Southern Union Gas Co. v. City of Port Neches

DIES, Chief Justice.

Appellees herein are the cities of Port Neches, Port Arthur, Nederland, Groves, Griffin Park, and Lakeview. In December 1971, Pennzoil Pipeline Company (now United Texas Transmission Company— UTTCO), entered into a gas supply agreement with Southern Union Gas Company; with the latter selling the gas to the cities. The contract provided for an annual price adjustment. In 1974, the cities enacted rate ordinances which adopt by reference the 1971 contract. The 1971 contract had this provision: “For each Rate Year, which shall be a twelve (12) month period of Oct. 1 through…