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ORD 2021-22 Electric Franchise Wright-Hennepin 2021.10.25ORDINANCE NO.2021-22 CITY OF OTSEGO WRIGHT COUNTY, MINNESOTA ELECTRIC FRANCHISE ORDINANCE AN ORDINANCE GRANTING TO WRIGHT-HENNEPIN COOPERATIVE ELECTRIC ASSOCIATION, A MINNESOTA COOPERATIVE FORMED UNDER MINNESOTA STATUTE CHAPTER 308A, ITS SUCCESSORS AND ASSIGNS, PERMISSION TO CONSTRUCT, OPERATE, REPAIR, AND MAINTAIN IN THE CITY OF OTSEGO, WRIGHT COUNTY, MINNESOTA, AN ELECTRIC DISTRIBUTION SYSTEM AND TRANSMISSION LINES, INCLUDING NECESSARY POLES, LINES, FIXTURES AND APPURTENANCES, FOR THE FURNISHING OF ELECTRIC ENERGY TO THE CITY, ITS INHABITANTS, AND OTHERS, AND TO USE THE PUBLIC WAYS AND PUBLIC GROUNDS OF THE CITY FOR SUCH PURPOSES. THE CITY COUNCIL OF THE CITY OF OTSEGO, WRIGHT COUNTY,IVIINNESOTA, ORDAINS. SECTION 1. DEFINITIONS. For purposes of this Ordinance, the following capitalized terms listed in alphabetical order shall have the following meanings. City. The City of Otsego, County of Wright, State of Minnesota. City Utility System. Facilities used for providing non -energy related public utility service owned or operated by City or agency thereof, including sewer and water service, street lighting and traffic signals, but excluding facilities for providing heating, lighting or other forms of energy. Commission. The Minnesota Public Utilities Commission, or any successor agency or agencies, including an agency of the federal government, which preempts ali or part of the authority to regulate electric retail rates now vested in the Minnesota Public Utilities Commission, subject to exemption from regulation generally applicable to Minnesota Cooperative Electric Associations, including without limitation the right to local regulation by the Company's Board pursuant to Minnesota Statutes Chapter 216B. Company, Wright -Hennepin Cooperative Electric Association, a Minnesota cooperative formed under Minnesota Statute Chapter 308A, its successors and assigns including all successors and assigns that own or operate any part or parts of the Electric Facilities subject to this franchise. Electric Facilities. Electric transmission and distribution towers, poles, lines, guys, anchors, conduits, fixtures, and necessary appurtenances owned or operated by Company for the purpose of providing electric energy for public or private use. 1 Notice. A written notice served by one party on the other party referencing one or more provisions of this Ordinance. Notice to Company shall be mailed to the Chief Executive Officer, 6800 Electric Drive, P.O. Box 330, Rockford, MN 55373-0330. Notice to the City shall be mailed to the City Administrator, 13400 90th Street NE, Otsego, Minnesota 55330. Either party may change its respective address for the propose of this Ordinance by written notice to the other party. Ordinance. This electric franchise ordinance, also referred to as the Franchise. Public Ground. Land owned by the City for park, open space or similar purpose, which is held for use in common by the public. Public Way. Public right -of --way within the City as defined in Minn.237.1625 subd. 3. SECTION 2. ADOPTION OF FRANCHISE. 2.1 Grant of Franchise. Pursuant to Minnesota Statutes Section 216B.36, City hereby grants Company, for a period of 10 years from the date this Ordinance is passed and approved by the City, the right to transmit and furnish electric energy for light, heat, power and other purposes for public and private use within and through the limits of the City as its boundaries now exist or as they may be extended in the future. For these purposes, Company may construct, operate, repair, and maintain Electric Facilities in, on, over, under and across the Public Ways and Public Grounds of City, subject to the provisions of this Ordinance. Company may do all reasonable things necessary or customary to accomplish these purposes, subject, however, to such reasonable regulations as may be imposed by the City pursuant to separate ordinance consistent with state law and to the further provisions of this Franchise. 2.2 Effective Date• Written Acceptance. This Franchise shall be in force and effect from and after passage of this Ordinance, its acceptance by Company, and its publication as required by law. The City, by Council resolution, may revoke this Franchise if Company does not file a written acceptance with the City within 90 days after publication. 2.3 Service and Rates. The Company represents that it is exempt from rate regulation by the Commission. The service to be provided and the rates to be charged by Company for electric service in City are subject to the limited jurisdiction of the Commission, as established by Minnesota Statutes Chapter 216B. The area within the City in which Company may provide electric service is subject to the provisions of Minnesota Statutes, Section 21613.40. 2.4 Publication Expense. The expense of publication of this Ordinance will be paid by City. 2.5 Dispute Resolution. If either party asserts that the other party is in default in the performance of any obligation hereunder, the complaining party shall notify the other party of the default and the desired remedy. The notification shall be written. Representatives of the parties must promptly meet and attempt in good faith to negotiate a resolution of the dispute. If the dispute is not resolved within 30 days of the written notice, the parties may jointly select a mediator to facilitate further discussion. The parties will equally share the fees and expenses of this mediator. If a mediator is not used or if the parties are unable to resolve the dispute within 30 days after first meeting with the selected mediator, either party may commence an action in District Court to interpret and enforce this franchise or for such other relief as may be permitted by law or equity. 2.6 Termination of Franchise. If the City and the Company are unable to agree on the terms of a new franchise upon the expiration of this Franchise, this Franchise terminates effective upon the expiration of the aforementioned 10-year term. 2.7 Assignnment. This City agrees that the franchise granted under this Ordinance is assignable by the Company to a successor company organized for purposes of delivering electric energy and operating the Electric Facilities, subject to the City's consent, which shall not be unreasonably withheld. SECTION 3. LOCATION, OTHER REGULATIONS. 3.1 Location of Facilities. Electric Facilities shall be located, constructed, and maintained so as not to interfere with the safety and convenience of ordinary travel along and over Public Ways and so as not to disrupt normal operation of the Public Way or any City Utility System. City acknowledges Company's Electric Facilities, as they exist on the effective date of this Franchise, are properly located and installed and do not interfere with City Utility System or with the safety and convenience of ordinary travel along Public Ways. Electric Facilities shall be located on Public Grounds as determined by the City. Company's construction, reconstruction, operation, repair, maintenance, and location of Electric Facilities shall be subject to permits if required by separate ordinance and to other reasonable regulations of the City to the extent not inconsistent with the terms of this Franchise. Company may abandon underground Electric Facilities in place, provided at the City's request, Company will remove abandoned metal or concrete encased conduit interfering with a City project, but only to the extent such conduit is uncovered by excavation as part of the City project. 3.2 Field Locations and Mapping. Company shall provide field locations for its underground Electric Facilities within the City consistent with the requirements %J Minnesota Statutes, Chapter 216D and mapping information as required by federal and state law. 3.3 Street Openings. Company shall not open or disturb any Public Way or Public Ground for any purpose without first having obtained a permit from the City, if required by separate ordinance, for which the City may impose a reasonable fee, unless the City is receiving a franchise fee pursuant to this Ordinance, in which case all permit fees will be waived. Permit conditions imposed on Company shall not be more burdensome than those imposed on other utilities for similar facilities or work. Company may, however, open and disturb any Public Way or Public Ground without permission from the City where an emergency exists requiring the immediate repair of Electric Facilities. In such event, Company shall notify the City by telephone to the office designated by the City as soon as practicable. Not later than the second working day thereafter, Company shall obtain any required permits and pay any required fees. 3.4 Restoration. After undertaking any work requiring the opening of any Public Way or Public Ground, the Company shall restore the Public Ways or Public Grounds, including paving and its foundation, in accordance with Minnesota Rules 7819.1100 and applicable City ordinances. 3 Company shall restore the Public Ground to as good a condition as formerly existed, and shall maintain the surface in good condition for six (6) months thereafter. All work shall be completed as promptly as weather permits, and if Company shall not promptly perform and complete the work, remove all dirt, rubbish, equipment, and material, and put the Public Ground in the said condition, the City shall have, after demand to Company to cure and the passage of a reasonable period of time following the demand, but not to exceed five (5) days, the right to make the restoration of the Public Ways or Public Grounds at the reasonable expense of Company. Company shall pay to the City the cost of such work done for or performed by the City, including administrative expense and overhead. City shall provide Company with evidence of the costs and expenses associated with said restoration. This remedy is in addition to any other remedies available to the City for noncompliance with this section, but the City hereby waives any requirement for Company to post a construction performance bond, certificate of insurance, letter of credit, or any other form of security or assurance that may be required of a person or entity obtaining the City's permission to install, replace, or maintain facilities in a Public Way or Public Ground. In all other aspects, Company shall comply with the terms of Minnesota Rules 7819.1100 for restoration of Public Ways and Grounds, and Minnesota Rules 7819,3000 and 7819,0100. 3.5 Avoid Damage to Electric Facilities. Nothing in this Ordinance relieves any person from liability arising out of the failure to exercise reasonable care to avoid damaging Electric Facilities while performing any activity. 3.6 Notice of Improvements. The City must give Company reasonable notice of plans for improvements to Public Ways or Public Ground where the City has reason to believe that Electric Facilities may affect or be affected by the improvement. The notice must contain: (i) the nature and character of the improvements; (ii) the Public Ways and Public Grounds upon which the improvements are to be made; (iii) the extent of the improvements, (iv) the time when the City will start the work; and (v) if more than one Public Way or Public Ground is involved, the order in which the work is to proceed. The City shall give notice to Company a sufficient length of time in advance of the actual commencement of the work, as reasonably possible, to permit Company to make any necessary additions, alterations or repairs to its Electric Facilities. 3.7 Shared Use of Poles. Company shall make space available on its poles or towers for City fire, water utility, police or other City facilities whenever such use will not interfere with the use of such poles or towers by Company, by another electric utility, by a telephone utility, or by any cable television company or other form of communication company. In addition, the City shall pay for any added cost incurred by Company because of such use by City. Any facilities which the City attaches to Company facilities shall be installed and maintained in accordance with the National Electrical Safety Code (NESC). SECTION 4. RELOCATIONS. 4.1 Relocation of Electric Facilities in Public Ways. In accordance with Minnesota statutes and administrative rules, Company shall promptly and at its own expense, with due regard for seasonal working conditions, permanently remove and relocate its facilities in the right-of-way when it is necessary to prevent interference, and not merely for convenience of the local government unit, in connection with: (1) a present or future local government use of the right-of- way for a public project; (2) the public health or safety; or (3) the safety and convenience of travel over the right-of-way. In the event the City requests the relocation, removal, replacement, or reconstruction of Company's Electric Facilities for the convenience of the City, City shall promptly reimburse Company for all of Company's costs and expenses related thereto. 4.2 Relocation of Electric Facilities in Public Ground. City may require Company, at Company's expense, to relocate or remove its Electric Facilities from Public Ground upon a fmding by City that the Electric Facilities have become or will become a substantial impairment to the existing or proposed public use of the Public Ground. 4.3 Projects with Federal Funding. Relocation, removal, or rearrangement of any Company Electric Facilities made necessary because of the extension into or through City of a Federally aided highway project shall be governed by the provisions of Minnesota Statutes Sections 161.45 and 161.46 if funds for these purposes are available. 4.4 No Waiver. The provisions of this Franchise apply only to facilities constructed in reliance on a franchise from the City and shall not be construed to waive or modify any rights obtained by Company for installations within a Company right-of-way acquired by easement or prescriptive right before the applicable Public Way or Public Ground was established, or Company's rights under state or county permit. SECTION 5. TREE TRIMMING. Company may trim all trees and shrubs in the Public Grounds and Public Ways of City to the extent Company finds necessary to avoid interference with the proper construction, operation, repair, and maintenance of any Electric Facilities installed hereunder, subject to permit or other reasonable regulation by the City, provided that Company shall save the City harmless from any liability arising therefrom, except if said liability arises from the City's gross negligence or willful misconduct. SECTION 6. INSURANCE AND INDEMNIFICATION. 6.1. Insurance. The Company shall maintain insurance consistent with state law. 6.2 Indemnity of City. Company shall indemnify, keep, and hold the City free and harmless from any and all liability on account of injury to persons or damage to property occasioned by the construction, maintenance, repair, inspection, the issuance of permits, or the operation of the Electric Facilities located in the Public Ways and Public Grounds. The City shall not be indemnified for losses or claims occasioned through its own negligence except for losses or claims arising out of or alleging the City's negligence as to the issuance of permits for, or inspection of, Company's plans or work. The City shall not be indemnified if the injury or damage results from the performance in a proper manner of acts reasonably deemed hazardous by Company, and such performance is nevertheless ordered or directed by City after notice of Company's determination. 6.3 Defense of City. In the event a suit is brought against the City under circumstances where this agreement to indemnify applies, Company at its sole cost and expense shall defend the City in such suit if written notice thereof is promptly given to Company within a period wherein Company is not prejudiced by lack of such notice. If Company is required to indemnify and defend, 5 it will thereafter have control of such litigation, but Company may not settle such litigation without the consent of the City, which consent shall not be unreasonably withheld. This section is not, as to third parties, a waiver of any defense or immunity otherwise available to the City; and Company, in defending any action on behalf of the City, shall be entitled to assert in any action every defense or immunity that the City could assert in its own behalf. SECTION 7. VACATION OF PUBLIC WAYS. The City shall give Company at least two (2) weeks prior written notice of a proposed vacation of a Public Way. Except where required for a City improvement project, the vacation of any Public Way, after the installation of Electric Facilities, shall not operate to deprive Company of its rights to operate and maintain such Electric Facilities, until the reasonable cost of relocating the same and the loss and expense resulting from such relocation is first paid to Company. In no case, however, shall City be liable to Company for failure to specifically preserve a right -of --way under Minnesota Statutes, Section 160.29, as may be supplemented or amended from time to time. In accordance with Minnesota Rules, Part 7819,3200, if the City's order directing vacation of the Public Way does not require relocation of the Company's Electric Facilities, the vacation proceeding shall not be deemed to deprive the Company of its right to continue to use the right -of --way of the former Public Way for its Electric Facilities installed prior to such order of vacation, unless it would not be in the public interest as contemplated by Minnesota Rules, Part 7819.3200. SECTION 8. CHANGE IN FORM OF GOVERNMENT. Any change in the foi�n of government of the City shall not affect the validity of this Ordinance. Any governmental unit succeeding the City shall, without the consent of Company, succeed to all of the rights and obligations of the City provided in this Ordinance. SECTION 9. FRANCHISE FEE. 9.1 Fee Schedule. During the term of the franchise hereby granted, and in lieu of any permit or other fees being imposed on Company, the City may impose on Company a franchise fee by collecting the amounts indicated in a Fee Schedule set forth in a separate ordinance from each customer in the designated Company Customer Class. The parties have agreed that the franchise fee collected by the Company and paid to the City in accordance with this Section 9 shall not exceed the following amounts. Class Residential Sm C & I —Non-Dem Sm C & I —Demand Large C & I Public Street Ltg Muni Pumping N/D Muni Pumping — Dem Fee Per Premise Per Month 0 9.2 Separate Ordinance. The franchise fee shall be imposed by a separate ordinance duly adopted by the City Council, which ordinance shall not be adopted until at least 90 days after written notice enclosing such ordinance has been served upon Company by certified mail. The fee shall not become effective until the beginning of a Company billing month at least 90 days after written notice enclosing such adopted ordinance has been served upon Company by certified mail. Section 2.5 shall constitute the sole remedy for solving disputes between Company and the City in regard to the interpretation of, or enforcement of, the separate ordinance. No action by the City to implement a separate ordinance will commence until this Ordinance is effective. 9.3 Terms Defined. For the purpose of this Section 9, the following definitions apply: 9.3.1 "Customer Class" shall refer to the classes listed on the Fee Schedule and as defined or determined in Company's electric tariffs on file with the Commission. 9.3.2 "Fee Schedule" refers to the schedule in Section 9.1 setting forth the various customer classes from which a franchise fee would be collected if a separate ordinance were implemented immediately after the effective date of this Franchise. The Fee Schedule in the separate ordinance may include new Customer Class added by Company to its electric tariffs after the effective date of this Franchise. 9.3.3 "Gross Revenue" means all sums, excluding any surcharge or similar addition to the Company's charges to customers for the purpose of reimbursing the Company for the cost resulting from the franchise fee, received by the Company from the sale of electricity to its members within the corporate limits of the City. 9.4 Collection of the Fee. The franchise fee shall be payable quarterly and shall be based on the amount collected by Company during the period for which payment is to be made by imposing a surcharge equal to the designated franchise fee beginning on the agreed effective date for the applicable customer classification in all customer billings for electric service in each class. The payment shall be due the last business day of the month following the period for which the payment is made. The franchise fee may be changed by ordinance from time to time; however, each change shall meet the same notice requirements and not occur more often than annually and no change shall require a collection from any customer for electric service in excess of the amounts specifically permitted by this Section 9. The time and manner of collecting the franchise fee may be subject to the approval of the Commission. No franchise fee shall be payable by Company if Company is legally unable to first collect an amount equal to the franchise fee from its customers in each applicable class of customers by imposing a surcharge in Company's applicable rates for electric service. Company may pay the City the fee based upon the surcharge billed subject to subsequent reductions to account for uncollectibles, refunds and correction of erroneous billings. Company agrees to disclose to the City (1) the total number of members in the City limits; (2) the rate classification totals; and (3) the total amount collected. The Company shall not be required to disclose identifiable customer or customer information or any other information regarding identified customers. The Company agrees to provide at the time of each payment a statement summarizing how the fianchise fee payment was determined, including information showing any adjustments to the total surcharge billed in the period for which the payment is being made to account for any uncollectibles, refunds or error corrections. 7 9.5 Equivalent Fee Requirement. The separate ordinance imposing the fee shall not be effective against Company unless it lawfully imposes and the City quarterly or more often collects a fee or tax of the same or greater equivalent amount on the receipts from sales of energy within the City by any other energy supplier, provided that, as to such a supplier, the City has the authority to require a franchise fee or to impose a tax under Minnesota Statute, Section 21613.36. The "same or greater equivalent amount" shall be measured, if practicable, by comparing amounts collected as a franchise fee from each similar customer, or by comparing, as to similar customers the percentage of the annual bill represented by the amount collected for franchise fee purposes. The franchise fee or tax shall be applicable to energy sales for any energy use related to heating, cooling or lighting, or to run machinery and appliances, but shall not apply to energy sales for the purpose of providing fuel for vehicles. If the Company specifically consents in writing to a franchise or separate ordinance collecting or failing to collect a fee from another energy supplier in contravention of this Section 9.5, the foregoing conditions will be waived to the extent of such written consent. SECTION 10. PROVISIONS OF ORDINANCE. 10.1 Severability. Every section, provision, or part of this Ordinance is declared separate from every other section, provision, or part; and if any section, provision, or part shall be held invalid, it shall not affect any other section, provision, or part. Where a provision of any other City ordinance conflicts with the provisions of this Ordinance, the provisions of this Ordinance shall prevail. 10.2 Limitation on Applicability. This Ordinance constitutes a fianchise agreement between the City and Company as the only parties, and no provision of this Franchise shall in any way inure to the benefit of any third person (including the public at large) so as to constitute any such person as a third parry beneficiary of the agreement or of any one or more of the terms hereof, or otherwise give rise to any cause of action in any person not a party hereto. SECTION 11. AMENDMENT PROCEDURE. Either party to this fianchise agreement may at any time propose that the agreement be amended to address a subject %J concern, and the other party will consider whether it agrees that the amendment is mutually appropriate. If an amendment is agreed upon by both City and Company, this Ordinance may be amended at any time by the City passing a subsequent ordinance declaring the provisions of the amendment, which amendatory ordinance shall become effective upon the filing of Company's written consent thereto with the City Cleric within 90 days after the date of final passage by the City of the amendatory ordinance. SECTION 12, PREVIOUS FRANCHISES SUPERSEDED. This Franchise supersedes any previous electric fianchise granted to Company or its predecessor. ADOPTED this 25th day of October, 2021 by the City Council of the City of Otsego, Minnesota. Stockamp, Attest: �. Audra Etzel, City Clerk Date Published: w it jio Wright -Hennepin Cooperative Electric Association A Touchstone Energy' Cooperative fit % December 15, 2021 Mr. Adam Flaherty Otsego City Administrator/Finance Director 13400 90th Street NE Otsego, MN 55330 Re: Otsego Electric Franchise Fee Dear Mr. Flaherty: DEC 2 0 2021 D By I write to respond to the City's October 27, 2021 request to accept, in writing, the ordinance recently adopted by the City Council of the City of Otsego ("City") relating to the City's imposition of a franchise fee on Wright -Hennepin Cooperative Electric Association ("WH") regarding WH's provision of electricity to the City, its residents, and WH members. WH has reviewed the ordinance and communicated with the City's legal counsel during its preparation. WH acknowledges, and therefore consents to, the City's statutory right to impose franchise fees on utilities serving the City and its residents. That said, we remind the City again why WH opposed this ordinance in writing from the beginning. In short, this ordinance effectively puts WH in the role of tax collector for the City. Consequently, it will increase WH member bills for no WH-initiated cause. It will also effectively tax other WH members to finance the staff time and additional overhead required to administer it. And, while WH will designate this fee as City -imposed on member bills, it is less transparent than other forms of taxation because it's not coming directly from the City itself. For all these reasons, we encourage the City to revisit this decision at some point in the future. Sincerely c and �� (763) 477-3000 �� (800) 943-2667 � (763) 477-3054 ® www.whe.org EM info@whe.org 6800 Electric Drive, P.O. Box 330, Rockford, MN 55373-0330