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.
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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.
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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,
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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.
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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