AN ORDINANCE GRANTING BLACK HILLS/KANSAS GAS UTILITY COMPANY, LLC D/B/A BLACK HILLS ENERGY, A KANSAS CORPORATION, ITS LESSEES, SUCCESSORS AND ASSIGNS, A NATURAL GAS FRANCHISE AND THE AUTHORITY TO CONSTRUCT, OPERATE, MAINTAIN, AND EXTEND A NATURAL GAS DISTRIBUTION PLANT AND SYSTEM, AND GRANTING THE RIGHT TO USE THE STREETS, ALLEYS, AND OTHER PUBLIC PLACES WITHIN THE PRESENT OR FUTURE CORPORATE LIMITS OF THE CITY OF GODDARD, KANSAS
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF GODDARD, KANSAS, AS FOLLOWS:
SECTION 1. FRANCHISE GRANTED
The City Council of the City of Goddard, Kansas (hereinafter referred to as "Grantor"), hereby grants a non-exclusive franchise to Black Hills/Kansas Gas Utility Company, LLC d/b/a Black Hills Energy, a Kansas limited liability corporation (hereinafter called "Grantee"), its lessees, successors and assigns. Grantee is hereby granted the right, privilege, franchise, permission and authority to lay, construct, install, maintain, operate and extend in, along, over, above or across the present and future streets, alleys, avenues, bridges, public rights-of-way and public easements as are now within the present or future limits of said Grantor, a natural gas distribution system and all facilities necessary for the purpose of supplying natural gas or processed gas and other operations connected therewith or incident thereto for all purposes to the inhabitants of said Grantor and consumers in the vicinity thereof, and for the distribution of natural gas from or through said Grantor to points beyond the limits thereof. Such facilities shall include, but not be limited to, all mains, services, pipes, poles, communication devices, conduits and all other apparatus and appliances necessary or convenient for transporting, distributing and supplying natural gas for all purposes for which it may be used, and to do all other things necessary and proper in providing natural gas service to the inhabitants of Grantor and in carrying on such business.
SECTION 2. TERM
(a) The term of this franchise shall be twenty (20) years from the effective date of this ordinance, except as otherwise provided in this Section.
(b) Upon written request of either the Grantor or the Grantee, the franchise may be reviewed after five (5) years from the effective date of this ordinance and either the Grantor or the Grantee may propose amendments to any provision of this franchise by giving thirty (30) days written notice to the other of the amendment(s) desired. The Grantor and the Grantee shall negotiate in good faith in an effort to agree upon mutually satisfactory amendment(s).
(c) Upon written request of either the Grantor or the Grantee, the franchise shall be reopened and renegotiated at any time upon any of the following events:
(l) Change in federal, state or local law, regulation or order which materially affects any rights or obligations of either the Grantor or the Grantee, including but not limited to the scope of the grant to the Grantee or the compensation to be received by the Grantor.
(2) Change in the structure or operation of the natural gas industry which materially affects any rights or obligations of either the Grantor or the Grantee, including but not limited to the scope of the grant to the Grantee or the compensation to be received by the Grantor.
(3) Any other material and unintended change or shift in the economic benefit the Grantor or the Grantee relied upon and anticipated upon entering into this franchise.
(d) The compensation provision of this franchise shall be reopened and renegotiated if energy consumers within the Grantor have access to alternative natural gas suppliers or other suppliers of energy through the pipelines who use the Right-of-Way and do not pay a franchise fee or other payment substantially equivalent to this franchise, which results in a material and unfair disadvantage to the Grantee. The use of Right-of-Way provision of this franchise shall be reopened and renegotiated if energy consumers within the City have access to alternative natural gas suppliers or other suppliers of energy through pipelines who use the Right-of-Way and do not have the requirements on the use of the Right-of-Way substantially equivalent to the requirements of this franchise, which results in a material and unfair disadvantage to the Grantee. Upon any such event, the Grantor shall have up to one hundred eighty (180) days after written request of the Grantee in which to restore competitive neutrality, provided that any adjustment in compensation resulting from renegotiations under this subsection (d) shall be effective no later than ninety (90) days after such notice.
(e) Failure of the Grantor and the Grantee to successfully renegotiate the materially affected provisions of the franchise under subsections (8), (c) or (d) shall give rise to dispute resolution as follows: At the expiration of one hundred eighty (180) days from the date of the written request (or sooner if requested by both the Grantor and the Grantee) the Grantor and the Grantee shall each select a representative who shall jointly select a third representative. The three representatives shall hear the positions of the Grantor and the Grantee and shall determine the matters in disagreement by majority vote. Such decision shall be presented to the Grantor and the Grantee as the renegotiated language under subsection (8), (c) or (d). Rejection of the dispute resolution by either the Grantor or the Grantee shall give rise to the remedies provided by Section 12, or at the option of the parties, the franchise shall remain in effect according to its then existing terms.
(f) Amendments under this Section, if any, shall be made by ordinance as prescribed by statute. The franchise shall remain in effect according to its terms pending completion of any review or renegotiation provided by subsections (8), (c), (d) or (e).
SECTION 3. FRANCHISE FEES ORT AXES
In consideration of and as compensation for the franchise hereby granted to the Grantee by the Grantor, the Grantee shall make an accounting to the Grantor of all natural gas that has been Distributed on a monthly basis (less gas distributed to the City for Grantor use). The Company shall pay the Grantor:
(a) A sum equal to five percent (5%) of the Gross Receipts received from the Distribution of natural gas.
(b) A sum equal to the Volumetric Rate multiplied by the number of MCF of Transport Gas. "Volumetric Rate" shall mean that sum measured in cents per MCF as established in this ordinance. The Volumetric Rate shall be recalculated in August annually beginning January 1, 2023, based upon the Settlement Price for natural gas futures contracts traded on the New York Mercantile Exchange (NYMEX). The Volumetric Rate calculation form on file with the City Clerk and incorporated herein by reference shall be used for the recalculation of the Volumetric Rate. The recalculation shall be effective each January I and shall be based on Settlement Prices for the twelve (12) month period beginning in July of the second (2nd) preceding year and ending in June of the preceding year. For each fifteenth (15th) day of each month during said twelve (12) month period, the Settlement Prices on the 15th day of each month ( or where necessary, for the following business day) for the next twelve (12) months will be summed and divided by twelve (12) to determine an average Settlement Price. The average Settlement Price will be multiplied by five percent (5%) to obtain the Volumetric Rate to be effective January 1 of the next succeeding year. The Volumetric Rate shall be calculated in August annually by Black Hills Energy and shall be effective on the following January 1st upon filing of the completed Volumetric Rate Calculation Form with the City Clerk without requirement of amendment to the Ordinance. The Volumetric Rate Calculation Form for 2023 is attached hereto as Exhibit A.
(c) The sums in (A) and (B) above shall be adjusted for uncollectible receivables and for uncollectible receivables which are later collected.
(d) Any consideration hereunder shall be reported and paid to Grantor by Grantee on semi-annual calendar year basis. Such payment shall be made not more than thirty (30) days following the close of the period for which payment is due. Initial and final payments shall be prorated for the portions of the periods at the beginning and the end of the term of this Franchise Ordinance.
(e) In the event the accounting rendered to the Grantor by the Grantee is found to be incorrect, then payment shall be made on the corrected amount, it being agreed that the Granter may accept any amount offered by the Grantee, but the acceptance thereof by the Grantor shall not be deemed a settlement of such item if the amount is in dispute or later found to be incorrect. The Grantee agrees that all of its books, records and documents and all of its contracts and agreements as may be reasonably necessary for an effective compliance review of this ordinance shall at all reasonable times be opened to the inspection and examination of the officers of the Grantor and its duly authorized agents, auditor and employees for the purpose of verifying said accounting or for any other lawful purpose. Notwithstanding the obligation herein, the Grantee shall have the right to request the reasonable protection of proprietary information and to provide redacted documents or require the Grantor or its agents to enter into such agreements pertaining to confidentiality as may reasonably protect the proprietary information of the Grantee but which do not unreasonably frustrate the purposes of this subsection.
(f) Grantee shall list the franchise fee collected from customers as a separate item on bills for utility service issued to its customers. If at any time the Kansas Corporation Commission or other authority having proper jurisdiction prohibits such recovery, then Grantee will no longer be obligated to collect and pay the franchise fee. Any customer refunds ordered by the Commission or other authority due to an unlawful or prohibited collection of the franchise fee collected by Grantee and remitted to Grantor shall be refunded by Grantor.
(g) Within ten (10) days of the date of this ordinance, Grantor shall provide Grantee with a map of its corporate limits (the "Map"). The Map shall be of sufficient detail to assist Grantee in determining whether their customers reside within Grantor's corporate limits. The Map along with Grantee's Geographic Information System ("GIS") mapping information shall serve as the basis for determining Grantee's obligation hereunder to collect and pay the franchise fee from customers; provided, however, that if the Grantor's corporate limits are changed by annexation or otherwise, it shall be the Grantor's sole responsibility to (a) update the Map so that the changes are included therein, and (b) provide the updated Map to the Grantee.
(h) Grantee's obligation to collect and pay the franchise fee from customers within an annexed area shall not commence until the later: ( a) of sixty ( 60) days after Grantee's receipt from the Grantor of an updated Map including the annexed area, or (b) after Grantee's receipt from the Grantor of an updated Map including the annexed area as is reasonably necessary for Grantee to identify the customers in the annexed area obligated to pay the franchise fee; provided, further that neither party shall have the obligation to correct a mistake, including but not limited to collection of the fee by Grantee from its customers or remittance of that fee by Grantee to Grantor, that is discovered more than one (1) year after the occurrence thereof. Grantor shall indemnify Grantee from claims of any nature, including attorney fees, arising out of or related to the imposition and collection of the franchise fee. In addition, Grantee shall not be liable for paying franchise fees from or to any customer originally or subsequently identified, or incorrectly identified, by Grantor or by Grantee, as being subject to the franchise fee or being subject to a different level of franchise fees or being exempt from the imposition of franchise fees.
(i) Grantor shall have access to and the right to examine, during normal business hours, such of Grantee's books, receipts, files, records and documents as is necessary to verify the accuracy of payments due hereunder. If it is determined that a mistake was made in the payment of any franchise fee required hereunder, the mistake shall be corrected promptly upon discovery such that any under-payment by Grantee shall be paid within thirty (30) days of recalculation of the amount due, and any over-payment by Grantee shall be deducted from the next payment of such franchise fee due by Grantee to Grantor.
(j) Except as set forth below, the franchise fee paid by Grantee to the Grantor as set forth in subsection (a) shall be in lieu of all occupation, licenses, excise fees, or taxes which the City may impose for the rights and privileges granted herein.
SECTION 4. GOVERNING RULES AND REGULATIONS
The franchise granted hereunder is subject to all conditions, limitations and immunities now provided for, or as hereafter amended, and applicable to the operations of a public utility, by state or federal law. The rates to be charged by Grantee for service within the present or future corporate limits of Grantor and the rules and regulations regarding the character, quality and standards of service to be furnished by Grantee, shall be under the jurisdiction and control of such regulatory body or bodies as may, from time to time, be vested by law with authority and jurisdiction over the rates, regulations and quality and standards of service to be supplied by Grantee. Provided however, should any judicial, regulatory or legislative body having proper jurisdiction take any action that precludes Grantee from recovering from its customers any cost associated with services provided hereunder, then Grantee and Grantor shall renegotiate the terms of this Ordinance in accordance with the action taken. In determining the rights and duties of the Grantee, the terms of this Ordinance shall take precedence over any conflicting terms or requirements contained in any other ordinance enacted by the Granter.
SECTION 5. PROVISION FOR INADEQUATE ENERGY SUPPLIES
If an energy supplier is unable to furnish an adequate supply of energy due to an emergency, an order or decision of a public regulatory body, or other acts beyond the control of the Grantee, then the Grantee shall have the right and authority to adopt reasonable rules and regulations limiting, curtailing or allocating extensions of service or supply of energy to any customers or prospective customers, and withholding the supply of energy to new customers, provided that such rules and regulations shall be uniform as applied to each class of customers or prospective customers, and shall be non-discriminatory as between communities receiving service from the Grantee.
SECTION 6. CONSTRUCTION AND MAINTENANCE OF GRANTEE'S FACILITIES
Any pavements, sidewalks or curbing taken up and any and all excavations made shall be done in such a manner as to cause only such inconvenience to the inhabitants of Grantor and the general public as is reasonably necessary, and repairs and replacements shall be made promptly by Grantee, leaving such properties in as good a condition as existed immediately prior to excavation.
(a) Grantee agrees that for the term of this franchise, it will use its best efforts to maintain its facilities and equipment in a condition sufficient to meet the current and future energy requirements of Granter, its inhabitants and industries. While maintaining its facilities and equipment, Grantee shall obtain permits as required by ordinance and will fix its excavations within a commercially reasonable time period, except that in emergency situations Grantee shall take such immediate unilateral actions as it determines are necessary to protect the public health, safety, and welfare; in which case, Grantee shall notify Grantor as soon as reasonably possible. Within a reasonable time thereafter, Grantee shall request and Grantor shall issue any permits or authorizations required by Grantor for the actions conducted by Grantee during the emergency situation.
(b) Granter will give Grantee reasonable notice of plans for street improvements where paving or resurfacing of a permanent nature is involved that affects Grantee's facilities. The notice shall contain the nature and character of the improvements, the rights-of-way upon which the improvements are to be made, the extent of the improvements, and the time when the Grantor will start the work, and, if more than one right-of-way is involved, the order in which the work is to proceed. The notice shall be given to the Grantee as soon as practical in advance of the actual commencement of the work, considering seasonable working conditions, to permit the Grantee to make any additions, alterations, or repairs to its facilities.
SECTION 7. EXTENSION OF GRANTEE'S FACILITIES
Upon receipt and acceptance of a valid application for service, Grantee shall, subject to its own economic feasibility criteria as approved by the Kansas Corporation Commission make reasonable extensions of its distribution facilities to serve customers located within the current or future corporate limits of Grantor.
SECTION 8. RELOCATION OF GRANTEE'S FACILITIES
If Granter elects to change the grade of or otherwise alter any street, alley, avenue, bridge, public right-of-way or public place for a public purpose, unless otherwise reimbursed by federal, state or local legislative act or governmental agency, Grantee, upon reasonable notice from Granter, shall remove and relocate its facilities or equipment situated in the public rights-of-way, at the cost and expense of Grantee, if such removal is necessary to prevent interference with Grantor's facilities.
(a) If Granter orders or requests Grantee to relocate its facilities or equipment for the primary benefit of a commercial or private project, or as a result of the initial request of a commercial or private developer or other non-public entity, and such removal is necessary to prevent interference with such project, then Grantee shall receive payment for the cost of such relocation as a precondition to relocating its facilities or equipment.
(b) Grantor shall consider reasonable alternatives in designing its public works projects and exercising its authority under this section so as not to arbitrarily cause Grantee unreasonable additional expense. If alternative public right-of-way space is available, Granter shall also provide a reasonable alternative location for Grantee's facilities. Granter shall give Grantee written notice of an order or request to vacate a public right-of-way; provided, however, that its receipt of such notice shall not deprive Grantee of its right to operate and maintain its existing facilities in such public right-of way until it (a) if applicable, receives the reasonable cost of relocating the same and (b) obtains a reasonable public right-of-way, dedicated utility easement, or private easement alternative location for such facilities.
SECTION 9. CONFIDENTIAL INFORMATION
Granter acknowledges that certain information it might request from Grantee pursuant to this Ordinance may be of a proprietary and confidential nature, and that such requests may be subject to the Homeland Security Act or other confidentiality protections under state or federal law. If Grantee requests that any information provided by Grantee to Grantor be kept confidential due to its proprietary or commercial value, Grantor and its employees, agents and representatives shall maintain the confidentiality of such information, to the extent allowed by law. If Grantor is requested or required by legal or administrative process to disclose any such proprietary or confidential information, Granter shall promptly notify Grantee of such request or requirement so that Grantee may seek an appropriate protective order or other relief.
SECTION 10. FORCE MAJEURE
It shall not be a breach or default under this Ordinance if either party fails to perform its obligations hereunder due to force majeure. Force majeure shall include, but not be limited to, the following: 1) physical events such as acts of God, landslides, lightning, earthquakes, fires, freezing, storms, floods, washouts, explosions, breakage or accident or necessity of repairs to machinery, equipment or distribution or transmission lines; 2) acts of others such as strikes, work-force stoppages, riots, sabotage, insurrections or wars; 3) governmental actions such as necessity for compliance with any court order, law, statute, ordinance, executive order, or regulation promulgated by a governmental authority having jurisdiction; and (4) any other causes, whether of the kind herein enumerated or otherwise not reasonably within the control of the affected party to prevent or overcome. Each party shall make reasonable efforts to avoid force majeure and to resolve such event as promptly as reasonably possible once it occurs in order to resume performance of its obligations hereunder; provided, however, that this provision shall not obligate a party to settle any labor strike.
SECTION 11. HOLD HARMLESS
Grantee, during the term of this Ordinance, agrees to save harmless Grantor from and against all claims, demands, losses and expenses arising directly out of the negligence of Grantee, its employees or agents, in constructing, operating, and maintaining its distribution and transmission facilities or equipment; provided, however, that Grantee need not save Grantor harmless from claims, demands, losses and expenses arising out of the negligence of Granter, its employees or agents.
SECTION 12. RIGHT TO ASSIGN
This franchise shall be assignable only in accordance with the laws of the state of Kansas, as the same may exist at the time when any assignment is made.
SECTION 13. SUCCESSORS AND ASSIGNS
All rights, privileges and authority granted to Grantee hereunder shall inure to the benefit of Grantee's lessees, successors and assigns, subject to the terms, provisions and conditions herein contained, and all obligations imposed upon Grantee hereunder shall be binding upon Grantee's lessees, successors and assigns.
SECTION 14. NO THIRD PARTY BENEFICIARIES
This Ordinance constitutes a franchise agreement between the Grantor and Grantee. No provision of this Ordinance shall 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 for any person not a party hereto.
SECTION 15. SEVERABILITY
If any clause, sentence or section of this Ordinance is deemed invalid by any judicial, regulatory or legislative body having proper jurisdiction, the remaining provisions shall not be affected.
SECTION 16. NON WAIVER
Any waiver of any obligation or default under this Ordinance shall not be construed as a waiver of any future defaults, whether of like or different character.
SECTION 17. EFFECT AND INTERPRETATION OF ORDINANCE
The captions that precede each section of this Ordinance are for convenience and/or reference only and shall not be taken into consideration in the interpretation of any of the provisions of this Ordinance.
(02-21-2023)