Exhibit 10.2
AGREEMENT
for a Supply of Water
between
MIDDLESEX WATER COMPANY
and the
CITY OF RAHWAY
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Entered into as of April 1, 2006
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This Agreement (hereinafter referred to as the "Agreement") is entered
into as of this 1st day of April 2006 between:
MIDDLESEX WATER COMPANY, a public utility and corporation organized
under the laws of the State of New Jersey, with offices at 0000 Xxxxxx
Xxxx, Xxxxxx, Xxx Xxxxxx (hereinafter referred to as "Middlesex")
and the
CITY OF RAHWAY, a municipal corporation of the State of New Jersey with
its principal offices located at Xxxx Xxxx Xxxxx, Xxxxxx, Xxx Xxxxxx
00000 (hereinafter referred to as "Rahway").
W I T N E S S E T H:
WHEREAS, Middlesex owns and operates a public water supply system; and
WHEREAS, Rahway has requested that Middlesex provide it with a supply
of water for private and public use; and
WHEREAS, this Agreement is designed to set for the terms and conditions
between the parties relating to a supply of water.
Now therefore, in consideration of the premises and of the mutual
covenants herein contained, the parties agree that:
1. Supply of Water.
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Middlesex agrees to supply Rahway with water, and Rahway agrees to
accept such water upon the terms and conditions set forth herein.
2. Term.
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The term of this Agreement shall be ten (10) years from the date
hereof. Except as otherwise provided herein, or as the parties may mutually
agree upon, service shall terminate on a date that is ten (10) years following
the date hereof.
The terms of the Agreement shall remain in effect after the termination
date and any periods of renewal of the Agreement, unless written notice of
intention to terminate the Agreement is given by either party at least three
hundred sixty-five (365) days prior to the end of any such period. In the event
that such notice has not been given, the Agreement shall remain in effect until
the earlier of (a) renewal or modification of the Agreement by consent of both
parties, or (b) a date no less than three hundred sixty-five (365) days after
the date that either party provides written notification of termination.
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3. Rates.
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Rahway shall pay Middlesex at a rate which is the sum of (a) the rate
for Service Under Contract pursuant to Rate Schedule No. 5 of Middlesex's
tariff, currently at the rate of $1,476.72 per million gallons (Exhibit A
attached hereto), and (b) the rate for Transmission Service pursuant to Rate
Schedule No. 8 of Middlesex's tariff, currently at the rate of $50.00 per
million gallons (Exhibit B attached hereto); or as applicable rates and tariffs
may be established and/or changed from time to time with the approval of the New
Jersey Board of Public Utilities ("BPU") as required by law. (Such rate is
hereinafter referred to as the "Contract Rate.") Rahway shall pay Middlesex at
the said Contract Rate for the greater of the Daily Minimum quantity of water
(as defined below in paragraph 7) or for all water delivered to Meter Stations
(as defined below in paragraph 5 (Meter Stations/Points of Delivery) up to and
including the Allowable Excess as determined under paragraph 8 (a). Rahway shall
pay Middlesex the applicable Peaking Charges, set forth in paragraph 8, for all
water in excess of the Allowable Excess, subject to the provisions of paragraph
9 hereof.
4. Delivery System.
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Water to be supplied by Middlesex hereunder shall be delivered to
Rahway through Middlesex's water transmission system and all existing
interconnections located on such transmission system as existed at the date of
this Agreement and such other interconnections as may be reasonably agreed upon
from time to time.
5. Meter Stations/Points of Delivery.
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The parties understand and agree that delivery shall be made through
such points of delivery into the Rahway system as may be reasonably agreed upon
from time to time by the parties (hereinafter referred to as "Meter Stations").
Water so supplied shall be metered at the Meter Stations.
6. Meters, Services and Other Appurtenances.
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Middlesex shall furnish, install and maintain at its own cost such
service connections and meters as it shall deem necessary for connection to the
Meter Stations. The meters and service pipes shall remain the property of
Middlesex. Middlesex shall maintain and verify the accuracy of said meters at
least annually, and Rahway, at its sole cost, shall have the right to test the
meters at the Meter Stations by a certified meter
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technician at any reasonable time upon written notice to Middlesex. Rahway shall
provide for furnishing, installing and maintaining at its own cost all other
piping, fittings, valves, meter pits or vaults and appurtenances, including
pressure reducing stations, necessary to take water from Middlesex.
7. Minimum Payment Obligation.
(a) Rahway shall be obligated to pay for the Daily Minimum quantity of
water at the Contract Rate. "Daily Minimum" shall mean:
(i) One hundred thousand (100,000) gallons of water a day
(0.10 million gallons per day (mgd)), or
(ii) Such greater amount as may be elected under paragraph
7 (b) of this Agreement.
(b) At any time during the term of this Agreement, Rahway may elect,
upon written notification to Middlesex, to increase the Daily Minimum quantity
of water to a greater quantity of water (hereinafter referred to as the "Revised
Daily Minimum"). Once such an election is made by Rahway, the Revised Daily
Minimum quantity of water shall remain in effect for a period of at least twelve
(12) months from the effective date of such election unless further increased
pursuant to this Agreement. At the end of such twelve (12) month period, the
Revised Daily Minimum shall remain in effect unless Rahway shall further amend
(increase or decrease) the Revised Daily Minimum. Each such election to amend
shall be on written notice to Middlesex and shall remain in effect for a period
of twelve (12) months from the effective date of such election unless further
increased pursuant to this Agreement. Any election to decrease the Revised Daily
Minimum shall not be reduced below the initial amount of one hundred thousand
(100,000) gallons of water a day specified in paragraph 7(a)(i) of this
Agreement.
8. Peaking Charges.
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(a) The total daily quantity of water taken by Rahway at the Meter
Stations may exceed the Daily Minimum or the Revised Daily Minimum by up to 50%
on a 24-hour basis without affecting the Contract Rate. The quantity of water
taken in the peak hour multiplied by 24 may exceed the Daily Minimum or the
Revised Daily Minimum by up to 100% without affecting the Contract Rate. Such
excess quantities of water are known as the "Allowable Excess".
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(b) If the quantity of water taken in a 24-hour period shall exceed the
Daily Minimum or the Revised Daily Minimum by more than 50%, ("Daily Peaking
Excess"), Rahway shall pay for such Daily Peaking Excess at a rate (the "Daily
Peaking Rate") determined by the following formula:
(i) A fraction (the numerator of which is the actual
daily usage; and the denominator of which is the
applicable Daily Minimum or Revised Daily Minimum
then in effect multiplied by 1.5) multiplied by the
Contract Rate. For example, if the actual daily usage
is .25 million gallons, and the Daily Minimum is .10
million gallons and the Contract Rate is
$1,500.00:
.25 x Contract Rate
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.10 x 1.5
1.67 x $1,500.00 = $2,505.00 (Daily
Peaking
Rate)
In this example, the charge for the Daily Peaking
Excess would be $250.00 calculated as follows:
.25 - .15 (Allowable Excess) = .10 (Daily Peaking
Excess)
.10 x $2,505.00 = $250.50
(c) If the quantity of water supplied in the maximum peak hour
multiplied by 24 shall exceed the Daily Minimum or the Revised Daily Minimum by
more than 100%, ("Hourly Peaking Excess") Rahway shall pay for such Hourly
Peaking Excess with a charge (the "Hourly Peaking Charge") determined by the
following formula:
(i) A fraction (the numerator of which is the
quantity of water supplied in the maximum
peak hour multiplied by 24; and the
denominator of which is the applicable Daily
Minimum or Revised Daily Minimum then in
effect multiplied by 2.0) multiplied by the
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Contract Rate.
For example, if the quantity of water
supplied in the maximum peak hour multiplied
by 24 equals .30 million gallons; and the
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Daily Minimum is .10 million gallons and the
Contract Rate is
$1,500.00:
.30 x Contract Rate
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.10 x 2
1.50 x $1,500.00 = $2,250.00
(Hourly Peaking Charge)
In this example, the charge for such Hourly
Peaking Excess would be calculated as
follows:
300,000 gal. / 24 = 12,500
200,000 gal. / 24 = 8,333
Calculated maximum
Peak hour excess =
12,500 - 8,333 = 4,167 gal.
Hourly Peaking Charge x Calculated Max. Peak
Hour Excess
$2,250 mgd 4,167 gal.
$2,250 mgd x .004167
= $9.375 for such Hourly Peaking Excess
A similar calculation would be made for each
day there is an Hourly Peaking Excess, but
there shall not be more than one such Hourly
Peaking Charge in each 24-hour period.
(d) In no instance, and under no conditions, shall the daily 24-hour
quantity of water supplied and purchased under this Agreement exceed One (1)
million gallons, nor shall the maximum hourly flow exceed the rate of Two (2)
million gallons per day, unless otherwise agreed in writing by the parties.
(e) Notwithstanding anything herein to the contrary, the obligation of
Middlesex to supply water under this Agreement beyond the Daily Minimum or the
Revised Daily Minimum, as the case may be, is subject to Middlesex having the
supply and capacity to provide such amounts.
9. Exceptions for Special Circumstances
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Notwithstanding anything to the contrary herein, the parties recognize
that at different times during the year, Rahway experiences a problem with
excess chloride in its
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water (the "Chloride Issue"). In addition, at different times during the year,
Rahway experiences an additional passing flow problem whereby it is required to
cease taking, or decrease the amount of, water which it may legally take from
the Rahway River (the "Passing Flow Issue").
In the event that Rahway is experiencing either of these problems
throughout the year and properly notifies Middlesex of such problems, and the
expected duration of the same, then and in such event, Middlesex agrees that
Rahway shall be obligated to pay for the amount of water needed to address each
such problem according to the following schedule:
(a) For the daily amount of water used for the Chloride Issue during
the period from October 1 - April 30, Rahway shall pay for such water at the
Contract Rate set forth herein without regard to any additional Peaking Charges
as set forth in paragraph 8 hereof.
(b) For the daily amount of water used for the Passing Flow Issue
during the period from October 1 - April 30, Rahway shall pay for such water at
the Contract Rate set forth herein without regard to any additional Peaking
Charges as set forth in paragraph 8 hereof.
(c) For the daily amount of water used for the Chloride Issue during
the period from May 1 - September 30, Rahway shall pay for such water at the
Contract Rate set forth herein without regard to any additional Peaking Charges
as set forth in paragraph 8 hereof, provided that the amount of water used for
the Chloride Issue does not exceed one million gallons per day. For any amounts
of water used in excess of one million gallons per day, Rahway shall pay for
such excess at a Daily Peaking Rate as determined under paragraph 8 hereof.
(d) For the daily amount of water used for the Passing Flow Issue
during the period from May 1 - September 30, Rahway shall pay for such water in
accordance with the provisions of paragraphs 7 and 8 herein, except that the
amount charged as the Daily Peaking Rate shall not exceed and shall be capped at
the rate for one million gallons under the Consumption Charges as set forth in
Rate Schedule No. 1 - General Water Service - GS (the "Retail Rate") then in
effect under the applicable Middlesex Tariff. As
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of the date of the Agreement, the Retail Rate is the equivalent of $2,938.70 per
million gallons of water used.
10. Payment.
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The terms are net cash on presentation of invoice.
11. Combined Charge.
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Payments for water (in excess of the Daily Minimum or the Revised Daily
Minimum and adjustments of the Daily Minimum or the Revised Daily Minimum under
paragraph 7) shall be determined on the basis of the combined total daily
quantity of water supplied through all the Meter Stations as determined by meter
readings at said Meter Stations.
12. Meter Readings.
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Middlesex will read the meters daily (at a regular hour determined by
Middlesex) for all water supplied to Rahway at each connection then in
operation.
13. Definitions.
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Where the words "daily" or "24 hours" are used in this contract, they
shall refer to the 24-hour period between the daily meter readings.
14. Quality.
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All water delivered to Rahway by Middlesex under this Agreement is
intended to comply with all Federal and State primary requirements for safe
drinking water.
15. Scheduling.
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Middlesex shall have the right to modify its rate of delivery to manage
its system requirements in accordance with accepted operating procedures. Rahway
shall give Middlesex reasonable advance notice of any anticipated departures
from its then normal usage.
16. Exceptions for Emergencies.
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The Daily Minimum or Revised Daily Minimum payment obligation shall not
be affected in the event that the amount of water supplied by Middlesex to
Rahway exceeds the daily or hourly limitations established herein for not more
than twenty-four (24) hours in case of documented fire or main break emergencies
experienced by Rahway and for not more that five (5) days in the case of other
exceptional circumstances experienced by Rahway requiring an emergency supply of
water, provided Middlesex is promptly
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notified that any such emergency exists. It is at the sole reasonable discretion
of Middlesex to determine if such requests meet the criteria of an emergency as
contemplated in this Agreement.
17. Excused Performance.
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Middlesex agrees to provide a continuous, regular and uninterrupted
supply of water at the Meter Stations, subject to delays in initiating service
or interruptions in service by reasons of acts of God, accident, strike, legal
process, or other cause beyond its control, or failure, refusal, or delay on the
part of any governmental or regulatory body having jurisdiction in issuing
permits, approvals, authorizations, licenses, rights-of-way or the like.
Middlesex shall not be liable for damages to Rahway by reason of inadequate
pressure or volume or quality or failure to provide water for any cause
whatsoever provided that the same does not arise out of the negligence of
Middlesex. In the event of an interruption in service Middlesex agrees to act
diligently within the bounds of normal operating procedures to return service to
normal.
18. Indemnification.
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Rahway shall completely indemnify, protect and save harmless Middlesex
from any and all costs, expenses, liability, losses, claims, suits and
proceedings of any nature whatsoever arising out of the water service by Rahway.
However, as to claims involving water quality, this paragraph is intended not to
apply to water until after it is delivered to Rahway system, i.e., after water
is supplied through points of delivery referred to in paragraph 5.
Middlesex shall completely indemnify, protect and save harmless Rahway
from all costs, expenses, liability, losses, claims, suits and proceedings of
any nature whatsoever caused by any breach by Middlesex of its obligations under
this Agreement.
Notwithstanding anything herein to the contrary, each party's aggregate
liability to the other arising out of or in connection with this Agreement shall
not exceed an amount equal to two times one year's gross revenues required to be
paid by Rahway to Middlesex based upon the Daily Minimum or Revised Daily
Minimum in effect at the time of the occurrence giving rise to the liability,
and each party hereby releases the other from any liability in excess thereof.
This paragraph is not intended to limit either party's liability to third
parties.
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19. Regulatory Approvals.
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This Agreement shall be filed with and subject to approval by the BPU
and the New Jersey Department of Environmental Protection as may be required by
law.
Middlesex shall expeditiously initiate the said filings for the said
approvals. Both parties agree to cooperate and act in good faith in connection
with obtaining these and any other regulatory authorizations.
20. Miscellaneous.
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To the extent not inconsistent with this Agreement, all other
provisions of Middlesex's tariff shall be deemed to govern service hereunder.
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New Jersey.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first written above.
MIDDLESEX WATER COMPANY
ATTEST:
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
President
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Secretary
CITY OF RAHWAY
ATTEST:
By: /s/ Xxxxx X. Xxxxxxx
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/s/ Xxxx X. Xxx Xxxxx X. Xxxxxxx
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Xxxx X. Xxx Mayor
City Clerk
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