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5. NSP Franchise CITY OF CHANHASSEH :) - 690 COULTER DRIVE. P.O. BOX 147. CHANHASSEN, MINNESOTA 55317 (612) 937-1900 . FAX (612) 937-5739 MEMORANDUM TO: Mayor and City Council FROM: Don Ashworth, City Manager DA TE: December 2, 1997 SUBJ: NSP Franchise Given its length, I sent a copy of the proposed franchise agreement to council members this past week. As I stated at that time, the city attorney and I have been negotiating this contract with NSP for approximately six months. At this point, we believe that the proposed franchise conforms to the franchises previously negotiated with Minnegasco and Minnesota Valley Electric. Approval of the attached franchise is recommended. g: \mgr\nspfranc h i se .doc Northern States Power Company Law Department October 13, 1997 Altom,ys Harold J. Baeley Jack F. Sjoholm Stephen C. Lapadat James L. Alunan Michael C. Connelly James P. Johnson Jeffrey C. Paulson Bruce A. Colt Peter M. Glass John'P. Moore,Jr. Corporate Secrelllr)' 414 Nicollet Mall Minneapolis. Minnesota 55401 Telephone (612) 330-6600 Fax No. (612) 330.5827 Gary R. johnsnn Vice President and General Counsel Writer's Direct Dial Number 330-6603 Roger N. Knutson, Esq. Campbell, Knutson, Scott & Fuchs, P.A. Eagandale Office Center, Suite 317 1380 Corporate Center Curve Eagan, MN 55121 Re: Proposed Electric Franchise for the City of Chanhassen Dear Roger: I am enclosing herewith a marked version of a proposed franchise for the City of Chanhassen which continues the markings that were previously made in the draft which you reviewed before. The only changes which I have made, at your request, is to insert a new Section 9 Franchise Fee, based on the "Stillwater" model, but retaining the special exception at the end to permit undergrounding without imposing a similar fee on other franchise holders in the city. This is now set forth as Section 9.7. In addition, at your request, I inserted a new Section 10 allowing the franchise to be reopened after 10 years if the city refuses to amend it at that time to incorporate provisions that the Company has agreed to in at least two other franchises agreed to by the Company with other cities after the date of this franchise agreement. Section 10 was renumbered as Section 11 and Section 11 restated as Section 12. If these changes are acceptable, we can quite quickly on our word processor send out a clean copy for adoption by the City. Please let me know at your earliest convenience if the enclosure is acceptable. Very truly yours, Jfa~1fl f3(i44-- Harold J. ~~ey 1./ Senior Attorney' v' HJB/J AG cc: Joyce Gutkowski Lou Howard DRAFr: 10/9/97 ORDINANCE NO. CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES, MINNESOTA AN ORDINANCE GRANTING TO NORTHERN STATES POWER COMPANY, A MINNESOTA CORPORATION, ITS SUCCESSORS AND ASSIGNS, PERMISSION TO CONSTRUCT, OPERATE, REPAIR AND MAINTAIN IN THE CITY OF CHANHASSEN, 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 CHANHASSEN, CARVER AND HENNEPIN COUNTIES, MINNESOTA, ORDAINS: SECTION 1. DEFINITIONS. For purposes of this Ordinance, the following capitalized terms listed in alphabetical order shall have the following meanings: 1.1 City. The City of Chanhassen, Counties of Carver and Hennepin, State of Minnesota. 1.2 City Utility System. Facilities used for providing non-energy related sewer, water, or any other public utility service owned or operated by City or agency thereof including sewer and water service. but excluding facilities for providing heating. lighting or other forms of energy. 1.3 Commission. The Minnesota Public Utilities Commission, or any successor agency or agencies, including an agency of the federal government which preempts all or part of the authority to regulate electric retail rates now vested in the Minnesota Public Utilities Commission. HJB:FRANCHISE:CHANHASSEN.chan. wp 1 DRAFT: 10/9/97 1.4 Company. Northern States Power Company, a Minnesota corporation, its successors and assigns. 1.5 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 use. 1.6 Non-Betterment Costs. Costs incurred by Company from relocation, removal or rearrangement of Electric Facilities that do not result in an improvement to the Electric Facilities. 1.7 Notice. A writing served by any party or parties on any other party or parties. Notice to Company shall be mailed to the General Counsel, Law Department, 414 NicolletMall, Minneapolis, MN 55401. Notice to City shall be mailed to the City Manager/Clerk at 690 Coulter Drive, Chanhassen, MN 55317. Either party may change its respective address for the purpose of this Ordinance by written notice to the other party. 1.8 Public Ground. Land owned by the City for park, open space or similar purpose, which is held for use in common by the public. 1.9 Public Way. Any street, alley, walkway or other public right-of- way within the City. 1.10 Total Cost. Cost to Company for removing overhead Electric Facilities and replacing its function by installing underground Electric Facilities, including but not limited to. engineering. materials and labor. including overheads, less the depreciated value on Company's books of the overhead Electric Facilities removed and replaced by said underground Electric Facilities. SECTION 2. ADOPTION OF FRANCHISE. 2.1 Grant of Franchise. City hereby grants Company, for a period of 20 years, 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 HJB .FRANCHISE:CHANHASSEN .chan.wp 2 DRAFT: 10/9/97 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 ordinance and to the further provisions of this franchise agreement. 2.2 Effective Date: Written Acceptance. This franchise shall be in force and effect from and after its passage and its acceptance by Company, and its publication as required by law. An acceptance by Company must be filed with the City Manager/Clerk within 90 days after publication. 2.3. Service. Rates and Area. The service to be provided and the rates to be charged by Company for electric service in City are subject to the jurisdiction of the Commission. The area within the City in which Company may provide electric service is subject to the provisions of Minnesota Statutes, Section 216BAO. However. during the term of this franchise. Minnesota Statutes. Chapter 216B. may be amended or repealed in a manner to: (1) allow City by franchise agreement or otherwise to directly establish service area boundaries between electric suppliers providing electric service within the municipal limits of City. or (2) permit City by franchise agreement or otherwise to establish service area boundaries which must be followed by the Commission in an application to it to revise service area boundaries previously established by the Commission. unless the Commission finds the requested revision would create an unreasonable duplication of facilities or such revision is for another reason not in the best interest of the pUQlic. If this occurs. City may by resolution direct Company to negotiate an amendment to this franchise agreement establishing such service area boundaries. Ifno amendment to this franchise occurs within 90 days after the date a written copy of such resolution is served upon Company. City may. upon 30 days prior written notice to Company. terminate this franchise by ordinance. Notwithstanding the foregoing. City shall not take any action which deprives Company of the right to provide service to any customer of Company existing at the time of City's action to terminate for the entire term of this franchise set forth in Section 2.1 unless Company. for its investment in Electric Facilities reasonably necessary to serve such customer. is duly compensated in accordance with the provisions of an applicable statute. or regulation thereunder. of the State of Minnesota for its investment and loss of revenue. HJB :FRANCHISE:CHANHASSEN.chan.wp 3 DRAFT: 10/9/97 3.3 Street Openings. Company shall not open or disturb the paved surface of any Public Way or Public Ground for any purpose without first having obtained permission from the City, for which the City may impose a reasonable fee. 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 the paved surface of 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, Company shall restore the same, including paving and its foundation, to as 51 good condition as formerly existed, and shall maintain the same any paved surface in good condition for two years thereafter. The 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 Way or 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 days, the right to make the restoration at the expense of Company. Company shall pay to the City the cost of such work done for or performed by the City, including its administrative expense and overhead, plus ten percent additional as liquidated damages. This remedy shall be in addition to any other remedy available to the City for noncompliance with this Section 3.4. 3.5 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. 3.6 Building and Relocations. Company. at the request of any person holdin~ a building moving permit. shall temporarily remove. raise. or lower its overhead wires. The expense of such temporary removal. raising. or lowering of HJB :FRANCHISE:CHANHASSEN .chan.wp 5 DRAFT: 10/9/97 overhead wires shall be paid by person(s) reQuestin~ the same. and Company shall have the authority to require such payment in advance. 3.7 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. 3.8 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 notice must be given to Company a sufficient length of time in advance of the actual commencement of the work to permit Company to make any necessary additions, alterations or repairs to its Electric Facilities. SECTION 4. RELOCATIONS. 4.1 Relocation of Electric Facilities in Public Ways. Except as provided in Section 4.3, if the City determines to vacate a Public Way for a City improvement project, or at City's cost to grade, regrade, or change the line of any Public Way, or construct or reconstruct any City Utility System in any Public Way, it may order Company to relocate its Electric Facilities located therein if relocation is reasonably necessary to accomplish the City's proposed public improvement. Company shall relocate its Electric Facilities at its own expense. The City shall give Company reasonable notice of plans to vacate for a City improvement project, or to grade, regrade, or change the line of any Public Way or to construct or reconstruct any City Utility System. If a relocation is ordered within five years of a prior relocation of the same Electric Facilities, which was made at Company expense, the City shall reimburse Company for Non-Betterment Costs on a time and material basis, provided that if a subsequent relocation is required because of the extension of a City Utility System to a previously unserved area, Company may be required to make the subsequent relocation at its expense. Nothing in this Ordinance requires Company to relocate, remove, HJB :FRANCHISE:CHANHASSEN .chan.wp 6 DRAFT: 10/9/97 replace or reconstruct at its own expense its Electric Facilities where such relocation, removal, replacement or reconstruction is solely for the convenience of the City and is not reasonably necessary for the construction or reconstruction of a Public Way or City Utility System or other City improvement. 4.2 Relocation of Electric Facilities in Public Ground. Except as may be provided in Section 4.3, City may require Company to relocate or remove its Electric Facilities from Public Ground upon a finding by City that the Electric Facilities have become or will become a substantial impairment of the public use to which the Public Ground is or will be put. The relocation or removal shall be at Company's expense. 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, Section 161.46 as supplemented or amended. It is understood that the right herein granted to Company is a valuable right. City shall not order Company to remove or relocate its Electric Facilities when a Public Way is vacated, improved or realigned because of a renewal or a redevelopment plan which is financially subsidized in whole or in part by the Federal Government or any agency thereof, unless the reasonable Non-Betterment Costs of such relocation and the loss and expense resulting therefrom are first paid to Company, but the City need not pay those portions of such for which reimbursement to it is not available. 4.4 No Waiver. The provisions of Section 4 apply only to Electric Facilities constructed in reliance on a franchise and Company does not waive its rights under an easement or prescriptive right, or State or County permit. 4.5 Chan~e to Under~round. If required by the City. Company shall change from overhead to underground. at City expense based on Company's Total Cost. in any area where: (1) the City requests underground lines and all other lines thereafter are chan~ed from overhead to under~round. or (2) any overhead line is changed to underground by the open trench with telephone and/or cable television. and Company can share trench at a cost not to exceed Company's pro rata share of the cost of the trenching. Prior to commencement of construction by Company HJB :FRANCHISE:CHANHASSEN.chan. wp 7 DRAFT: 10/9/97 Qf any particular project. the City shall deliver a written commitment to pay the Total Cost for the project as estimated by Company. SECTION 5. TREE TRIMMING. Company may trim all trees and shrubs in the Public Ways and Public Grounds of City interfering with the proper construction, operation, repair and maintenance of any Electric Facilities installed hereunder, provided that Company shall save the City harmless from any liability arising therefrom, and subject to permit or other reasonable regulation by the City. SECTION 6. INDEMNIFICATION. 6.1 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. 6.2 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, 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. HJB :FRANCHISE:CHANHASSEN.chan.wp 8 DRAFf: 10/9/97 SECTION 7. V ACA TIQN OF PUBLIC WAYS. The City shall give Company at least two 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 are 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. SECTION 8. CHANGE IN FORM OF GOVERNMENT. Any change in the form 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 Separate Ordinance. 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 not to exceed an amount determined by collecting the amounts indicated belm'" from each customer in the designated Company Customer Classification for metered service at each and every customer location: Customer Classification '^.lmount per J\1onth Residential Small C & I & 11unicipal 'Nith No Demand Charge Small C & I & J\1unicipal 'Nith Demand Charge Large C & I ~ $4;00 $10.00 $65.00 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 60 days after ,,'.'ritten notice enclosing such proposed ordinance has been served upon Company HJB :FRANCHISE:CHANHASSEN .chan.wp 9 DRAFf: 10/9/97 by certified mail. The fee shall not become effective until at least 60 days after written notice enclosing such adopted ordinance has been ser';ed 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. A separate ordinance \vhich imposes a lesser franchise fee on the residential class of customers than the amount set forth in the above Fee Schedule shall not be effective against Company unless the fee imposed on each other customer class in the above Fee Schedule is reduced proportionately by the same percentage as the reduction represented by the lesser fee on the residential class. The payment of a franchise fee as provided by this Section 9.1 does not relieve Company from paying fees to City unrelated to the installation, ownership or operation of Electric Facilities, such as building permit fees. 9.2 Terms Defined. For the purpose of this Section 9, the follO\ving definitions apply: 9.2.1 "Customer Classification" 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. 9.2.2 "Fee Schedule" refers to the schedule in Section 9.1 setting forth an amount per month for various customer classes. 9.2.3 "Final Order" refers to an order of the Commission changing Company's electric service rates for one or more of Company's Customer Classifications, if the order is not an interim order and the time for appeal on such order has expired or all proceedings relating to an appeal have been exhausted. 9.3 Collection of the Fee. The franchise fee shall be payable quarterly, and shall be b;sed on the amount collected by Company during complete billing month~ during the period for '.vhich payment is to be made by imposing a surcharge equal to the designated franchise fee for the applicable Customer Classification in all customer billings for metered service in each class. The payment shall be due the last business day of the month follO\ving the period for which the payment is made. The franchise fee may be changed by ordinance from HJB :FRANCHISE:CHANHASSEN .chan.wp 10 DRAFT: 10/9/97 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 metered service in excess of the amounts specifically permitted by this Section 9. The time and manner of collecting the franchise fee is subject to the approval of the Commission, which Company agrees to use its best efforts to obtain. No franchise fee shall be payable by Company if Company is legally unable to fust collect an amount equal to the franchise fee from its customers in each applicable class of customers by imposing a surcharge in Company~ applicable rate for electric service. Company may pay the City the fee based upon the surcharge billed subject to subsequent reductions to account for uneollectibles, refunds and correction of erroneous billings. Company agrees to make its records available for inspection by the City at reasonable times provided that the City and its designated representative agree in writing not to disclose any information 'Nhich would indicate the amount paid by any identifiable customer or customers or any other information regarding identified customers. 9.1 Conditions on the Fee. The separate ordinance imposing the fee shall not be effective against Company unless it la'.vfully imposes and the City quarterly or more often collects a fee or tax of the same or greater equi valen t amoun t 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. 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 the franchise fee purposes. The franchise fee or tax shall be applicable to energy sales for any energy use related to heating, cooling, or lighting, as 'Nell as to the supply of energy needed to run machinery and appliances on premises located within or adjacent to the City, but shall not apply to energy sales for the purpose of providing fuel for vehicles. 9.5 Exception to Equi':alent Fee Requirement. The requirement in Section 9.1 to impose an equivalent fee on any other energy supplier \vill not apply if the franchise fee is dedicated to paying the cost of undergrounding Electric Facilities belonging to Company provided that: (1) the City shall maintain such an undergroundin~ franchise fee in a separate account and shall not use it for any other purpose other than reimbursing Company for the cost of HJB :FRANCHISE:CHANHASSEN.chan.wp 11 DRAFT: 10/9/97 undergroundin~ its Electric Facilities: and (2) provided that collection of the franchise fee ~Nill terminate when the balance in the account exceeds the amount Company estimates is necessary to reimburse it for the cost of undergrounding pr~ie~ts. v/hich the City has ~iven notice of under Section 1.5 or which Company and City have othenvise a~eed Company should perform on a reimbursement basis. Company ~.~:ill not terminate the collection of such a franchise fee without ~r~viding the City '.':ith at least 30 days prior written notice. After completion of ~l sche~led proi~clS at the time of termination of the franchise fee. the City may se any remaining balance in the account for its general purposes. Any franchise fee imposed on Company as authorized by this Section 9.5 shall be the exclusive fee payable by Company under this franchise until the City. by ordinance. repeals the separate ordinance imposinr; the fee under this Section 9.5. 9.6 Permitted .^..djustments. If following effective date of this franchise the Commission by Final Order approves a change in Company's electric rates resulting in a general rate increase for one or more Customer Classifications, Company shall calculate and send to the City a letter setting forth the amount, as a percentage, of authorized increase for each classification of customer within 60 days after Company receives the Final Order. The amount of the franchise fee that may be imposed by the City may be increased from the Fec Schedule in Section 9.1 to an amount not to exceed the percentage for the applicable Customer Classification stated in Company's letter times each monthly amount set forth in the Fee Schedule and adding the resultant amount to the applicable amount set forth in the Fee Schedule. In this manner the franchise fee collected or permitted to be collected from each class of customer can increase by the same percentage as Company's electric rate increase. During the period where the City has imposed a franchise fee by separate ordinance under Section 9.1 there is no waiver of the right to impose the amendment if the City does not seek an increase in any franchise fee immediately after any such letter from Company and, if the City so chooses, the City can combine the percentages derived from more than one rate case, to the extent not previously applied by the City, in setting the amount of the franchise fee, so that the City is not prejudiced by delaying any action to impose or increase the franchise fee. SECTION 9. FRANCHISE FEE. HJB :FRANCHISE:CHANHASSEN .chan.wp 12 DRAFf: 10/9/97 9.1. Separate Ordinance. During- the term of the franchise hereby g-ranted. and in lieu of any permit or other fees being imposed on the Company. the City may impose on the Company a franchise fee of not more than five percent of the Company's Gross Revenues as hereinafter defined. 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 60 days after written notice enclosing- such proposed ordinance has been served upon the Company by certified mail. The fee shall not become effective until at least 60 days after written notice enclosing such adopted ordinance has been served upon the Company by certified mail. Section 2.5 shaJI constitute the sole remedy for solving disputes between the Company anq 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. No pre-existing ordinance imposing a fee shall be effective against the Company unless it is specifically amended after the effective date of this ordinance following the procedures of this Section 9 for the adoption of a new separate ordinance. A separate ordinance which imposes a lesser franchise fee on the residential class of customers then on other classifications of customers shall not be effective against the Company. 9.2 Terms Defined. For the purpose of this Section 9. the following definitions apply: 9.2.1 "Commission" means the Minnesota Public Utilities Commission. or any successor agency or agencies. including an agency of the federal government which preempts all or part of the authority to regulate electric retail rates now vested in the Minnesota Public Utilities Commission. 9.2.2 "Delivery Component" of electric service means the portion of the retail rate paid by the customer to compensate the Company for the use of transmission and distribution facilities. including investment costs and all expenses of constructing. operating and maintaining such facilities. 9.2.3 "Discount Rate" means a reduced electric retail rate for a customer or class of customers approved by the Commission for service to a customer of Company located within City to respond to competition from the threat of (1) self-generation or (ij) the conversion of customer-equipment to use a form of energy other than electricity. HJB :FRANCHISE:CHANHASSEN.chan.wp 13 DRAFT: 10/9/97 9.2.4 The term "Gross Revenues" means all sums received by the Company from the sale of electricity to its retail customers within the cOl:porate limits of the City. excludin ~ any surchar~e. sales tax. miscellaneous tariff char~es or any similar addition to the Company's charges to customers for the purpose of reimbursin; the ~ompany for the franchise fee. sales tax. or similar charge. The term "Gros Revenues" shall also exclude all revenues received by the Company from the sale of electric service provided under a Discount Rate. 9.2.5 "Supply Component" of electric service means the portion of the retail rate paid by the consumer to compensate the supplier for electric capacity and/or ener~y delivered to the consumer. includin~ investment costs and all expenses of producin~ or purchasin~ such capacity and/or ener~y. 9.3 Discount Rate Adjustment. If the Cit~ adopts a separate ordinance as described in Section 9.1, thereafter the Company hall ~ive City written notice of any Commission proceedin~s relating to implementation of a Discount Rate for a specifically identified customer within the City. In addition. if both a separate ordinance and a Discount Rate are in effect. Company and City may mutually agree by letter a~reement that Company will collect a franchise fee on the Discount Rate equal to. or the equivalent of. the fee or tax the City would have received if the customer had elected to purchase the competing form of energy instead of electric service from Company. 9.4. Exclusive Electric Service. The Company has a~reed to collect and pay any franchise fee imposed pursuant to this Section 9.4 only so long as the law allows the Company to be the exclusive provider of both the Supply Component and the Delivery Component of retail electric service to its defined service area within the City. The Company's exclusive service status is currently provided under Minn. Stat. Chapter 216B.37 et seq. If the Company is no longer the exclusive provider of both the Supply Component and the Delivery Component of retail service within City. the Company's obligation to collect and pay a franchise fee on such retail electric service shall terminate upon twenty (20) days notice to City. However. HJB :FRANCHISE:CHANHASSEN .chan.wp 14 DRAFT: 10/9/97 the Company agrees to collect and pay any applical)le franchise fee imposed bX the City on the revenues from the Delivery Component of electric service provided by Company to retail customers located with the City under the applicable Commission-approved Delivery Component of the Company's retail electric service rates. This franchise fee on the Commission-approved Delivery Component of electric retail service shall apply whether Company or another entity provides the Supply Component of the retail electric service to such customer. 9.5 Collection of the Fee. The franchise fee shall be payable not less often than quarterly. and shall be based on the Gross Revenues of the Company during complete billing months during the period for which payment is to be made. The payment shall be due the last business day of the month following the period for which the payment is made. The percent fee may be chan~ed by ordinance from time to time: however. each change shall meet the same notice requirements and the percentage may not be changed more often than annually. Such fee shall not exceed any amount which the Company may legally charge to its customers prior to payment to the City by imposing a surcharge equivalent to such fee in its rates for electric service. The Company may pay the City the fee based upon the surcharge billed subject to subsequent reductions to account for un collectibles or customer refunds. The time and manner of collecting the franchise fee is subiect to the approval of the Public Utilities Commission. which the Company agrees to use best efforts to obtain. The Company agrees to make its Gross Revenues records available for inspection by the City at reasonable times. 9.6 Condition of the Fee. The separate ordinance imposing the fee shall not be effective against the Company unless it lawfully imposes and the City quarterly or more often collects a fee or tax of the same or greater percentage 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. The franchise fee or tax shall be applicable to energy sales for any energy use related to heating. cooling. or lighting. as well as to the ')upply of energy needed to run machinery and appliances on premises located within or adjacent to the City. 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 HJB :FRANCHISE:CHANHASSEN.chan.wp 15 DRAFf: 10/9/97 from another energy supplier in contravention of this Section 9.6. the foregoing conditions will be waived to the extent of such written consent. 9.7 Exception to Equal Fee Requirement. The requirement in Section 9.6 to impose an equal fee on any other energy supplier will not apply if the franchise fee is dedicated ~o ~ay;ni the cost 9f undergroundinll Electric Facilities belonllinll to Company pr vi e that: (1) the City shall maintain such an undergrounding franchise fee in a separate account and shall not use it for any other pm:pose other than reimbursing Company for the cost of undergrounding its Electric Facilities: and (2) provided that collection of the franchise fee will terminate when the balance in the account exceeds the amount Company estimates is necessary to reimburse it for the cost of undergrounding projects. which the City has given notice of under Section 4.5 or which Company and City have otherwise agreed Company should perform on a reimbursement basis. Company will not terminate the c~lection Qf ;uyh a franchise fee without providinll the City with at least ;20 days rior written notice. After completion of all scheduled proiects at the time of termination of the franchise fee. the City may use any remaining balance in the account for its general pm:poses. Any franchise fee imposed on Company as authorized by this Section 9.7 shall be the exclusive fee payable by Company under this franchise until the City. by ordinance. repeals the separate ordinance imposing the fee under this Section 9.7. SECTION 10. FRANCHISE REOPENER. After this franchise agreement has been in effect for ten years. the City may give Company Notice that City desires to amend this franchise agreement to incoworate specific provisions which Company has agreed to in the electric franchise agreement for two or more other cities of the second. third or fourth class in the seven-county metropolitan area. based on a franchise ordinance adopted by such cities after the date of this franchise agreement. which cities are identified in the Notice. If Company refuses to do so within 90 days after receiving said Notice from the City. the City may terminate this franchise agreement upon 30 days prior written Notice unless Company gives Notice to the City within said 30-day period that it will immediately agree to accept an amendment to this Ordinance incorporating the desired franchise provisions existing in two or more other cities as referenced in the City's Notice. The termination will not be effective until after completion of any dispute resolution proceedings under Section 2.5 commenced HJB .FRANCHISE:CHANHASSEN.chan.wp 16 DRAFT: 10/9/97 by the Company within said 30-day period. which proceedinl?: confirms the City's action to be in compliance with this Section 10. 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. 'Nhere a provision of any other City ordinance conflicts \vith the provisions of this Ordinance, the provisions of this Ordinance shall prevail. SECTION 11. PROVISIONS OF ORDINANCE. 11.1 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. 11.2 Limitation on Applicability. This Ordinance constitutes a franchise 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 party beneficiary of the agreement or of anyone or more of the terms hereof, or otherwise give rise to any cause of action in any person not a party hereto. SECTION 12. AMENDMENT. 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 HJB :FRANCHISE:CHANHASSEN.chan.wp 17 DRAFT: 10/9/97 written consent thereto with the City Manager/Clerk within 90 days after the effecti ve date of the amendatory ordinance. PASSED AND APPROVED this 1997. day of BY: Donald J. Chmiel Mayor of the City of Chanhassen, MN ATTEST: Don Ashworth, Manager/Clerk of the City of Chanhassen, MN HJB .FRANCHISE:CHANHASSEN .chan.wp 18 ORDINANCE NO. CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES, MINNESOTA AN ORDINANCE GRANTING TO NORTHERN STATES POWER COMPANY, A MINNESOTA CORPORATION, ITS SUCCESSORS AND ASSIGNS, PERMISSION TO CONSTRUCT, OPERATE, REPAIR AND MAINTAIN IN THE CITY OF CHANHASSEN, MINNESOTA, AN ELECTRIC DISTRffiUTION 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 CHANHASSEN, CARVER AND HENNEPIN COUNTIES, MINNESOTA, ORDAINS: SECTION 1. DEFINITIONS. For purposes of this Ordinance, the following capitalized terms listed in alphabetical order shall have the following meanings: 1.1 City. The City of Chanhassen, Counties of Carver and Hennepin, State of Minnesota. 1.2 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, but excluding facilities for providing heating, lighting or other forms of energy. 1.3 Commission. The Minnesota Public Utilities Commission, or any successor agency or agencies, including an agency of the federal government which preempts all or part of the authority to regulate electric retail rates now vested in the Minnesota Public Utilities Commission. 1 1.4 Company. Northern States Power Company, a Minnesota corporation, its successors and assigns. 1.5 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 use. 1.6 Non-Betterment Costs. Costs incurred by Company from relocation, removal or rearrangement of Electric Facilities that do not result in an improvement to the Electric Facilities. 1.7 Notice. A writing served by any party or parties on any other party or parties. Notice to Company shall be mailed to the General Counsel, Law Department, 414 Nicollet Mall, Minneapolis, MN 55401. Notice to City shall be mailed to the City Manager/Clerk at 690 Coulter Drive, Chanhassen, MN 55317. Either party may change its respective address for the purpose of this Ordinance by written notice to the other party. 1.8 Public Ground. Land owned by the City for park, open space or similar purpose, which is held for use in common by the public. 1.9 Public Way. Any street, alley, walkway or other public right-of-way within the City. 1.10 Total Cost. Cost to Company for removing overhead Electric Facilities and replacing its function by installing underground Electric Facilities, including but not limited to, engineering, materials and labor, including overheads, less the depreciated value on Company's books of the overhead Electric Facilities removed and replaced by said underground Electric Facilities. SECTION 2. ADOPTION OF FRANCHISE. 2.1 Grant of Franchise. City hereby grants Company, for a period of 20 years, 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, 2 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 ordinance and to the further provisions of this franchise agreement. 2.2 Effective Date: Written Acceptance. This franchise shall be in force and effect from and after its passage and its acceptance by Company, and its publication as required by law. An acceptance by Company must be filed with the City Manager/Clerk within 90 days after publication. 2.3. Service. Rates and Area. The service to be provided and the rates to be charged by Company for electric service in City are subject to the jurisdiction of the Commission. The area within the City in which Company may provide electric service is subject to the provisions of Minnesota Statutes, Section 216BAO. However, during the term of this franchise, Minnesota Statutes, Chapter 216B, may be amended or repealed in a manner to: (1) allow City by franchise agreement or otherwise to directly establish service area boundaries between electric suppliers providing electric service within the municipal limits of City, or (2) permit City by franchise agreement or otherwise to establish service area boundaries which must be followed by the Commission in an application to it to revise service area boundaries previously established by the Commission, unless the Commission finds the requested revision would create an unreasonable duplication of facilities or such revision is for another reason not in the best interest of the public. If this occurs, City may by resolution direct Company to negotiate an amendment to this franchise agreement establishing such service area boundaries. If no amendment to this franchise occurs within 90 days after the date a written copy of such resolution is served upon Company, City may, upon 30 days prior written notice to Company, terminate this franchise by ordinance. Notwithstanding the foregoing, City shall not take any action which deprives Company of the right to provide service to any customer of Company existing at the time of City's action to terminate for the entire term of this franchise set forth in Section 2.1 unless Company, for its investment in Electric Facilities reasonably necessary to serve such customer, is duly compensated in accordance with the provisions of an applicable statute, or regulation thereunder, of the State of Minnesota for its investment and loss of revenue. 3 2.4. Publication Expense. The expense of publication of this Ordinance shall be paid by Company. 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 for breach of contract, or either party may take any other action permitted by law. SECTION 3. LOCATION, OTHER REGULATIONS. 3.1 Location of Facilities . Electric Facilities shall be located and constructed 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 any City Utility System previously installed therein. 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 other reasonable regulations of the City. Under this franchise agreement the City does not relinquish its police power regulatory authority and Company does not relinquish its eminent domain authority. Company may abandon underground Electric Facilities in place provided at City's request Company removes abandoned concrete enclosed conduit interfering with a City improvement project if such conduit is uncovered as part of the City improvement project. 3.2 Field Locations. Company shall provide field locations for any of its underground Electric Facilities consistent with the requirements of Minnesota Statutes, Chapter 216D. 4 3.3 Street Openings. Company shall not open or disturb the paved surface of any Public Way or Public Ground for any purpose without first having obtained permission from the City, for which the City may impose a reasonable fee. 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 the paved surface of 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, Company shall restore the same, including paving and its foundation, to as good a condition as formerly existed, and shall maintain any paved surface in good condition for two years thereafter. The 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 Way or 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 days, the right to make the restoration at the expense of Company. Company shall pay to the City the cost of such work done for or performed by the City, including its administrative expense and overhead, plus ten percent additional as liquidated damages. This remedy shall be in addition to any other remedy available to the City for noncompliance with this Section 3.4. 3.5 Shared Use of Pole~. 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. 3.6 Building and Relocations. Company, at the request of any person holding a building moving permit, shall temporarily remove, raise, or lower its overhead wires. The expense of such temporary removal, raising, or lowering of 5 overhead wires shall be paid by person(s) requesting the same, and Company shall have the authority to require such payment in advance. 3.7 A void 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. 3.8 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 notice must be given to Company a sufficient length of time in advance of the actual commencement of the work to permit Company to make any necessary additions, alterations or repairs to its Electric Facilities. SECTION 4. RELOCATIONS. 4.1 Relocation of Electric Facilities in Public Ways. Except as provided in Section 4.3, if the City determines to vacate a Public Way for a City improvement project, or grade, regrade, or change the line of any Public Way at public cost, or construct or reconstruct any City Utility System in any Public Way, it may order Company to relocate its Electric Facilities located therein if relocation is reasonably necessary to accomplish the City's proposed public improvement. Company shall relocate its Electric Facilities at its own expense. Company need not relocate at its own expense for an improvement in the Public Way performed to accommodate an adjoining landowner which improvement is conditioned upon such adjoining landowner paying the cost of making the improvement. The City shall give Company reasonable notice of plans to vacate for a City improvement project, or to grade, regrade, or change the line of any Public Way or to construct or reconstruct any City Utility System. If a relocation is ordered within five years of a prior relocation of the same Electric Facilities, which was made at Company expense, the City shall reimburse Company for Non- Betterment Costs on a time and material basis, provided 6 that if a subsequent relocation is required because of the extension of a City Utility System to a previously unserved area, Company may be required to make the subsequent relocation at its expense. Nothing in this Ordinance requires Company to relocate, remove, replace or reconstruct at its own expense its Electric Facilities where such relocation, removal, replacement or reconstruction is solely for the convenience of the City and is not reasonably necessary for the construction or reconstruction of a Public Way or City Utility System or other City improvement. 4.2 Relocation of Electric Facilities in Public Ground. Except as may be provided in Section 4.3, City may require Company to relocate or remove its Electric Facilities from Public Ground upon a finding by City that the Electric Facilities have become or will become a substantial impairment of the public use to which the Public Ground is or will be put. The relocation or removal shall be at Company's expense. 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, Section 161.46 as supplemented or amended. It is understood that the right herein granted to Company is a valuable right. City shall not order Company to remove or relocate its Electric Facilities when a Public Way is vacated, improved or realigned because of a renewal or a redevelopment plan which is financially subsidized in whole or in part by the Federal Government or any agency thereof, unless the reasonable Non-Betterment Costs of such relocation and the loss and expense resulting therefrom are first paid to Company, but the City need not pay those portions of such for which reimbursement to it is not available. 4.4 No Waiver. The provisions of Section 4 apply only to Electric Facilities constructed in reliance on a franchise and Company does not waive its rights under an easement or prescriptive right, or State or County permit. 4.5 Change to Underground. If required by the City, Company shall change from overhead to underground, at City expense based on Company's Total Cost, in any area where: (1) the City requests underground lines and all other lines thereafter are changed from overhead to underground, or (2) any overhead line is changed to underground by the open trench with telephone and/or cable television, and Company can share trench at a cost not to exceed Company's pro rata share of the cost of the 7 trenching. Prior to commencement of construction by Company of any particular project, the City shall deliver a written commitment to pay the Total Cost for the project as estimated by Company. SECTION 5. TREE TRIMMING. Company may trim all trees and shrubs in the Public Ways and Public Grounds of City interfering with the proper construction, operation, repair and maintenance of any Electric Facilities installed hereunder, provided that Company shall save the City harmless from any liability arising therefrom, and subject to permit or other reasonable regulation by the City. SECTION 6. INDEMNIFICATION. 6.1 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. 6.2 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, 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 8 to assert in any action every defense or immunity that the City could assert in its own behalf. SECTION 7. V ACA TION OF PUBLIC WAYS. The City shall give Company at least two 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 are first paid to CompanyCompany. 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. SECTION 8. CHANGE IN FORM OF GOVERNMENT. Any change in the form 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. Separate Ordinance. 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 of not more than five percent of CompanyCompany's Gross Revenues as hereinafter defined. 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 60 days after written notice enclosing such proposed ordinance has been served upon Company by certified mail. The fee shall not become effective until at least 60 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. A separate ordinance which imposes a lesser franchise fee on the 9 residential class of customers then on other classifications of customers shall not be effective against Company. 9.2 Terms Defined. For the purpose of this Section 9, the following definitions apply: 9.2.1 "Delivery Component" of electric service means the portion of the retail rate paid by the customer to compensate Company for the use of transmission and distribution facilities, including investment costs and all expenses of constructing, operating and maintaining such facilities. 9.2.2 "Discount Rate" means a reduced electric retail rate for a customer or class of customers approved by the Commission for service to a customer of Company located within City to respond to competition from the threat of (i) self- generation or (ii) the conversion of customer-equipment to use a form of energy other than electricity. 9.2.3 "Gross Revenues" means all sums received by Company from the sale or delivery of electricity to its retail customers within the corporate limits of the City, excluding any surcharge, sales tax, miscellaneous tariff charges or any similar addition to Company's charges to customers for the purpose of reimbursing Company for the franchise fee, sales tax, or similar charge. The term "Gross Revenues" shall also exclude all revenues received by Company from the sale of electric service provided under a Discount Rate. 9 .2.4 "Supply Component" of electric service means the portion of the retail rate paid by the consumer to compensate the supplier for electric capacity and/or energy delivered to the consumer, including investment costs and all expenses of producing or purchasing such capacity and/or energy. 9.3 Discount Rate Adjustment. If the City adopts a separate ordinance as described in Section 9.1, thereafter Company shall give City written notice of any Commission proceedings relating to implementation of a Discount Rate for a specifically identified customer within the City. In addition, if both a separate ordinance and a Discount Rate are in effect, Company and City may mutually agree by letter agreement that Company will collect a franchise fee on the Discount Rate 10 equal to, or the equivalent of, the fee or tax the City would have received if the customer had elected to purchase the competing form of energy instead of electric service from Company. 9.4 Exclusive Electric Service. Company has agreed to collect and pay any franchise fee imposed pursuant to this Section 9 only so long as the law allows Company to be the exclusive provider of both the Supply Component and the Delivery Component of retail electric service to its defined service area within the City. Company's exclusive service status is currently provided under Minnesota Statutes, Section 216B.37 et seq. If Company is no longer the exclusive provider of both the Suppl y Component and the Delivery Component of retail service within City, Company's obligation to collect and pay a franchise fee on such retail electric service shall terminate upon 20 days Notice to City. However, Company agrees to collect and pay any applicable franchise fee imposed by the City on the revenues from the Delivery Component of electric service provided by Company to retail customers located within the City under the applicable Commission-approved Delivery Component of Company's retail electric service rates. This franchise fee on the Commission-approved Delivery Component of electric retail service shall apply whether Company or another entity provides the Supply Component of the retail electric service to such customer. 9.5 Collection of the Fee. The franchise fee shall be payable quarterly and shall be based on the Gross Revenues of Company during complete billing months during the period for which payment is to be made. The payment shall be due the last business day of the month following the period for which the payment is made. The percent fee may be changed by ordinance from time to time; however, each change shall meet the same notice requirements and the percentage may not be changed more often than annually. Such fee shall not exceed any amount which Company may legally charge to its customers prior to payment to the City by imposing a surcharge equivalent to such fee in its 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. The time and manner of collecting the franchise fee is subject to the approval of the Commission, which Company agrees to use best efforts to obtain. Company agrees to make its Gross Revenues records available for inspection by the City at reasonable times. 11 9.6 Conditions on the Fee. 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 percentage 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. The franchise fee or tax shall be applicable to energy sales for any energy use related to heating, cooling, or lighting, as well as to the supply of energy needed to run machinery and appliances on premises located within or adjacent to the City, but shall not apply to energy sales for the purpose of providing fuel for vehicles. 9.7 Exception to Equal Fee Requirement. The requirement in Section 9.6 to impose an equal fee on any other energy supplier will not apply if the franchise fee is dedicated to paying the cost of undergrounding Electric Facilities belonging to Company provided that: (1) the City shall maintain such an undergrounding franchise fee in a separate account and shall not use it for any other purpose other than reimbursing Company for the cost of undergrounding its Electric Facilities; and (2) provided that collection of the franchise fee will terminate when the balance in the account exceeds the amount Company estimates is necessary to reimburse it for the cost of undergrounding projects, which the City has given notice of under Section 4.5 or which Company and City have otherwise agreed Company should perform on a reimbursement basis. Company will not terminate the collection of such a franchise fee without providing the City with at least 30 days prior written notice. After completion of all scheduled projects at the time of termination of the franchise fee, the City may use any remaining balance in the_account for its general purposes. Any franchise fee imposed on Company as authorized by this Section 9.7 shall be the exclusive fee payable by Company under this franchise until the City, by ordinance, repeals the separate ordinance imposing the fee under this Section 9.7. SECTION 10. FRANCHISE REOPENER. After this franchise agreement has been in effect for ten years, the City may give Company Notice that City desires to amend this franchise agreement to incorporate specific provisions which Company has agreed to in the electric franchise agreement for two or more other cities of the second, third or fourth class in the seven-county metropolitan area, based on a franchise ordinance adopted by such cities after the date of this franchise agreement, which cities are identified in the Notice. If 12 Company refuses to do so within 90 days after receiving said Notice from the City, the City may terminate this franchise agreement upon 30 days prior written Notice unless Company gives Notice to the City within said 30-day period that it will immediately agree to accept an amendment to this Ordinance incorporating the desired franchise provisions existing in two or more other cities as referenced in the City's Notice. The termination will not be effective until after completion of any dispute resolution proceedings under Section 2.5 commenced by Company within said 30-day period, which proceeding confirms the City's action to be in compliance with this Section 10. SECTION 11. PROVISIONS OF ORDINANCE. 11.1 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. 11.2 Limitation on Applicability. This Ordinance constitutes a franchise 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 party beneficiary of the agreement or of anyone or more of the terms hereof, or otherwise give rise to any cause of action in any person not a party hereto. SECTION 12. AMENDMENT. 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 Manager/Clerk within 90 days after the effective date of the amendatory ordinance. 13 PASSED AND APPROVED this day of December, 1997. BY: Nancy Mancino Mayor of the City of Chanhassen, MN ATTEST: Don Ashworth, Manager/Clerk of the City of Chanhassen, MN 14 EXCERPTS OF MINUTES OF MEETING OF THE CITY COUNCIL OF THE CITY OF CHANHASSEN, CARVER AND HENNEPIN COUNTIES, MINNESOTA ,19_ A meeting of the City Council of the City of Chanhassen, Minnesota, duly called, convened, and held in accordance with law, was called to order by Mayor on the _ day of 19 _, at o'clock .m. at the Council Chamber in the City. The following members, constituting a legal quorum, were present: Councilmem ber entitled: introduced a certain Ordinance No. AN ORDINANCE GRANTING TO NORTHERN STATES POWER COMPANY, A MINNESOTA CORPORATION, ITS SUCCESSORS AND ASSIGNS, PERMISSION TO CONSTRUCT, OPERATE, REPAIR AND MAINTAIN IN THE CITY OF CHANHASSEN, 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. and on motion made, seconded, and duly adopted, the above-entitled Ordinance was read. Thereafter a motion was made by Councilmember and seconded by Councilmember that the above-entitled Ordinance be adopted as read and in its entirety. NSP Reference: CHANHS-E-MIN 11/19/97 On roll call the vote was as follows: AYES NAYS The Mayor then declared said motion duly carried and the above-entitled Ordinance duly passed and adopted, and ordered the City Manager/Clerk to publish the same in accordance with the law in such case made and provided, I DO HEREBY CERTIFY that I am City Manager/Clerk of the City of Chanhassen, Carver and Hennepin Counties, Minnesota, and that I am custodian of its records, that the above is a true and correct copy of a part of the minutes of the meeting of the City Council of the City held on ,19_, City Manager/Clerk NSP Reference: CHANHS-E-MIN 11/19/97