's boundary, and who notify DIRECT ENERGY of such move and any new account
number in a timely manner, will retain their participant status at their then-existing price;
provided, however, that if an Aggregation Member fails to notify DIRECT ENERGY of such a
move in a timely manner causing the Aggregation Member to default to the Local Utility's retail
electric service, DIRECT ENERGY shall not be responsible for any switching fee that may be
imposed by the Local Utility in order for the Aggregation Member to return to the Governmental
Aggregation. If the consumer moves out of GA's corporate limits, all obligations, except for the
consumer's obligation to pay all amounts owed, shall cease as between that consumer, DIRECT
ENERGY, and GA, effective with the consumer's termination of service with the Local Utility
relative to its participation in the Governmental Aggregation.
Consumers that opt-out of or otherwise leave the Aggregation Group will default to the
appropriate Local Utility's standard service offer or other appropriate service.
2.5 Direct Mail. Except as otherwise provided in this Agreement, prior to the termination of
this Agreement, DIRECT ENERGY shall not intentionally target by direct mail or direct
telemarketing any residential Eligible Consumer within GA's geographic boundaries for the
provision of Retail Electric Services without the prior consent of GA.
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ARTICLE 3.
OPERATIONS
3.1 Scheduling. DIRECT ENERGY, either directly or through its designee, shall perform
any and all scheduling necessary to provide service to the Aggregation Group. DIRECT
ENERGY shall be responsible for all scheduling for delivery to the Aggregation Members,
except to the extent such scheduling is handled by the Local Utility during the ordinary course of
its provision of local distribution services.
3.2 Metering. Metering shall continue to be done by the Local Utility or other entity
approved by the ICC.
3.3 Start Date. The Start Date for the electricity flows contemplated under this Agreement
will be the first appropriate meter-read date in the month of September 2012, for those Eligible
Consumers who become Aggregation Members pursuant to Section 1.1(b). This Start Date is
subject to DIRECT ENERGY's timely receipt of the list of Eligible Consumers located within
GA's boundaries and any enrollment data necessary for customer enrollment by July 2, 2012.
3.4 End Date. Upon the conclusion or termination of this Agreement, the end date for
service to each Aggregation Member shall be the next immediate metering date after the
effective date of such conclusion or termination, subject to the Local Utility's procedures. Upon
the conclusion of the opt-out term between each Aggregation Member and DIRECT ENERGY,
the end date for service for the Aggregation Member shall be pursuant to the opt-out procedures
and consistent with the local utility's procedures.
ARTICLE 4.
PRICES AND FEES
4.1 Price. For Aggregation Members enrolled under the opt-out process described in
Section 1.1(b) of this Agreement, DIRECT ENERGY shall charge to Aggregation Members the
fixed rate of$ 0.04915 per kWh for Retail Electric Services, plus all applicable taxes and fees
for the Term. The Price is exclusive of all Local Utility Charges. DIRECT ENERGY and GA
agree that DIRECT ENERGY will purchase and retire Renewable Energy Certificates ("RECs")
to offset one hundred percent(100%)of Aggregation Members' electricity usage.
4.2 Switching Fee Reimbursement. GA shall not be responsible for the payment of any
consumer-switching fee or other fees imposed by the Local Utility as a result of the transfer of
consumers to DIRECT ENERGY Retail Electric Services. Upon termination of this Agreement,
DIRECT ENERGY shall not be responsible for the payment of any consumer-switching fee
associated with the return of a customer to the Local Utility.
4.3 Early Termination Fee. Customers that join the Aggregation Group and then leave
during the term of this service period will not be charged an early Termination Fee by DIRECT
ENERGY.
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ARTICLE 5.
BILLING
5.1 Billing. The Parties understand that the Local Utility will provide consolidated billing for
the services provided hereunder. Notwithstanding the foregoing, if offered by the Local Utility
in the future, DIRECT ENERGY may at its sole option provide consolidated billing to
Aggregation Members. Under no circumstances will a dual billing option be offered absent
GA's consent; provided, however, that such option may be offered by DIRECT ENERGY
without GA's prior consent, but only if the Local Utility no longer offers consolidated billing.
ARTICLE 6.
CONTINGENCIES AND FORCE MAJEURE
6.1 Contingencies.
(a) Regulatory Events. The following events constitute a "Regulatory Event"
hereunder:
(i) Illegality. Due or in the interpretation of any applicable law by any judicial or
government authority with competent jurisdiction, it becomes unlawful for a Party to
perform any obligation under this Agreement.
(ii) Adverse Government Action. (A) Any regulatory agency or court having
jurisdiction over the Agreement requires a material change to the terms of this Agreement
that materially and adversely affects a Party's ability to perform hereunder or otherwise
provide the Retail Electric Services, or (B) Regulations or court action adversely and
materially impacts a Party's ability to perform hereunder or otherwise provide the Retail
Electric Services.
(iii) New Taxes. Any ad valorem, property, occupation, severance, generation, first
use, conservation, Btu or energy, transportation, transmission, utility, gross receipts,
privilege, sales, use, consumption, excise, lease, transaction or other governmental
charge, license, fee or assessment (other than such charges based on net income or net
worth), or increase in such charges, or application of such charges to a new or different
class of parties, enacted and effective after the Effective Date. For the purposes of
clarification, it is agreed and understood that the GA's municipal electricity use tax in
Chapter 4.14 of the Elgin Municipal Code previously adopted by the GA which imposes
a tax with respect to the use or consumption of electricity with the first bill issued on or
after July 1, 2012, does not and will not for the purposes of this Agreement constitute a
New Tax and does not and will not constitute a Regulatory Event hereunder.
(b) Notice, Negotiation, and Early Termination. Upon the occurrence of a Regulatory
Event, the adversely affected Party shall within ten (10) days give notice to the other Party that
such event has occurred. Within thirty(30)days, or such other period as the Parties may agree to
in writing, each Party will enter into good faith negotiations with the other Party to amend or
replace this Agreement. In the case of a Regulatory Event, the Parties shall attempt to amend
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this Agreement so that the adversely affected Party is restored as nearly as possible to the
economic position it would have been in but for the occurrence of the Regulatory Event. In
either case, if the Parties are unable, within thirty (30) days of initiating negotiations or such
other period as the Parties may agree to in writing, to agree upon an amendment to the
Agreement, the adversely affected Party shall have the right, upon subsequent additional thirty
(30) days prior written notice, to terminate and close out its obligations under the Agreement
pursuant to the terms of Section 9.1 hereof.
(c) Action by GA. During the term of this Agreement, GA shall (i) solely for
purposes of terminating this Agreement, not seek to implement or implement any changes to its
laws, rules, regulations, ordinances or otherwise that would constitute a Regulatory Event under
this Agreement, and (ii) shall take all reasonable steps to ensure that any changes to laws, rules,
regulations, ordinances or otherwise sought or implemented by GA during the term of this
Agreement do not cause the occurrence of a Regulatory Event under this Agreement.
6.2 Force Majeure.
(a) Neither Party shall be considered to be in default in the performance of its
obligations under this Agreement, if its failure to perform results directly from a Force Majeure
event. In the event that either Party is unable, wholly or in part, to meet its obligations under this
Agreement due to conditions of a Force Majeure event, the obligations of each Party, so far as
they are affected by such Force Majeure, shall be suspended during the period of Force Majeure.
(b) In the event any Party hereto is rendered unable, wholly or in part, by Force
Majeure to carry out its obligations hereunder, it is agreed that upon such Party's (the "Claiming
Party") giving notice and full particulars of such Force Majeure within three (3) business days
after becoming aware of the cause relied upon, such notice to be confirmed in writing to the
other Party, then the obligations of the Claiming Party shall, other than the obligation to make
payments due hereunder, and only to the extent they are affected by such Force Majeure, be
suspended during the continuance of said inability but for no longer period. The Party receiving
such notice of Force Majeure shall have until the end of the second (2nd) Business Day
following such receipt to notify the Claiming Party that it objects to or disputes the existence of
an event of Force Majeure.
(c) The Claiming Party affected by an event of Force Majeure shall use due diligence
to fulfill its obligations hereunder and to remove any disability caused by such event at the
earliest practicable time. Nothing contained in this section shall be construed as requiring a Party
to settle any strike or labor dispute in which it may be involved or make a capital expenditure to
cure an event of Force Majeure.
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ARTICLE 7.
TERM
7.1 Term. This Agreement commences as of the Effective Date and is for a term of twenty-
four (24) consecutive monthly billing periods starting from the initial meter read date in
September 2012, and expires at the end of the last day of the 24`1' billing cycle for the
Aggregation Member(s) with the latest billing cycle(the"Term").
ARTICLE 8.
REPRESENTATIONS AND WARRANTIES
8.1 Mutual Representations and Warranties. Each Party represents and warrants to the other
Party, as of the Effective Date of this Agreement, that:
(a) It is duly organized and validly existing under the laws of the jurisdiction of its
organization or incorporation and, if relevant under such laws, is in good standing;
(b) It has the corporate, governmental and/or other legal capacity, authority and
power to execute and deliver this Agreement and any other document relating hereto to which it
is a Party, and to perform its obligations under this Agreement and any other document relating
hereto to which it is a Party, and has taken all necessary action to authorize such execution,
delivery and performance;
(c) The execution, delivery and performance of this Agreement do not violate or
conflict with any law applicable to it, any provision of its constitutional documents, any order or
judgment of any court or other agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(d) All governmental and other authorizations, approvals, consents, notices and
filings that are required to have been obtained or submitted by it with respect to this Agreement
or any other document relating hereto to which it is a Party have been obtained or submitted and
are in full force and effect, and it has complied with all conditions and terms of any such
authorizations, approvals, consents, notices and filings;
(e) Its obligations under this Agreement and any other document relating hereto to
which it is a Party are legal, valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable
principles of general application regardless of whether enforcement is sought in a proceeding in
equity or at law);
(f) No Bankruptcy Event has occurred and is continuing, and that a Bankruptcy
Event would neither occur as a result of its entering into or performing its obligations under this
Agreement or any other document relating hereto to which it is a Party nor is presently or
otherwise threatened;
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(g) There is not pending or, to its knowledge, threatened against it or any of its
Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal,
governmental body, agency or official or any arbitrator that is likely to affect the legality,
validity or enforceability against it of this Agreement or any other document relating hereto to
which it is a Party or its ability to perform its obligations under this Agreement or such
document;
(h) It has entered into this Agreement with a full understanding of the material terms
and risks of transaction contemplated hereunder, and it is capable of assuming those risks;
(i) The other Party is not acting as a fiduciary or in an advisory capacity to the other
Party; and
(j) All applicable information that is furnished in writing by or on behalf of it to the
other Party is and will be, as of the date of the information, true, accurate and complete in every
material respect.
8.2 Additional Representations of GA. Relative to this Agreement, GA further represents to
DIRECT ENERGY, as of the Effective Date, that:
(a) GA's execution and delivery of this Agreement, and its performance of its
obligations hereunder, are in furtherance, and not in violation, of the purposes for which GA is
organized pursuant to its authorizing statutes and regulations.
(b) This Agreement does not constitute any kind of investment by GA that is
proscribed by any constitution, charter, law, rule, regulation, government code, constituent or
governing instrument, resolution, guideline, ordinance, order, writ,judgment, decree, charge, or
ruling to which GA (or any of its officials in their respective capacities as such) or its property is
subject.
(c) All acts necessary to the valid execution, delivery and performance of this
Agreement including, without limitation, competitive bidding, public notice, election,
referendum, prior appropriation or other required procedures have or will be taken and
performed as required under the Act, Regulations and GA's ordinances, bylaws, policies or other
regulations;
(d) In addition to its obligations pursuant to Section 1.9 of this Agreement, GA will
not represent to consumers that the Retail Electric Services will result in monthly or annual
savings when compared to the Local Utility standard service without also acknowledging that
over time energy prices fluctuate so savings levels are not guaranteed in the long term, it being
expressly understood that while the Price offered by DIRECT ENERGY may be less than such
Local Utility price as of the date of this Agreement, there is no assurance that the Price
differential will remain so in the future;
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(e) If GA has been referred to Direct Energy by an agent, broker or consultant, such
agent, broker or consultant has disclosed to GA, prior to GA's execution of this Agreement,
whether such agent, broker or consultant will be receiving compensation from Direct Energy
and, if any, the total anticipated remuneration to be paid to such agent, broker, or consultant over
the period of this Agreement.
8.3 Limitation of Warranties. THE ONLY REPRESENTATIONS AND WARRANTIES
MADE BY THE PARTIES ARE SET FORTH IN THIS ARTICLE EIGHT. ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, ARE DISCLAIMED BY THE PARTIES.
ARTICLE 9.
DEFAULT AND EARLY TERMINATION
9.1 Default. If either Party fails to comply with any material term or condition of this
Agreement and such failure is not excused as Force Majeure, such Party shall be in default under
this Agreement. If a Party is in default under this Agreement, the Party claiming that the other
Party is in default shall give notice to the defaulting Party in writing detailing the alleged default
and requesting specific relief that is in accord with the terms and conditions of this Agreement.
The Party receiving such notice of default shall respond in writing within five (5) business days
affirming or denying the alleged default and detailing how any such default under this
Agreement will be cured. If the Party claiming the default is not reasonably satisfied that such
default has been cured within thirty (30) days following the date that the notice of default has
been received by the defaulting Party, the claiming Party shall be free to seek legal redress and
take such other actions, including termination of this Agreement, as it sees fit.
9.2 Enforcement of Remedies. The Party claiming default under Section 9.1 above may
enforce any of its remedies under this Agreement successively or concurrently at its option. All
of the remedies and other provisions of this Article shall be without prejudice and in addition to
any right of setoff, recoupment, combination of accounts, lien or other right to which any Party
or any of its Affiliates is at any time otherwise entitled (whether by operation of law or in equity,
under contract or otherwise).
ARTICLE 10.
LIMITATION OF LIABILITY/INSURANCE
10.1 Direct Energy Indemnification. Direct Energy shall protect, defend, indemnify and hold
harmless GA and its employees (each a" GA Indemnitee", or collectively, the"GA Indemnitees")
from and against any material Claims that may be suffered or incurred by or asserted against any
of the GA Indemnitees as a result of: (a) any material misrepresentations, or alleged illegal or
fraudulent marketing practices, by Direct Energy; (b) any material regulatory actions, complaints
or alleged material violation of Laws by Direct Energy, except to the extent any event set forth in
any of subsections (a) or (b) resulted from, or is caused by, the sole, joint, concurrent,
contributing or comparative negligence or fault of the GA or any GA Indemnitee; (c) a breach by
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Direct Energy of any material term of a sales agreement between any Consumer within the GA
and Direct Energy; and/or(d) a breach by Direct Energy in the performance of this Agreement..
10.2 Defense of Claims. If a third party claim is made or threatened against GA in respect of a
Claim for which Direct Energy owes an indemnity obligation pursuant to Section 10.1, and if
GA intends to seek indemnity with respect thereto, GA shall notify Direct Energy of such claim.
The failure by GA to give such notice will not relieve Direct Energy of its obligations under
Section 10.1, except to the extent that such failure materially prejudices the ability of Direct
Energy to defend such Claim. Direct Energy shall have, at GA's option, the obligation to
assume at its sole expense the defense of such Claims; provided that GA shall have the right to
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participate in such defense with counsel of its choosing at GA's expense, and Direct Energy shall
not be permitted to settle any such claim in a manner that creates obligations on the GA without
the written approval of GA. Direct Energy shall not consent to the entry of any judgment that
does not include as an unconditional term thereof the requirement that the claimant deliver to GA
a signed release of GA from all liability in respect of the relevant claim.
10.3 Limitation of Liability. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
HEREIN, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY
UNDER THIS AGREEMENT FOR INCIDENTAL, INDIRECT, SPECIAL, OR
CONSEQUENTIAL DAMAGES CONNECTED WITH OR RESULTING FROM
PERFORMANCE OR NON-PERFORMANCE OF THIS AGREEMENT, IRRESPECTIVE OF
WHETHER SUCH CLAIMS ARE BASED UPON BREACH OF WARRANTY, TORT,
(INCLUDING NEGLIGENCE OF ANY DEGREE), STRICT LIABILITY, CONTRACT,
OPERATION OF LAW OR OTHERWISE.
10.4 Insurance. Contemporaneous with Direct Energy's execution of this Agreement, Direct
Energy shall provide certificates of insurance, all with coverages and limits as shown in Exhibit
B to this Agreement. For good cause shown, the City Manager or his designee may extend the
time for submission of the required policies of insurance upon such terms, and with such
assurances of complete and prompt performance, as the City Manager or his designee may
impose in the exercise of his sole discretion. Such certificates and policies shall be in a form
acceptable to GA and from companies with a general rating of A minus, and financial size
category of Class X or better, in Best's Insurance Guide. Such insurance policies shall provide
that no change, modification in, or cancellation of, any insurance shall become effective until the
expiration of thirty (30) days after written notice thereof has been given by the insurance
company to GA. Direct Energy shall, at all times during the term of this Agreement, maintain
and keep in force, at Direct Energy's expense, the insurance coverages provided herein.
ARTICLE 11.
NOTICES
11.1 Unless otherwise specified, all notices, demands, requests, consents, statements,
payments or other communications under this Agreement shall be made to the following:
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If to DIRECT ENERGY: Direct Energy Services, LLC
Greenway Plaza, Suite 600
Houston, TX 77046
Attn: Vice President—US North
Direct Energy Residential
With a Copy to: Direct Energy Services, LLC
Greenway Plaza, Suite 600
Houston,TX 77046
Attn: Principal Legal Counsel
Direct Energy Residential
If to CITY OF ELGIN, ILLINOIS: City of Elgin
150 Dexter Court
Elgin, IL 60120
Attention: City Manager
With a Copy to: City of Elgin
150 Dexter Court
Elgin, IL 60120
Attention: City Clerk
With a Copy to: Independent Energy Consultants, Inc.
215 W Garfield Road, Suite 210
Aurora, Ohio 44202
Attention: Office Manager
11.2 Notices shall, unless otherwise specified herein, be in writing and may be delivered by
hand delivery, United States mail, or overnight courier service. Notice by hand delivery shall be
deemed effective at the close of business on the day actually received, if received during
business hours on a business day, and otherwise shall be effective at the close of business on the
next business day following receipt. Notice by overnight United States mail or courier shall be
deemed effective two (2) business days after the day on which sent by such overnight United
States or courier service. Notice sent by regular US mail shall be effective five(5)business days
following the day on which it was deposited in the United States certified or registered mail,
postage prepaid, return receipt requested, and addressed to the intended recipient at its address
set forth in this Agreement. A Party may change its addresses or the contact person for purposes
of this Article 11 by providing written notice of same in accordance herewith.
ARTICLE 12.
CONFIDENTIALITY
12.1 Obligation of Confidentiality. The Parties agree for themselves and their respective
Representatives to keep confidential all Confidential Information provided hereunder and to use
the Confidential Information solely for purposes related to this Agreement. Except as provided
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herein, Confidential Information shall not be disclosed by the receiving Party ("Receiving
Party") to any third party without the prior written consent of the disclosing Party ("Disclosing
Party"), and such third party shall be requested to treat the Confidential Information in
accordance with this Agreement.
12.2 Disclosure. In the event Receiving Party is required to disclose such Confidential
Information by a law, court, agency or other governing body having, or purporting to have,
jurisdiction over the Party, the Receiving Party shall timely notify the Disclosing Party prior to
any disclosure, if such notice is, in the determination of the Receiving Party's counsel, permitted
by law, so as to allow the other Party an opportunity to resist such disclosure and/or to seek
appropriate protection from further disclosure. If the Receiving Party, in the determination of
counsel, is compelled to disclose Confidential Information, the Receiving Party may disclose
only that portion of the Confidential Information which the Receiving Party's counsel advises
that the Receiving Party is compelled to disclose.
12.3 Limitations on Customer Information. Both Parties acknowledge and agree that the
Customer Information is subject to, and must be maintained in compliance with, the limitations
on disclosure of the Customer Information, including without limitation 20 ILCS 3855/1-92,
Section 16-122 of the Public Utilities Act, 220 ILCS 5/16-102, Section 2HH of the Consumer
Fraud and Deceptive Business Practices Act, 815 ILCS 505/2HH, and the provisions of the Local
Utility's Tariff Rate GAP. GA shall warrant to the Local Utility that customer-specific
information provided to the GA in accordance with the provisions of the Local Utility's Tariff
Rate GAP shall be treated as confidential. To protect the confidentiality of Customer
Information:
(a) DIRECT ENERGY'S access to Customer Information is limited those authorized
representatives of DIRECT ENERGY'S, or any third party, who have a need to know the
information for purposes of this Agreement.
(b) DIRECT ENERGY warrants that it will not disclose, use, sell, or provide
Customer Information to any person, firm or entity for any purpose outside of the Governmental
Aggregation program.
(c) DIRECT ENERGY and the GA acknowledge that Customer Information remains
the property of GA. Within ten(10) business days of the GA providing DIRECT ENERGY'S of
notice of a breach of confidentiality of Customer Information, DIRECT ENERGY'S shall
investigate the nature and cause of the breach, and provide DIRECT ENERGY'S detailed report
thereof, including actions taken to assure the future confidentiality of Customer Information. In
instances of material or ongoing breaches of confidentiality of Customer Information, the GA
may bar DIRECT ENERGY from placing any new bids to the GA's subsequent Request(s) for
Qualifications to supply the GA's Aggregation Group.
(d) DIRECT ENERGY warrants that it will delete and/or destroy the Customer
Information described in Items 18 through 23, Item Number 26, and Item Number 27 in the
Company Obligations section of the Local Utility's Tariff Rate GAP, and provided by the GA
within 60 days after the Local Utility provides the information to GA. GA will offer its
assistance to ensure that DIRECT ENERGY meets these requirements and deadlines.
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12.4 Proprietary Rights, Survival. Each Party acknowledges the proprietary rights of the other
Party in and to the Confidential Information. The obligations under this Article Twelve shall
survive the conclusion or termination of this Agreement for two (2) years.
ARTICLE 13.
GENERAL TERMS
13.1 Entire Agreement, Amendments and Counterparts. The terms of this Agreement
(including any exhibits, schedules and attachments hereto) constitute the entire agreement
between the parties with respect to the matters set forth in this Agreement. This Agreement
merges and supersedes all prior understandings and representations (both oral and written)
between the Parties, and each Party releases the other from all claims arising in connection with
any such prior agreement. This Agreement may be changed only by written agreement executed
after the date hereof by the Parties. All exhibits, schedules and addendums attached hereto are
incorporated herein by reference.
13.2 No Waiver. No failure on the part of any Party to exercise, and no delay in exercising,
any right under this Agreement shall operate as a waiver thereof, nor shall any partial exercise of
any such right preclude the full exercise of that right or the exercise of any other right. No
waiver shall be valid unless set forth in a mutually signed writing, and any such waiver shall not
operate as a waiver of the same or any other right on another occasion, unless otherwise agreed
to mutually in writing.
13.3 Headings. The headings used for the articles and sections herein are for convenience
only and shall not affect the meaning or interpretation of the provisions of this Agreement.
13.4 No Partnership. Nothing in this Agreement shall constitute or be construed as
constituting or tending to create an agency, partnership, fiduciary relationship, or master-servant
or employer-employee relationship between the Parties.
13.5 Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with and subject to the internal substantive laws of the State of Illinois.
13.6 Jury Trial Waiver. Both Parties waive any right to trial by jury in any action arising
hereunder.
13.7 No Third Party Beneficiaries. This Agreement confers no rights or remedies whatsoever
upon any person or entity other than the Parties and shall not create,or be interpreted as creating,
any standard of care, duty or liability to any person or entity not a party hereto. Neither Party
shall be liable to a third party not a party to this Agreement for any unauthorized act or omission
on the part of the other Party, nor for any unauthorized obligation or debt incurred by the other
Party.
13.8 Binding Effect. This Agreement shall be binding on and inure to the benefit of the
parties and their respective successors and permitted assigns, except as expressly provided in this
Agreement.
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13.9 Assignment. This Agreement shall not be assigned by either Party without the written
consent of the other, which consent shall not be unreasonably withheld; provided, however, that
DIRECT ENERGY or its successor in interest may assign this Agreement, without the consent
of GA, to an Affiliate or any other company which shall succeed it by purchase, merger,
consolidation, or other transfer of substantially all of DIRECT ENERGY'S assets or DIRECT
ENERGY'S Ohio retail electric assets. The Agreement shall be binding upon, inure to the
benefit of, and be enforceable against the respective successors and assigns of the Parties to this
Agreement.
13.10 Authorization. Each Party to this Agreement represents and warrants that it has full and
complete authority to enter into and perform this Agreement. Each person who executes this
Agreement on behalf of either Party represents and warrants that he or she has full and complete
authority to do so and that such Party will be bound by the Agreement.
13.11 Prefatory Statements. The Parties hereto agree and acknowledge that the prefatory
statements in this Agreement are intended to be and shall be a part of the provisions of this
Agreement,
13.12 Severability. If any provision of this Agreement is determined to be invalid, void, or
unenforceable by any court having jurisdiction, such determination shall not invalidate, void or
make unenforceable any other provision, agreement or covenant of this Agreement.
13.13 Agent. GA may designate an agent or Representative to act on its behalf, which agent or
Representative GA may change from time-to-time upon written notice to DIRECT ENERGY.
13.14 Waiver of Conflict of Interest. If GA has been referred to Direct Energy by an agent,
broker or consultant, and such agent, broker or consultant will be receiving compensation from
Direct Energy, it could be construed that such agent, broker, or consultant possesses a conflict of
interest in representing GA. If GA has any concerns or questions regarding an actual or potential
conflict of interest, GA should discuss the issue with such agent, broker, or consultant. BY
ENTERING INTO THIS AGREEMENT, GA ACKNOWLEDGES AND WAIVES ANY
ACTUAL OR POTENTIAL CONFLICT OF INTEREST.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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Execution of Master Services Agreement
By their respective signatures below, the Parties hereby acknowledge their agreement to
this Master Services Agreement as of the Effective Date. The Parties agree that signatures
transmitted on this Agreement may be delivered via facsimile or email/pdf, it being the express
intent of the Parties that such Agreement delivered via facsimile or email/pdf shall have the same
force and effect as if it were an original.
City of Elgin Direct Energy Services,LLC
By: By:
Name: David J. Kaptain Name: �,i. n(1Y ) ' i
Title: Mayor Title: �� \) am.
Date: June V , 2012 Date: 11 I t 2.O 1
•
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Exhibit A
Definitions
"Act" means the Public Utilities Act (220 ILLS 5/), the Electric Supplier Act (220 ILCS 30/)
and the IIlinois Power Agency Act(20 ILCS 3855/).
"Affiliate" means, in relation to any person, any entity controlled, directly or indirectly, by such
person, any entity that controls, directly or indirectly, such person, or any entity directly or
indirectly under common control with such person. For this purpose, "control" of any entity or
person means ownership of a majority of the voting power of the entity or person. With respect
to GA, the term Affiliate shall include but not be limited to any political subdivision of GA, or an
instrumentality agency or department of GA.
"Aggregation Group" means the collection of Aggregation Members.
"Aggregation Member(s)" means those retail residential and commercial customers whose
meters are read on a cycle basis by the Local Utility, are within the corporate Iimits of GA, and
who are eligible to and do become members of GA's Governmental Aggregation program.
"Bankruptcy Event"means either Party:
(i) is dissolved (other than pursuant to a consolidation, amalgamation or merger),
becomes insolvent, is unable to pay its debts or admits in writing its inability
generally to pay its debts as they become due, or makes a general assignment,
arrangement or composition with or for the benefit of its creditors;
(ii) institutes or has instituted against it a proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any bankruptcy or insolvency
law or other similar law affecting creditors' rights, or a petition is presented for its
winding-up or liquidation;
(iii) seeks or becomes subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other similar official for it.
or substantially all its assets, or has a secured party take possession of all or
substantially all its assets or has a distress, execution, attachment, sequestration or
other legal process levied, enforced or sued on or against all or substantially all its
assets;
(iv) in the case of GA, there is appointed or designated any entity such as a board,
commission, authority or agency to monitor, review, oversee, recommend or
declare a financial emergency or similar state of financial distress;
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(v) causes or is subject to any event with respect to it which, under the applicable
laws of any jurisdiction, has an analogous effect to any of the events specified in
clauses(i) to (iv) inclusive; or
(vi) takes any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts.
"Confidential Information" means any and all data and information of whatever kind or nature
(whether written, electronic or oral) which is disclosed by one Party (the "Disclosing Party") to
the other Party (the "Receiving Party") regarding itself, its business, and/or the business of its
Affiliates, and, if disclosed in writing, is clearly and conspicuously designated in writing or other
tangible form as "confidential" or, if disclosed verbally, is described as confidential or
proprietary at the time of the conversation and the Disclosing Party also supplements the verbal
transmittal with a transmittal in writing or other tangible form that is conspicuously marked
"confidential" or "proprietary" within five (5) days of the verbal disclosure. Each Party shall
have the right to correct any inadvertent failure to designate information as Confidential
Information by providing the other Party with timely written notification of the error, and the
designated information shall be treated as Confidential Information from the time a Party
receives the written notification. Confidential Information does not include information: (a) in
the public domain at the time of disclosure; (b) which after disclosure passes into the public
domain, except by a wrongful act of the Receiving Party; (c) disclosed to the Receiving Party by
a third party not under an obligation of confidentiality; (d) already in the Receiving Party's
possession prior to disclosure by the Disclosing Party; or (e) subject to disclosure by law as a
public record subject to public disclosure; provided, however, that in the event the Receiving
Party believes disclosure is required under applicable law, it shall only disclose such information
in accordance with Section 12.2 of the Agreement.
"Customer Information" means that certain information that the Local Utility is required to
provide to the corporate authorities of the GA pursuant to Section 20 ILCS 3855/1-92 and its
Tariff Rate GAP, including without limitation those names and addresses and Electric Utility
account numbers of residential and small commercial retail customers in the Aggregation area
that are reflected in the Local Utility's records at the time of the request.
"Eligible Consumers" mean those retail residential and commercial consumers within the
geographic boundaries of GA and within the service territory of the Local Utility that are eligible
to participate in a Governmental Aggregation program.
"Force Majeure" for purposes of this Agreement means an event that (a) is not within the
reasonable control of the Party relying thereon and (b) could not have been prevented or avoided
by such Party through the exercise of due diligence. Subject to the foregoing, Force Majeure
shall include flood, earthquake, storm, drought, fire, pestilence, lightning, hurricanes, washouts,
landslides and other natural catastrophes and acts of God; strikes, lockouts, labor or material
shortage, or other industrial disturbances; acts of the public enemies, epidemics, riots, civil
disturbance or disobedience, sabotage, terrorist acts, wars or blockades; governmental actions
such as necessity to comply with any court order, law, statute, ordinance or regulation
promulgated by a governmental authority; or any other unplanned or non-scheduled occurrence,
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condition, situation or threat not covered above, which renders either Party unable to perform its
obligations hereunder, provided such event is beyond the reasonable control through the exercise
of due diligence of the Party claiming such inability. A change in economic electric power or
other market conditions or economic hardship unrelated to an uncontrollable force shall not
constitute a Force Majeure event. In no event shall a Regulatory Event sought or implemented
by GA serve as the basis for a declaration of an event of Force Majeure by GA.
"Governmental Aggregator" means an eligible governmental entity meeting the requirements
of 20 ILCS 3855/1-92.
"Governmental Aggregation" means a program organized and operated under authority
conferred by, inter alia, 20 ILCS 3855/1-92.
"ICC" means the Illinois Commerce Commission.
"Local Utility" means Commonwealth Edison, i.e., the electric distribution utility providing
services to the Aggregation Group of the Governmental Aggregation program.
"Local Utility Charges" means all fees, taxes and any other charges for electric service imposed
by the Local Utility, or any other federal, state or local governmental authority or other entity, at
any time from time-to-time, with the sole exception of the electric generation service charge(i.e.,
the charge for Retail Electric Services) and the by-passable federally-mandated congestion
charge.
"New Customers" means those Eligible Consumers who join the Governmental Aggregation
program during a Delivery Term but after the Opt-Out Period has expired.
"Point of Sale" means the electric meter(s) for each Aggregation Member's account, as
designated by the Local Utility Company.
"Opt-out Period" means the period of twenty-one (21) calendar days from the post-mark date of
the Opt-out Notice.
"Regulations" means ICC, Illinois Power Agency and Federal Energy Regulatory Commission
(and any successor agencies thereof) rules, regulations and precedent, to the extent of their
respective jurisdictions.
"Representative" means a Party, any Affiliate, or any shareholder, officer, director, employee,
agent, attorney,or advisor of the Party or its Affiliate. Each Party agrees to take reasonable steps
to keep the other Party informed of the identity and contact information for each of its
Representatives.
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EXHIBIT B
INSURANCE COVERAGES
A. Worker's Compensation and Employer's Liability with Limits not less than:
(1) Worker's Compensation: Statutory;
(2) Employer's Liability:
$500,000 injury-per occurrence
$500,000 disease-per employee
$500,000 disease-policy limit
Such insurance shall evidence that coverage applies in the State of Illinois.
B. Comprehensive Motor Vehicle Liability with a combined single limit of liability for
bodily injury and property damage of not less than $1,000,000 for vehicles owned, non-
owned, or rented.
All employees shall be included as insureds.
C. Comprehensive General Liability.
a. with coverage written on an "occurrence" basis with limits no less than:
$1,000,000 Bodily Injury and Property Damage Combined Single Limit
Coverage is to be written on an "occurrence" basis.
Coverages shall include:
• Broad Form Property Damage Endorsement
• Blanket Contractual Liability (must expressly cover the indemnity
provisions of the Agreement.)
D. Professional Liability Insurance. With a limit of liability of not less than $1,000,000 per
occurrence and $2,000,000 in the aggregate and covering Direct Energy against all sums
that Direct Energy may be obligated to pay on account of any Iiability arising out of the
Agreement.
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E. Umbrella Policy. The required coverages may be in any combination of primary, excess,
and umbrella policies. Any excess or umbrella policy must provide excess coverage over
underlying insurance on a following-form basis such that when any loss covered by the
primary policy exceeds the limits under the primary policy, the excess or umbrella policy
becomes effective to cover such loss.
F. City as Additional Insured. The City of Elgin shall be named as an Additional Insured on
all policies except for:
•
Worker's Compensation
Professional Liability
Each such additional Insured endorsement shall identify Owner as follows: City of Elgin,
including its elected and appointed officials, its officers, employees, agents, attorneys,
consultants, and representatives.
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