HomeMy WebLinkAbout6.e. Ordinance Granting Gas Franchise to Minnesota Energy Resources Corporation 4ROSEMOUNTEXECUTIVE SUMMARY
CITY COUNCIL
City Council Regular Meeting: April 15, 2014
AGENDA ITEM: Ordinance Granting Gas Franchise to AGENDA SECTION:
Minnesota Energy Resources Corporation Consent
PREPARED BY: Charles L. LeFevere, City Attorney AGENDA NO. € ,
ATTACHMENTS: Proposed Franchise Ordinance APPROVED BY: ee
RECOMMENDED ACTION: Adoption of Ordinance
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SUMMARY
At this time there are three gas providers in the City: Xcel, Centerpoint and Minnesota Energy Resources
Corporation ("MERC").
For some time, these providers had an informal agreement to divide the City into service territories. This was
helpful because it avoided the construction of multiple, competing gas lines under city streets. This meant less
disruption to the public right-of-way and reduced the likelihood of confusion about responsibility during gas leak
emergency situations.
In about 2005, the providers indicated that they were no longer willing to abide by the informal agreement.
Therefore, the City Council amended its right-of-way ordinance by adding new Section 4-2-32,which provides:After
May 27,2005, no permits shall be issued for installation of gas pipes and mains to entities that do not hold a current franchise from the
City. This prohibition does not apps to installation ofgas transmission lines that are not designed intended or used for local service or
local distribution, or to installation of gas pipes and mains to serve areas of the City to which existing gas franchisees cannot or will not
extend service.
As a stop-gap measure, this prevented further expansion by Xcel since its franchise had expired. Centerpoint's
franchise expired in 2007. Therefore,after 2007, only MERC was qualified to construct additional lines in city
streets
In October of 2013,MERC's franchise expired,leaving no gas providers in the City with a franchise.
It was hoped that the City could avoid some double-piping by imposing limits in the franchise,and staff provided
proposed franchises to all of the gas providers in the City. This proposal was based on the League of Minnesota
Cities model franchise. In addition to the routine franchise terms, the franchise gave the City Council the authority
to impose franchise fees in the future if it ever wished to do so. It also imposed some limits on the extension of
new lines into streets that are already occupied by gas pipelines. The first provider to agree to a franchise that staff
can recommend is MERC. The attached franchise is acceptable to MERC, and is submitted for City Council
approval.
RECOMMENDED ACTION: Motion to adopt ordinance.
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CITY OF ROSEMOUNT
COUNTY OF DAKOTA
STATE OF MINNESOTA
ORDINANCE NO. 2014-02
CITY OF ROSEMOUNT, DAKOTA COUNTY, MINNESOTA
AN ORDINANCE GRANTING MINNESOTA ENERGY RESOURCES CORPORATION, A
MINNESOTA CORPORATION, ITS SUCCESSORS AND ASSIGNS, A NONEXCLUSIVE
FRANCHISE TO CONSTRUCT, OPERATE, REPAIR AND MAINTAIN FACILITIES AND
EQUIPMENT FOR THE TRANSPORTATION, DISTRIBUTION, MANUFACTURE AND SALE OF
GAS ENERGY FOR PUBLIC AND PRIVATE USE AND TO USE THE PUBLIC GROUND OF
THE CITY OF ROSEMOUNT, MINNESOTA, FOR SUCH PURPOSE; AND, PRESCRIBING
CERTAIN TERMS AND CONDITIONS THEREOF.
THE CITY COUNCIL OF THE CITY OF ROSEMOUNT, DAKOTA COUNTY, MINNESOTA,
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 Rosemount, County of Dakota,State of Minnesota.
City Utility System. Facilities used for providing public utility service owned or operated by
City or agency thereof,including sewer, storm sewer,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 successof agency or
agencies, including an agency of the federal government, that preempts all or part of the authority to
regulate gas retail rates now vested in the Minnesota Public Utilities Commission.
Company. Minnesota Energy Resources Corporation, a Minnesota corporation, its successors
and assigns including all successors or assigns that own or operate any part or parts of the Gas Facilities
subject to this franchise.
Gas Facilities. Gas transmission and distribution pipes, lines, ducts, fixtures, and all necessary
equipment and appurtenances owned or operated by the Company for the purpose of providing gas
energy for public or private use.
Notice. A writing served by any party or parties on any other party or parties. Notice to
Company shall be mailed to Minnesota Energy Resources, 2665 — 145th Street West, Rosemount, MN
55068. Notice to the City shall be mailed to City Administrator, City of Rosemount, 2875— 145th Street
West, Rosemount, MN 55068. Any party may change its respective address for the purpose of this
Ordinance by written notice to the other parties.
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Public Way. Any street,alley or other public right-of-way within the City.
Public Ground. Land owned or otherwise controlled by the City for park, open space or
similar public purpose,which is held for use in common by the public.
SECTION 2. ADOPTION OF FRANCHISE.
2.1 Grant of Franchise. City hereby grants Company, for a period of ten years from the
date this Ordinance is passed and approved by the City, the right to import, manufacture, distribute and
sell gas 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 Gas Facilities in, on, over, under and across the Public Ways and Public Grounds, 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 or permit requirements 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 of this Ordinance and publication as required by law and its acceptance by
Company. If Company does not file a written acceptance with the City within 60 days after the date the
City Council adopts this Ordinance, or otherwise informs the City, at any time, that the Company does
not accept this franchise, the City Council by resolution may revoke this franchise or seek its
enforcement in a court of competent jurisdiction.
2.3. Service and Gas Rates. The service to be provided and the rates to be charged by
Company for gas service in City are subject to the jurisdiction of the Commission.
2.4. Publication Expense. Company shall pay the expense of publication of this
Ordinance.
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 before the Minnesota Public Utilities
Commission or in District Court, as appropriate, to interpret and enforce this franchise or for such
other relief as may be permitted by law or equity.
2.6. Continuation of Franchise. If the City and the Company are unable to agree on the
terms of a new franchise by the time this franchise expires, this franchise will remain in effect until a
new franchise is agreed upon, or until 90 days after the City or the Company serves written Notice to
the other party of its intention to allow the franchise to expire. However, in no event shall this
franchise continue for more than one year after expiration of the term set forth in Section 2.1.
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SECTION 3. LOCATION, OTHER REGULATIONS.
3.1. Location of Facilities. Gas 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 any City Utility System. Company may not install gas facilities in
any public way that is designated as a Local Street in the Transportation Section of the City's
Comprehensive Guide Plan ("Transportation Plan") if such street is occupied by gas facilities of
another provider of retail gas service. Company may install gas facilities in public ways that are
designated as collector streets in the Transportation Plan that are already occupied by gas facilities of
another provider of retail gas service provided that there is no more than one other gas line in the same
street and further provided that Company shall not place its line on the same side of the street as the
other provider's line unless ordered by the City to do so. Limitations on the ability of Company to
install facilities in a public way that is occupied by gas facilities of another provider of retail gas service
do not apply unless the same limitations are imposed on all other providers of retail gas service in the
City that have the legal authority to install new gas pipes and mains designed,intended or used for local
service or local distribution of gas. Gas Facilities may be located on Public Grounds as determined by
the City. Company's construction, reconstruction, operation, repair, maintenance, location and
relocation of Gas Facilities shall be subject to other reasonable regulations of the City consistent with
authority granted the City to manage its Public Ways and Public Grounds under state law, to the extent
not inconsistent with a specific term of this franchise.
3.2. Street Openings. Company shall not open or disturb the surface of any Public Way or
Public Ground for any purpose without first having obtained a permit from the City, if required by a
separate ordinance, for which the City may impose a reasonable fee in compliance with Minnesota
Rules, Part 7819.1000. 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 surface of any Public Way or Public Ground without a permit if (i) an emergency exists
requiring the immediate repair of Gas Facilities and (ii) Company gives telephone, email or similar
notice to the City before commencement of the emergency repair, if reasonably possible. Within two
business days after commencing the repair, Company shall apply for any required permits and pay any
required fees.
3.3. Restoration. After undertaking any work requiring the opening of any Public Way, the
Company shall restore the Public Way in accordance with Minnesota Rules, part 7819.1100 and
applicable City ordinances consistent with law. Company shall restore the Public Ground to as good a
condition as formerly existed, and shall maintain the surface in good condition for six 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 thirty days, the right to
make the restoration of the Public Ground at the expense of Company. Company shall pay to the City
the cost of such work done for or performed by the City. This remedy shall be in addition to any other
remedy available to the City for noncompliance with this Section 3.3. The Company shall also post a
construction performance bond consistent with the provisions of Minnesota Rules parts 7819.3000 and
7819.0100, subpart 6.
3.4. Avoid Damage to Gas Facilities. The Company must take reasonable measures to
prevent the Gas Facilities from causing damage to persons or property. The Company must take
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reasonable measures to protect the Gas Facilities from damage that could be inflicted on the Facilities
by persons, property, or the elements. The Company must take protective measures when the City
performs work near the Gas Facilities, if given reasonable notice by the City of such work prior to its
commencement.
3.5. Notice of Improvements to Streets. The City will give Company reasonable written
Notice of plans for improvements to Public Ways where the City has reason to believe that Gas
Facilities may affect or be affected by the improvement. The notice will contain: (i) the nature and
character of the improvements, (ii) the Public Ways upon which the improvements are to be made, (di)
the extent of the improvements, (w) the time when the City will start the work,and (v)if more than one
Public Way is involved, the order in which the work is to proceed. The notice will be given to
Company a sufficient length of time, considering seasonal working conditions, in advance of the actual
commencement of the work to permit Company to make any additions, alterations or repairs to its Gas
Facilities the Company deems necessary.
3.6 Mapping Information. The Company must promptly provide complete and accurate
mapping information for any of its Gas Facilities in accordance with the requirements of Minnesota
Rules Parts 7819.4000 and 7819.4100.
SECTION 4. RELOCATIONS.
4.1. Relocation in Public Ways. The Company shall comply with Minnesota Rules, part
7819.3100 and applicable City ordinances consistent with law.
4.2. Relocation in Public Grounds. City may require Company at Company's expense to
relocate or remove its Gas Facilities from Public Ground upon a finding by City that the Gas Facilities
have become or will become a substantial impairment to the existing or proposed public use of the
Public Ground. Relocation shall comply with applicable city ordinances consistent with law.
4.3. Projects with Federal Funding. Relocation, removal, or rearrangement of any
Company Gas 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.
SECTION 5. INDEMNIFICATION.
5.1. Indemnity of City. Company shall indemnify and hold the City 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 Gas 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.
5.2. 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
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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. The 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. This franchise agreement shall not be interpreted
to constitute a waiver by the City of any of its defenses of immunity or limitations on liability under
Minnesota Statutes,Chapter 466.
SECTION 6. VACATION OF PUBLIC WAYS.
The City shall give Company notice of a proposed vacation of a Public Way in accordance with
the requirements of law, but in no event less than two weeks' written notice. The City and the
Company shall comply with Minnesota Rules, 7819.3200 and applicable ordinances consistent with law.
SECTION 7. 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 8. FRANCHISE FEE.
8.1. Form. During the term of the franchise hereby granted, and in addition to permit fees
being imposed or that the City has a right to impose, the City may charge the Company a franchise fee.
The fee may be(i) a percentage of gross revenues received by the Company for its operations within the
City, or (ii) a flat fee per customer based on metered service to retail customers within the City or on
some other similar basis, or (iii) a fee based on units of energy delivered to any class of retail customers
within the corporate limits of the City. The method of imposing the franchise fee, the percentage of
revenue rate, or the flat rate based on metered service may differ for each customer class or combine
the methods described in (i) — (iii) above in assessing the fee. The City shall seek to use a formula that
provides a stable and predictable amount of fees, without placing the Company at a competitive
disadvantage. If the Company claims that the City required fee formula is discriminatory or otherwise
places the Company at a competitive disadvantage, the Company shall provide a formula that will
produce a substantially similar fee amount to the City and reimburse the City's reasonable fees and costs
in reviewing and implementing the formula. The City will attempt to accommodate the Company but is
under no franchise obligation to adopt the Company-proposed franchise fee formula and each review
will not delay the implementation of the City-imposed fee. The amount paid by Company shall be in
lieu of, and Company shall be exempt from, all other occupation, license, excise or taxes that the City
may impose for the rights and privileges herein granted or for the privilege of doing business within the
City (but not including right-of-way permit fees), and in the event any such fee, charge, license, tax or
assessment shall be imposed by the City, the payment to be made in accordance with the provisions of
this section shall be reduced in an amount equal to the annual burden of such fee, charge, license,tax or
assessment imposed upon the Company.
8.2. Separate Ordinance. The franchise fee shall be imposed by separate ordinance duly
adopted by the City Council, which ordinance shall not be adopted until at least thirty (30) days after
written notice enclosing such proposed ordinance has been served upon the Company. The fee shall
become effective seventy-five (75) days after written notice enclosing such adopted ordinance has been
served upon the Company by certified mail.
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8.3. Condition of Fee. The separate ordinance imposing the fee shall not be effective
against the Company unless it lawfully imposes a fee of the same or substantially similar amount on the
sale of eas energy within the City by any other gas energy supplier, provided that, as to such supplier,
the City has the authority or contractual right to require a franchise fee or similar fee through a
previously agreed upon franchise.
8.4. Collection of Fee. The franchise fee shall be payable not less than quarterly during
complete billing months of the period for which payment is to be made. The franchise fee formula
may be changed from time to time, however, the change shall meet the same notice requirements and
the fee may not be changed more often than annually. Such fee shall not exceed any amount that the
Company may legally charge to its customers prior to payment to the City. Such fee is subject to
subsequent reductions to account for uncollecubles and customer refunds incurred by the Company.
The Company agrees to make available for inspection by the City at reasonable times all records
necessary to audit the Company's determination of the franchise fee payments.
8.5. Continuation of Franchise Fee. If this franchise expires and the City and the
Company are unable to agree upon terms of a new franchise, the franchise fee,if any being imposed by
the City at the time this franchise expires,will remain in effect until a new franchise is agreed upon, but
in no event longer than one year after the expiration of the franchise.
8.6. Surcharge. The City recognizes that the Public Utilities Commission may allow the
Company to add a surcharge to customer rates for city residents to reimburse the Company for the cost
of the fee.
SECTION 9. ABANDONED FACILITIES.
The Company shall comply with City ordinances, Minnesota Statutes, Section 216D.01 et
seq. and Minnesota Rules Part 7819.3300, as they may be amended from time to time. The
Company shall produce, at City's request, any existing records describing the location of abandoned
and retired Facilities within the City.
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 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 any one or more of the terms hereof,
or otherwise give rise to any cause of action in any person not a party hereto.
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SECTION 11. AMENDMENT-PROCEDURE.
Either party to this franchise agreement may at any time propose that the agreement be
amended. 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 Clerk within 60 days after the effective
date of the amendatory ordinance.
Adopted this 15th day of April, 2014, by the City Council of the City of Rosemount.
William H. Droste, Mayor
ATTEST:
Amy Domeier,City Clerk
Published in the Rosemount Town Pages this 24th day of April, 2014.
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