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HomeMy WebLinkAboutOrdinance 556STATE OF MINNESOTA ) COUntY OF ANOKA ) SS CITY O~ COImMBIA ~tGHTS I, Rosella Lawson, being the duly qualified and acting City Clerk of the City of Columbia Heights, ~oka County, Minnesota, do hereby certify that t have carefully compared .~e attached ordinance entitled~ "~nordinance grantj.ng to the Minneapolis Gas Company, a Corporation organized under the laws of the State of Delaware, its successors and assigns,. permission to use the streets and public places in the City of Columbia Heights for the construction. maintenanceand operation of a system of mains. ~ipe- lines and other facilities for the manufacture, dis- tribution and sale of gas, subject to certain terms and conditions, and prescribing the rates to be charged therefor, and repealing all ordinances, or parts of ordinances, inconsistent h~re'~ith," with the original on file n the offi=e of the City Clerk of the said City of Columbia Heights, which ordinance was duly passed by the Council of the City of CoIumbia ~elghts on the 28th day of January~ i963, and published as required by law on the 7th, 14th. 21st and ~Sth day of Feb./cry. 1963. in the "Columbia Heights Record", andthat the attached copy is a true and correct copy of the said original. ~ IN WI.~ESS WHEREOF, I have hereunto set my hand a~%d affixed th~ ~eal of th~ said City of Cold. ia Heights. this ..... :/ ........ ~ay of C~ y of Columbia ~eights, ~innesota CITY OF COLUMBIA HEIGHTS UNIFORM SUBURBAN FRANCHISE FOR MINNEAPOLIS GAS COMPANY November 9, 196Z GRANTING TO THE MINNEAPOLIS GAS COMPANY, A CORPORATION ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE, ITS SUCCESSORS AND ASSIGNS, PERMISSION TO USE THE STREETS AND PUBLIC PLACES IN THE CITY OF COLUMBIA HEIGHTS FOR THE CON- STRUCTION, MAINTENANCE AND OPERATION OF A SYSTEM 'OF MAINS, PIPELINES AND OTHER FACILITIES FOR THE MANUFACTURE, DISTRIBUTION AND SALE OF GAS, SUB- JECT TO CERTAIN TERMS AND CONDITIONS, AND PRE- SCRIBING THE RATES TO BE CHARGED THEREFOR, AND REPEALING ALL ORDINANCES, OR PARTS OF ORDINANCES, INCONSISTENT HEREWITH. Whereas, the Minneapolis Gas Company, a corporation organ- ized under the laws of the State of Delaware, owns property used and useful in the manufacture, distribution and sale of gas in the City of Columbia Heights and is operating said property in said City; and Whereas, the City Council of the City of Columbia Heights on the Z7th day of May, 1947~ adopted an ordinance granting a franchise to the Minneapolis Gas Company, its successors and assigns, for the manufacture, distribution and sale of gas in said City for a period of twenty (20) years, which said franchise was amended November 13, 1951; and Whereas, meetings have been held between representatives of the Minneapolis Gas Company and the City Council of the City of Colur~bia Heights relative to a revision of the franchise previously granted; and Whereas, the Minneapolis Gas Company, as and for consideration and compensation for the rights and privileges herein granted, has agreed to surrender its present franchise ordinance and has agreed, during the term hereof, to continuously supply gas service to the inhabitants of the City, as provided in this franchise ordinance, and has agreed to perform contractual ob- ligations set forth in said franchise ordinance, and has agreed to pay to the Suburban Rate Authority for the use and benefit of the City the amount provided in Section 18; and Whereas, the City Council of the City of Columbia Heights, in cooperation with other municipalities of the suburban area, has determined that it is desirable and to the advantage of the con- sumers of gas in the City of Columbia Heights that a new franchise should be granted by said City to said Company upon the terms and conditions expressed herein and that the previous franchise hereinabove referred to should be repealed and all rights and privileges of the Company thereunder surrendered and cancelled except 'as hereinafter provided. NOW, THEREFORE, THE CITY OF COLUMBIA HEIGHTS DOES ORDAIN: Section 1. In this ordinance the terms "Municipality", "Municipal Council" and "Municipal Clerk~' shall mean respectively, the City of Columbia Heights, the Council of the City of Columbia Heights and the Clerk of the City of Columbia Heights. If at any --2-- time the powers of the Municipality, the Municipal Council or the Municipal Clerk shall be transferred to any other authority, boardj. officer or officers, then and in such case such authority, board, officer or officers shall have the rights, powers and duties here- in referred to or prescribed for the Municipality, the Municipal Council and the Municipal Clerk respectively. The term "Company" shall mean the Minneapolis Gas Company, its successors and assigns, and the words "streets and public places" shall mean the streets, avenues, alleys, parkways, roads, squares, parks, bridges, viaducts and public places in the Municipality. The term "gas" as used herein shall be held to include manufactured gas, natural gas, reformed natural gas, a mixture of natural gas and manufactured gas, or other form of gaseous energy. The term "one thousand cubic feet" of gas where used in this ordinance is 1,000 cubic feet of gas measured at temperature and pressure existing at the point of metering, or, when corrected, at 60° F and 14.5 pounds per square inch, absolute. The term "suburban area" shall include the cities of Bloomington, Columbia Heights, Crystal, Fridley, Hopkins, Robbins- dale, St. Louis Park and Wayzata; the villages of Brooklyn Center, Brooklyn Park, Deephaven, Edina, Excelsior, Golden Valley, Green- wood, Hilltop, Maple Grove, Minnetonka, Morningside, New Hope, -3- Osseo, Plymouth, Richfield, Sto Anthony, Shorewood a~ Woodland; t~~ Eden Prairie; and the area of Fort Snelling. Other municipalities or area adjacent to or near the City of Minneapolis or the "suburban area" may be included in the "suburban area" for rate-making purposes, subject to the provisions of Section The term "Suburban Rate Authority" shall mean an organiza- tion consisting of one member appointed by the Municipal Council of each Municipality in the suburban area adopting this ordinance and existing for the purpose of administering the rate provisions of this ordinance. It is empowered to employ consultants and others and shall adopt such rules, regulations and bylaws as will enable it properly to perform the functions herein provided for. Section Z. There is hereby granted to Minneapolis Gas Company, its successors and assigns, for a period extending to January 1, 1983, from and after the acceptance of this ordinance by the Company, and waiver of rights by said Company required by Section Z7 hereof, and subject to the terms, conditions and limita- tions herein stated, the right to manufacture, import, transport, sell and distribute gas for heating, illuminating and other pur- poses within the limits of the Municipality as the boundaries thereof now exist or as they may be extended in the future, and for that purpose to establish the necessary facilities and equipment -4- and to maintain a manufacturing plant, gas mains, service pipes and any other appurtenances necessary to the manufacture, sale and distribution of gas in and along the streets and public places of said Municipality, and to do all things which are reasonable, necessary or customary in the accomplishment, of this objective, subject, however, to the further provisions of this franchise. Provided, however, that before said Company shall establish any plant in said Municipality for the manufacture of gas, the approval of the Municipal Council of the location thereof, in the exercise of a reasonable discretion by said Council, shall be first ob- tained by said Company. If the right or privilege to manufacture~ purchase, transport, mix, distribute or sell gas in annexed territory, shall be owned or controlled by the Company at the date of annexation, said right or privilege shall, from and after the date of annexa- tion and during the balance of the term hereof, be exercised and controlled by the provisions of this ordinance~ The Company agrees to manage its plant and operations in a reasonably efficient and economical manner. The Company also agrees to use due diligence in the matter of the issuance of long-term debt to assure reason- able cost of such debt, provided, however, that this should not be construed as requiring competitive bids on new debt issues. Section 3. The Company shall charge, demand, collect and receive just and reasonable rates, charges and compensation --5-- Section 3 as hereinafter provided° The altering, amending or revising of any rates made by the Company to obtain compliance with this ordi- nance shall be by the Suburban Rate Authority. The said Suburban Rate Authority exists for the purpose of reviewing gas rates made by the Company and undertaking appropriate action thereon as in this ordinance authorized. Nothing in this ordinance shall prevent the power herein given to the Suburban Rate Authority to alter, amend or revise Company rates from being hereafter delegated, by law, to some other governmental authority, From and after the effective date of this ordinance, the Company shall charge, demand, collect and receive not to exceed the following rates for gas supplied to each customer at one location in the entire suburban area, including the Municipality, for each month, except as said rates shall be changed or modified as hereinafter provided, viz: First 300 cu ft or less $2°00 Next 3,700 cu ft 1o43 per M Next 26,000 cuft 1o10 per M Next 130,000 cu ft 1.00.per M Next 140,000 cuft 1o00 per M All over 300,000 cu ft °90 per M The rates above specified are called "Block 'Rates". The rates permitted by this ordinance, except as to natural gas furnished industrial customers, are for natural gas having a monthly average total gross heating value of not less than 950 --6-- Section 3 British Thermal Units per cubic foot, and shall continue, subject to adjustment as herein provided. Bills shall be rendered at rates permitted by this ordi- nance; provided, however, that when a bill is not paid within ten (10) days after a bill is delivered or mailed to a customer, the Company may charge, demand, collect and receive the amount thereof plus ten per cent (1~). The Company may require any consumer of gas to deposit with it a reasonable amount as security for payment of gas used or to be used by said consumer. The Company shall pay interest on the deposit at the rate of six per cent (6%) per annum. (a). The said rates shall remain in force and effect and be adjusted from time to timer as hereinafter provided. In order to avoid undue discrimination between customers the Company may, at the time specified in this section and subject to review in the same manner as is provided in said ordinance, adjust the Block Rates either by changing the number and size of the blocks or by changing the price variation between the blocks, or both, or by changing the rate form, by submitting at the time of filing the adjusted Block Rates material and data supporting the desir- ability for such change or changes and the reasonableness thereof° Provided, the Company shall make a rate structure study at least once in each five years hereafter. Provided, further, that the -7- Sectio 3 Block Rates for any other type of gas furnished in place of natural gas may be revised by agreement between the Suburban Rate Authority and the Company° Nothing herein shall prevent the Company from establish- ing from time to time during the term hereof lower rates than the rates hereby permitted, and, in addition to the rate schedules contained in this section, from establishing, changing or dis- continuing load building, inducement or competitive rates, pro- vided that such rates shall be reasonable for consumers within different classes of service and that a lesser rate to one class of consumers shall not impose an undue burden of cost upon con- sumers in other classes. The Company shall have the right to .contract for the sale of gas for industrial use on an interruptible basis, requiring the custome~ to have standby equipment for use upon notice by the Company. The Company's rules, regulations, schedules or con- tracts for curtailing interruptible gas service shall be uniform as applied to each class of interruptible customers. (b). The Block Rates specified in this section shall re- main in force and effect until January 31, 1963o In the month of January, 1963, and thereafter in the month of January of each year during the remaining period covered by this ordinance, the Company shall decrease the Block Rates, and may increase the -8- Section 3 same, sufficient to permit and enable the Company to realize Actual Net Earnings equal to the Allowable Annual Return, as pro- vided for in Section 4, for each calendar year of said remaining period. Increases or decreases in the Block Rates to be made at or about the end of each of the above mentioned calendar years shall be based upon forecasts for the ensuing calendar year of the rates required to permit and enable the Company to realize Actual Net Earnings during said calendar year sufficient to pro- duce the Allowable Annual Return plus past unabsorbed deficiencies therein, 'or less past unabsorbed overages therein, as the case may be, which may occur after January 1, 1963, under the terms of this ordinance. The Company shall file with the Suburban Rate Authority, on or before January 10 of each year, the aforesaid forecasts, together with the Block Rates which are proposed to be effective on bills rendered after January 31 of that year. Provided, however, in order to minimize or prevent ex- cessive fluctuations in the Block Rates, the Company may addi- tionally once during a calendar year, but not prior to July 15 thereof, adjust the Block Rates in the same manner as provided above for the adjustment of said Block rates at or about the end of each calendar year. -9- Section 3 In making increases or decreases in the Block Rates here- under, fractions of one-half (1/2) cent or more shall be counted as one cent and fractions of less than one-half (1/2) cent shall be disregarded so far as the current period is concerned. (c). The Company agrees not to make any change in rates permitted or required by this ordinance either by altering the classification thereof, or otherwise, until after twenty days' notice of any such change has been given to the Suburban Rate Authority. Such notice shall be deemed to have been given when a written statement of any change, or changes, in such rates, signed by the Company, shall be filed with the Suburban Rate Authority. The Company shall furnish such information, reports and statements relating to any such changes which may be required by the Suburban Rate Authority. Any change in rates made pursuant to the terms of this ordinance shall be made effective as soon as practicable after the expiration of each calendar year, sub- ject to the proviso in Subsection 3 (b)o Provided, that before any rate established by the Company for any new class of consumers shall become effective, the Company shall give ten (10) days' similar notice to the Suburban Rate Authority of the establish- ment of said rate, which may be altered, amended or revised within ten (10) days thereafter as in this section provided° The filing of any notice with the Suburban Rate Authority, as required by -10- Section 3 this ordinance, shall be deemed notice to this municipality. (d). The Company agrees that any change in rates made by the Company, not in accordance with this ordinance, may be altered, amended or revised, so as to conform to the provisions of this ordinance and according to the terms thereof, by an engineer, auditor or accountant of the Suburban Rate Authority duly appointed for such purpose. The engineer, auditor or accoun- tant so appointed shall be qualified and experienced in public utility regulatory matters and an employee of the said Suburban Rate Authority. Any such alteration, amendment or revision shall be made by order, stating the reasons therefor, duly served on the Company within twenty (Z0) days after notice of such proposed rates shall be given by the Company, as in this ordinance pro- vided. The Company shall have the right to a prompt hearing and review of such alteration, amendment or revision in the courts of the State of Minnesota, if proper application is made therefor within thirty (30) days after notice of such alteration, amend- ment or revision, and if such hearing and review is applied for, then until such alteration, amendment or revision shall be finally sustained or altered by such courts, the rate made by the Company shall remain in effect for the period as provided in this ordinance. At the time of making the application for review the Company shall file with the Clerk of Court a corporate undertaking requiring it -11- Section 3 to refund, rebate or comply with such other relief as said courts may order. At the hearing provided for herein on the issue or issues raised by the aforesaid order the court shall consider all evidence which may be relevant and proper. (e). The Company agrees that when no change in an exist- ing rate is proposed at the time of a rate filing, the said Subur- ban Rate Authority shall have the power to alter, amend or revise the said existing rate in the manner provided in Subsection 3 (d), if the said existing rate is not in accordance with the provi- sions of this ordinance. The right of the Company for court re- view in such instance shall also be the same as provided in Sub- section 3 (d) . (f) The Company shall not charge, demand, collect or re- ceive a greater or less or different compensation for any service or similar service rendered, or to be rendered, than the rates and charges applicable to such service in effect at the time for consumers in the same class, nor shall the Company refund or remit in any manner or by any device any portion of the rates or charges so specified. The Company shall not offer, extend to, or accept from any person or corporation any form of contract or agreement for service that is not regularly and uniformly applicable to all persons and corporations receiving the same or like service. The Company shall not extend, afford or use any rule or regulation, -tZ- or any privilege or facility that is not regularly and uniformly applicable to all persons and corporations receiving service under the same or like conditions, except as provided in Sub- section 3 (a) hereof. Section 4. It is the purpose of this ordinance to insure that the consumer shall pay only a fair, just and reasonable rate and that such rate will permit the Company to make a reasonable return on the capital investment in the business, as hereinafter defined in this Section, under an economical and efficient manage- ment of the same. (a). As used in this ordinance, "allowable annual return" shall mean the amount computed by application of the "allowable rate of return" to the "allowable rate base" as defined in accord- ance with the provisions of Subsections (b), (c), (d), (e), (f) and (g) o (b). The "allowable rate of return" shall be 6-1/2% during calendar years when the Company's average cost of long-term debt capital at the beginning of the current year is not less than 3-1/2% nor greater than 4-1/2%. Long-term debt shall consist of all debt due over one year after date of issue. The average cost of long-term debt shall be the weighted average effective cost of the outstanding long-term debt at the beginning of the current year. The effective cost of each debt issue shall be computed -13- Section 'by dividing the product of the interest rate and principal amount issued by the net proceeds of the issue. The net proceeds of an issue shall consist of the principal amount plus any premiums re- ceived, less any discounts and issuance expense, and less call premiums when any refunding of an issue results in a lower effect- ive cost of debt. Whenever there is a decrease in the Company's average cost of long-term debt capital below 3-1/2% or an increase above 4-1/Z%, the "allowable rate of return" of 6-1/2% shall be decreased or increased by 5~ of such decrease or increase. There- after, any contra move in the average cost of long-term debt cap- ital will required the reverse adjustment in the "allowable rate of return". No change in the "allowable rate of return" shall be made unless the decrease or increase in the average cost of long- term debt capital shall equal at least 1/10 of one percentage point, and in no event shall the decrease or increase in the "allowable rate of return" be other than in multiples of 1/20 of one percentage point. (c). The "allowable rate 'base" shall be the sum of the "fair value of the suburban area utility plant" used and useful in the public service as provided in Subsections (d), (e) and (f) and working capital as provided in Section 5, less average con- tributions in aid of construction and average cash advances for construction, as reflected on the Company's books° -14- Section 4 (d) The "fair value of the suburban area utility plant" shall be the sum of 50% of the average original plant cost in- cluding the current year net additions, less depreciation per books, computed on a monthly basis, and 50% of the "reproduction cost new" plant as defined in Subsections (e) and (f), less depre- ciation. Depreciation of the "reproduction cost new" plant shall be computed by the use of the ratio of the book depreciation re- serve to the original plant gross cost, plus three (3) percentage points. The 5(~/O weighting of the "reproduction cost new" plant shall be used as long as the Company's ratio of debt capital does not exceed 60O/O at the beginning of the current year. If it ex- ceeds 60O/O the 50% weighting of the "reproduction cost new" plant will be decreased by one percentage point for every one percentage point increase in the debt capital ratio above 60O/Oo In such event the 50% weighting of the original plant cost will be increased by each percentage point that the weighting of "reproduction cost new" plant is decreased° (e). "Reproduction cost new" shall consist of the sum of the following amounts: (1) The original cost at the beginning of the preceding calendar year of all plant classified as Intangible Plant, Land and Land Rights, and General -15- Section 4 Plant, excluding Structures and Improvements. (2) The original cost at the beginning of the preceding calendar year of all other plant trended to reflect the Handy-Whitman Index of Public Utility Construction Costs (North Central Division) as of July 1 prior to the current calendar year. Each plant account shall be trended by use of the following indexes: Plant Account Index Ail Manufactured Gas Produc- tion Plant excluding Land and Land Rights Total Construction and Equipment (Manufactured Gas) Distribution Plant Structures and Improvements Mains - Steel Mains - Cast Iron Pumping and Regulating Equipment Services Meters Meter Installations House Regulators House Regulator Installa- tions Structures and Improvements Mains - Steel Mains - Cast Iron Mechanical Equipment exclu- sive of Gas Holders Services Meters Meter Installations House Regulators House Regulator Installa- tions Other Property on Customers' Structures and Improvements Premises General Plant Structures and Improvements Structures and Improvements Any new Plant Account which may hereafter be established shall be trended in accordance with the appropriate Handy- Whitman Index. (3) The original cost of the gross plant additions, -16- Section 4 less retirements, installed in the preceding calendar year. (4) The original cost of the gross plant additions, less retirements, installed during the current calendar year averaged on a monthly basis. (f). At the end of each five-year interval the con- struction cost trends experienced by the Company since the adop- tion of this ordinance shall be compared with the appropriate Handy-Whitman Index. If, after such comparison, the difference between the Handy-Whitman costs and the Company's experience is 15%, or less, of the total "reproduction cost new" plant, the Handy-Whitman Index costs will be used for the succeeding five years. If the difference exceeds 15%, the parties agree to ad- just the Handy-Whitman costs to reflect Company experience. In the event the Handy-Whitman Index of Public Utility Construction Costs (North Central Division), or its successor, is no longer available, another similar Index mutually agreeable to the Company and the Suburban Rate Authority will be used. (g). As used in this ordinance, "Actual Net Earnings" of the Company shall consist of the balance remaining after deduct- ing from the gross revenues of the Company from the manufacture, purchase, mixture, transportation, distribution and sale of gas sold in the said suburban area during the calendar year of 1963, -17- Section and each calendar year thereafter, the following operating and maintenance costs and expenses connected with the manufacture, purchase, mixture, transportation, distribution and sale of gas sold in the said suburban area during such calendar periods: (1) Production Expenses, including cost of purchased gas; (Z) Distribution and Utilization Expenses; (3) Customers' Accounting and Collecting Expenses; (4) Sales Promotion Expenses; (5) An item to cover "Administrative and General Expenses" which shall be the just, fair and reasonable cost to the Company of all of the sub-accounts that are included in such Administrative and General Expenses, but the aggregate of "Administrative Salaries" and "General Incidental Expenses" classified as in the present practice of the Company in these accounts shall not exceed in any calendar year three per cent (3%) of the annual gross revenue, including contributions, gratuities and donations not to exceed three-tenths of one per cent (3/10 of 1%) of the annual gross revenue. (6) All taxes and governmental impositions of every nature actually paid by the Company directly to govern- mental tax collecting agencies or accrued in accordance Section 4 with general acceptable accounting principles° Any tax other than an ad valorem tax which may hereafter be law- fully authorized and thereafter separately imposed by any municipality shall be added only to the bills of the cus- tomers within such municipality. (7) An annual allowance, beginning January 1, 1963, for depreciation of depreciable property owned by the Company and used and useful in rendering gas service in the suburban area for each calendar year during the term of this ordinance of an amount designed to recover the original cost of such depreciable property over the esti- mated average service-life of each group of property on a straight-line basis, computed by application of the annual depreciation rates, now used by the Company in recording depreciation on the books of the Company to the original cost of depreciable property included in each of the major property classifications and properly chargeable to depre- ciation expenses. Provided, however, such annual deprecia- tion rates may be revised periodically so as to reflect all factors bearing on the amount designed to recover the orig- inal cost of such depreciable property over its estimated average service-life; (8) All other actual and proper classes of mainte- nance and operating expenses of the Company; -19- Section 4 (9) An item to cover taxes, depreciation and return on any plant not included in the suburban area Allowable Rate Base, but which is used and useful in rendering public service therein. A credit item (deduction from expenses) to cover taxes, depreciation and return on any plant included in the suburban area allowable rate base, but which is properly allocable to rendering service out- side the suburban area, subject, however, to the provi- sions of Section 1. (10) Annual allowance for amortization of extra- ordinary property losses resulting from change in type of gas, unusual obsolescence or unforeseen property damage. Appropriate items may be amortized or accrued according to accepted accounting practice and, except as otherwise pro- vided in this ordinance for specific items, the actual experience of the Company shall 'be the determining factor in support of the amounts and rates of amortization or accrual for such items, as such experience gives a definite guide. All expense items, whether charged directly and entirely in a calendar year or amortized or accrued over a longer period, all revenue items and all balance sheet items shall be, at all times, recorded by the Company in substantial accordance with the Uniform System of Accounts for Gas Utilities of the National -20- Association of Railroad and Utility Commissioners, except as otherwise provided in this ordinance and except that installment and carrying charges will be credited to gross merchandise sales. The allocation of the Company's operating expenses and Plant within and without the suburban area shall be made by the Company in accordance with a formula that reasonably reflects the costs as they occur for rendering service within and without the said area. Any change in such formula made in any rate filing will be specifically referred to in a separate communication filed with the Suburban Rate Authority at the time of the rate filing. When there is a balance in the account for cumulative overage in excess of the allowable return, such balance shall be credited with interest computed at the current prime interest rate. Net refunds (after taxes) from any supplier shall be credited to such account. Overages in such account may be used, by mutual agreement, in such manner as will minimize or prevent violent fluctuations in rates, notwithstanding the provisions of Subsection 3 (b) . Section 5. The Company shall be entitled to fair and adequate working capital in an amount determined as follows: As used in this ordinance, "working capital" shall mean an amount applicable to the suburban area for the calendar year of 1963, and for each calendar year thereafter, equal to the annual average funds invested by the Company during such calendar years in materials and supplies on hand, merchandise accounts receivable, prepayments and deferred charges properly chargeable to operations, plus a cash fund equal to ten (10) days' average daily operating expenses and taxes, plus one-eighth (1/8) of the annual operating expenses and taxes, less credits for the annual average of accrued taxes and purchased gas accounts payable. The working capital computed in accordance with the fore- going formula shall be included in the allowable rate base as pro- vided in Subsection 4(c). Section 6. The Company shall file with the Suburban Rate Authority printed schedules which shall be kept open for public inspection~ showing all rates, charges, compensation, forms of contracts or agreements made, established or enforced or to be enforced with customers in the suburban area, together with all rules and regulations relating to rates, charges or services rendered or to be rendered and all privileges allowed and facil- ities afforded by the Company to its customers in the suburban area. The Suburban Rate Authority shall have the right at any reasonable time to inspect, examine and audit the accounts, books~, records, reports, contracts, documents and papers of the Company° The said Suburban Rate Authority may appoint or designate the person or persons to make such inspection, examination or audit° Section 7o The Company shall at all times keep, maintain and preserve for the suburban area proper and accurate engineer- ing, accounting, financial and statistical records, relating to the construction, cost, maintenance and operation of its property which at all times shall show correctly and in detail all its financial transactions, including all of its receipts and dis- bursements and the particulars thereof, and all data needful for the preparation of the statements and reports hereinafter provided for. The Company shall, each month, prepare and file with the Suburban Rate Authority the following: (a) A detailed statement of all assets and liabilities of the Company as of the close of the preceding month; (b) A detailed statement showing source and application of revenues of the Company from the sale of gas and of by-products and from all other sources for the preceding month and year, up to and including the preceding month; also all expenditures of the Company during said year; all dividends and interest paid; the cost of all materials used in the manufacture of gas, all operating expenses, taxes and salaries; the cost of all repairs and of all property, real or personal, by it purchased, acquired, constructed or installed; said statements shall be so prepared as to show the net income of the Company from lis regular business and from all other sources and the use or disposition of said income. The Company shall also, from time to time, furnish monthly operating and financial reports and such other information, re- ports and statements regarding its property and business, and the conduct thereof, as the Suburban Rate Authority may require° All information, reports and statements furnished to the Suburban Rate Authority by the Company shall be certified by the President, Secretary or other proper officer of the Company. Section 8. The provisions of this ordinance relative to allowable annual return, allowable rate of return, allowable rate base and accruing annual depreciation rates fixed under the provisions hereof and other requirements shall be considered as conditions hereof, but no such provisions, nor any matter t fact or thing herein contained shall be construed as an admission either 'by the Municipality or the Company in connection with any proceeding for the acquisition of the Company's property, or any part thereof, under eminent domain or condemnation proceedings~ or in connection with any proceeding for the valuation of the Company's property, or any part thereof, during or after the termination hereof, or in connection with any proceeding for the fixing of rates after the termination hereof, to any of which proceedings the Municipality shall be a party. -24- Section 9o In determining "allowable annual return", "allowable rate of return" and ~'aliowable rate base~' under Section 4 hereof, the books and records of the Company, and its predecessors, made and kept prior to the passage of this ordi- nance, shall be used insofar as necessary in applying said Section 4o Section 10o The books of account shall contain an ac- count that may be designated as "Reserve for Depreciation of Utility Plant", or similar term, which shall show at all times as nearly as may be the unexpended or unused balance of accumulated charges to operating expenses on account of depreciation, 'replace- ments, renewals or retirements. When any property is abandoned or removed, withdrawn, retired from, or is not used and useful in the public service for any cause, the actual original cost shall be credited to the appropriate capital account, and such amount plus the cost incidental to said abandonment~ removal~ withdrawal or retirement shall be charged to said reserve, sub- ject, however, to the provisions of the following paragraph° The salvage value received and any other amounts recovered from said property shall be credited to said reserve° When a substantial segment of the Company's utility property is required to be abandoned and retired from service because of change of type of gas, or unusual obsolescence~ or unforeseen -Z5- property damage and such proper%~ ~$ not ~'ulky depreciation reserve or other reserves or Dy £nsurance, Lhen the unrecovered balance of such property shall be credztea to the de-= preciation reserve or other appropriate reserve and be charged tc, a deferred charge account designated as "Extraordinary Property Losses". Charges to said deferred charge account shall be amor- tized by charges to operating expenses as provided for in Section 4. If the original cost is not shown by the books and records of the Company or its predecessors, such amount shall be estimated and a record shall be made by the Company showing the facts upon which said estimate was based, the manner in which it was deter- mined and the person by whom it was made, and said estimated amount, together with removal costs and salvage value, or other amounts received or recovered from said property, shall be ac- counted for in the manner as hereinabove provided° Section tl. The Company shall at all times keep, main- tain and preserve all the books, records and accounts of the Minneapolis Gas Light Company, a corporation organized under the laws of the State of Minnesota, and the Minneapolis Gas Light Company, a corporation organized under the laws of the State of Delaware, the predecessors of the Company, and such books, records and accounts shall at all reasonable times be open to inspection and examination by the Suburban Rate Authority, as provided in -26- Section 6, in respec% to the books, £ecords and accounts of the Company. The Company shall set up, keep and maintain at all 5±roes at its general offices, accurate books of account, showing among other things as nearly as may be the actual original cost of the property owned by the Company within the suburban area° For this purpose, the books and records of the predecessor companies (Minneapolis Gas Light Company of Minnesota and Minneapolis Gas Light Company of Delaware) may be used without prejudice to the Suburban Rate Authority in any proceeding where the actual original cost may be an issue. All property added shall be entered on the books at its actual original cost. Section lZo The Company agrees to lay such of its mains and pipes as come within its requirements for service as soon as reasonably possible to do SOo The Company shall give reasonable notice to the municipal engineer of plans to lay mains in any part of the Municipality. The laying of such mains shall not unduly interfere with established municipal planning° Extensions of serv- ice beyond the borders of the suburban area as herein defined shall not collectively cast any undue burden on the customers in said suburban area. Section 13. The council of the Municipality shall have the right to make such reasonable rules and regulations as may be -27- necessary to provide adequate and proper service° The Munici- pality shall have the power to provide for the inspection, examina- tion and ascertainment of the accuracy of any and all gas meters used or intended to be used for measuring and ascertaining the quantity of gas supplied by the Company and to inspect, examine and ascertain the accuracy of recording pressure gauges and of all apparatus for testing and proving the accuracy of gas meters. Section 14. The Company shall not open or disturb the surface of any street or public place for any purpose without first having obtained a permit so to do from the proper Municipal officials, for which permit the Municipality may impose a reason- able fee to be paid by the Company° The mains, services and other property placed in the streets and public places pursuant to such permit shall be located in the streets or portion of the streets and public places as shall be designated by the Municipality° The Company shall, upon completion of any work requiring the open- ing of any street or public place, restore the same, including the paving and its foundations, to as good condition as formerly, and shall exercise reasonable care to maintain the same for two years thereafter in good condition. Said work shall be performed with due diligence and if the Company shall fail promptly to perform and complete the work, to remove all dirt and rubbish and to put the street or public place in good condition, the Municipality shall have the right to put. ~he street or public place in good condition at the expense of the Company; and the Company shall, upon demand, pay to the Municipality the cost of such work done for or performed by the Municipality, together with ten per cent (1~) additional as liquidated damages. Not- withstanding the foregoing provisions of this section, the Company may open and disturb the surface of any street without a permit where an emergency exists requiring the immediate repair of a gas main or gas service° The Company in such event will re- quest a permit not later than the second working day thereafter° Section 15. Whenever the Municipality shall grade, regrade or change the line of any street or public place or construct or reconstruct any sewer or water system therein and shall, in the proper exercise of its police power, and with due regard to seasonable working conditions, order the Company to relocate permanently its mains, services and other property located in said street or public place~ the Company shall relocate its faci].- ities at its own expense° In construing this paragraph, the ob- ligation of the Company to relocate its facilities shall be as applicable to water systems as it is to sewer systems° The Munic- ipality shall give the Company reasonable notice of plans to grade, regrade or change the line of any street or public place or to construct or reconstruct any sewer or water system therein~ -29- The Company may 'be required %o reiocate its ~acilities at its own expense where grade changes are made by the M~nzczpaizty for improved drainage or improved traffic conditions~ provided, however~ if a subsequent relocation or relocations shall be ordered within ten years from and after the first relocation the Munici- pality shall reimburse the Company for such non-betterment reloca~ tion expense which the Company may incur on a time and material basis° Provided, however, nothing in this ordinance contained shall deprive the Company of its rights ~under Section 161,~46~ Minnesota Statutes° Nothing contained in this section shall require the Company to remove and replace its mains or to cut and reconnect its service pipe running from the main to the customer's premises at its own expense where the removal and replacement or cutting and reconnecting is made for the purpose of a more expeditious operation for the construction or reconstruction of said sewer or water system; nor shall anything contained herein relieve any person, persons or corporations from liability arising out of the failure to exercise reasonable care to avoid injuring the Company-~s facilities while perfo~ming any work connected with grading, re- grading or changing the line of any street or public place or with the construction or reconstruction of any sewer or water system o -30- Where the Munzcipality orders the Company to relocate any of its facilities, the Company shall proceed with such reloca- tion. If such relocation is done without an agreement first being made as to who shall pay for the relocation cost, such relocation of the facilities by the Company shall not be construed as a waiver of its right to 'be reimbursed for the relocation cost. If the Company claims that it should be reimbursed for such re- location costs, it shall notify the Municipality within ten (10) days after receipt of such order~ Section 16. The Municipality shall give the Company reason- able written notice of plans for street improvements where paving or resurfacing of a permanent nature is involved, which notice shall contain the nature and character of the improvements, the streets upon which the improvements are to be made, the extent of the improvements and the time when the Municipality is going to start the work, and, if more than one street is involved, the order in which this work is to proceed. Paving or resurfacing of a perma- nent nature refers only to Portland cement concrete or high type bituminous concrete. The notice shall be given to the Company a sufficient length of time, considering seasonable working conditions, in advance of the actual commencement of the work to permit the Company to make any additions, alterations or repairs to its facilities deemed necessary by it. -31- In cases where streets are at final width and grade, and the Municipality has installed underground sewer or water mains and service connections to the property line abutting the streets prior to a permanent paving or resurfacing of such streets, and the Company's main is located under such street, the Company may be required to install gas service connections prior to such paving or resurfacing, whenever it is apparent that gas service will be required during the five years following the paving or resurfacing. Section 17. All mains, services, governors and other property and facilities shall be so located, constructed, installed and maintained as not to endanger or unnecessarily interfere with the usual and customary trade, traffic and travel upon the streets and public places of the Municipality. The Company shall keep and maintain all of its property in good condition, order and re- pair, so that the same shall not menace or endanger the life or property of any person. The Municipality shall have the right to inspect and examine at any reasonable time the property owned or used, in part or in whole, by the Company for the purpose of manu- facturing, distributing, furnishing or selling gas in the suburban area. Section 18o The Company agrees to pay to the Suburban Rate Authority, effective January 1, 1963, not less than $30,000.00 per -32- year to be allowed as an operating expense to the Compan~ and which shall be used to secure compliance with this ordinance~ and for such other purposes relating to the Company's purchased gas costs and gas supply as the Suburban Rate Authority shall deem necessary. The amount of such annual payment shall be subject to possible revision by the Suburban Rate Authority and the Company, not oftener than once in five (5) years, if mutually agreed to. Section 19. The Company shall at all times provide and furnish an adequate, safe and continuous supply of gas to the Municipality and its inhabitants, subject, however, to the further provisions of this section° The Company sells and distributes gas throughout its entire distribution system. The natural gas distributed by the Company is furnished by the pipeline system owned and operated by Northern Natural Gas Company, a "natural gas company" under the Federal Natural Gas Act, which subjects said Northern Natural Gas Company to the jurisdiction of the Federal Power Commission° The Company shall not be liable to the Municipality or its inhabitants, nor shall the Municipality, or any inhabitant who is a customer of the Company, be liable to the Company here- under by reason of the failure of the Company to deliver, or of the Municipality or a customer to receive, natural gas as a re- sult of acts of God, or the public enemy, inability of pipeline -33- supplier to furnish an adequate supply due to an emergency, an order or decision of a public regulatory body or other acts beyond the control of the party affected° Whenever any of the occurrences named above take place, the Company shall have the right and authority and it shall be its duty to adopt reasonable rules and regulations in connection with limiting, curtailing or allocating extensions of service or supply of gas to any customer or prospective customer, and with- holding the supplying of gas to new customers, provided that such rules and regulations shall be uniform as applied to each class of customers; classifications of customers shall be reasonable and shall be nondiscriminatory as between municipalities in the suburban area. If service is temporarily suspended because of any of the reasons set forth above, occurring through no fault or negligent act on the part of the Company~ such suspension shall not be made the 'basis of any action or proceeding to terminate this franchise. The quality of the gas sold in the suburban area shall be the same as that sold to the Company's customers in the City of Minneapolis° The pressure at which gas is supplied and the method and manner of testing the heating value, quality, purity and pressure of the gas supplied, shall be in accordance with accepted national. standards o -34- Section 20. The Company shall indemnify ~eep and hold the Municipality free and harmless from llabllzty on account, of injury or damage to persons or property growing out of the negli- gent construction, maintenance, repair and operatZon o~ its prop- erty, and in the event that suit shall be brought against the Municipality either independently or jointly with the Company on account thereof, the Company, upon notice to it by the Munici- pality, shall defend the Municipality in any suit at the cost of the Company~ and in event of a final, judgment being obtained against the Municipality, either independently or jointly with the Company, the Company shall pay such judgment with all costs and hold the Municipality harmless therefrom° Section Zlo Nothing herein shall be construed to limzt the right of the Municipality to acquire the property of the Company under any act of the legislature now or hereafter exist- ing, nor under any provisions of law now existing or hereafter adopted. In the event the Municipality should desire to acquire the property of the Company by the exercise of eminent domain, as herein set forth, the Company agrees that its value for the pur- pose of such acquisition shall not include any amount for the value of any right, privilege, franchise or grant from the State of Minnesota or the Municipality, for good wills or for future profits, and that in determining said value no regard shall be -35 - had to the amounts of stocks, bonds and other obligations of the Company. Section 22. The rights and privileges hereby granted are not exclusive and the Municipality expressly reserves the right to grant like rights and privileges to other persons or co rpo rat ion s. Section 23. If the Company shall ~be in default in the performance of any of the material terms and conditions of this ordinance and shall continue in default for more than ninety (90) days after receiving notice from the Municipality of such default, the Municipal Council may, 'by ordinance duly passed and adopted, terminate all rights granted under this ordinance to the Company. The said notice of default shall be in writing and shall specify the provisions of this ordinance in the pemformance of which it is claimed that the Company is in default. Such notice shall be served in the manner provided by the laws of Minnesota for the service of a summons and complaint in a civil action. The reason- ableness of any ordinance so passed declaring a forfeiture of the rights and privileges granted by this franchise ordinance shall be subject to review by a court of competent jurisdiction. SEction Z4~ Any change of the form of government of the Municipality as authorized by the State of Minnesota shall not affect the validity of this franchise. Any municipal corporation -36- succeeding the Municipality shall, without the consent of the Company, succeed to all the rights and obligations of the Munic- ipality provided in this franchise. Section 25° Except as herein otherwise specifically provided, whenever notice is to be given to the Company, such notice, in writing, addressed to the President, Vice President, Secretary or Treasurer of the Company and delivered at the Minneapolis office of the Company shall be service of such notice; and whenever notice is to be given to the Municipality, such notice, in writing, addressed to the Municipal Clerk and delivered at his office, shall be service of such notice; and whenever notice is to be given to the Suburban-Rate Authority, such notice, in writing, addressed to such Suburban Rate Author- ity and delivered to its office or to one of the members of its governing body, shall be service of such notice° Section 26° An ordinance entitled "Granting to ~Minneapolis Gas Light Company, its successors and assigns, the right to manufacture, import, transport, sell and distribute gas for heating, illuminating and other purposes in the City of Columbia Heights, and to use the streets, avenues and alleys there- of for that purpose", passed on the 27th day of May, 1947, and the amendments thereto passed on the 13th day of November, 1951, are hereby repealed° -37- Section 27° This ordinance shall be null and void unless the Company shall, within thirty days after its passage by the Council, file with the Municipal Clerk a written acceptance of the same and an agreement on its part, signed and acknowledged in its behalf under its corporate seal by its duly authorized officers, to surrender all rights and privileges under the ordi- nance described in Section 26, and to comply with, abide by, keep and perform all of the terms, conditions and requirements herein contained upon its part to be complied with or performed, and that the Company will not contest the validity of this ordinance or of any rate or rates which are in accordance with the terms hereof, except as herein expressly provided° Section 28° The expense of the publication of this ordi- nance shall be paid by the Company° Section Z9. If this ordinance is not adopted by March 1, 1963, by municipalities in which 66-Z/3% of the customers of the Company in the suburban area are located, the Municipal Council may revoke the same. The Company agrees to file with the Municipal Clerk on or before March 15, 1963, a sworn statement showing the total number of customers in the suburban area and the total num'ber of customers in municipalities in which the ordinance has been adopted~ If this ordinance is revoked the provisions of this ordinance shall be without prejudice to either party in any subsequent proceeding. -38- Section 30. Three years after January 1, 1963, either the Company or the Suburban Rate Authority may request a review of the question of whether the rate formula contained in Sections 4 and 5 accomplishes the purpose expressed in the first sentence of Section 4o Such review may 'be initiated by making a written request therefor to the other party during the month of January, 1966. Thereupon, the Suburban Rate Authority and the Company shall review and discuss such question with each other, thoroughly and in good faith, for a period not to exceed six months. Any change in said rate formula shall be prospective in operation only and shall 'be made by amendment to sections 4 or 5o Any such amendment to 'be effective must 'be adopted before December 1, 1966, by municipalities in which 66-Z/3% of the customers of the Company in the suburban area are located and accepted in writing by the Company in the form provided in Section Z7 prior to January 1, 1967~ In the absence of any such amendment, so adopted and accepted, the rate formula contained in Sections 4 and 5 shall be and remain in effect during the balance of the term of this franchise. Section 31. If any section, paragraph~ subdivision, clause or provision of this ordinance shall be adjudged invalid or uncon- stitutional, the same shall not affect the validity of this ordi- nance as a whole, or any part or provision, other than the part so -39- so decided to be invalid or unconstitutional° Section 3Zo Charter provisions° The Company hereby ac- cepts the provisions prescribed in Section 100, as amended, of Chapter t0 of the Charter of the City of Columbia Heights, as fol- lows: (a) That the Grantee shall be subject to and will perform on its part all the terms of Sections 94 to 10Z, inclusive, of this charter. (~b) That the grantee shall not issue any capital stock on account of the franchise or the value thereof, and that the grantee shall have no right to receive, upon condemnation proceed- ings brought by the city to acquire the public utility exercising such franchise, any return on account of the franchise or its va l u e o (c) That no sale or lease of said franchise shall be effective until the assignee or lessee shall have filed in the office of the city clerk an instrument, duly executed~ reciting the fact of such sale or lease~ accepting the terms of the fran- chise, and agreeing to perform all the conditions required of the grantee thereunder° (d) That every grant in said franchise contained of per- mission for the erection of poles, masts, or other fixtures in the streets and for the attachment of wires thereto, or for the -40- laying of tracks in, or of pipes or conduits under, places of any permanent or semi-permanent fixtures whatsoever, shall be subject to the condition that the council shall have the power to require such alterations therein, or relocations or re-routing thereof, as the council may at any time deem necessary for safety, health~ or convenience of the public, and particularly that it shall have the power to require the removal of poles, masts, and other fixtures bearing wires and the placing underground of poles, masts, and of other fixtures bearing wires and the placing under- ground of all wires for whatsoever purpose used° (e) Every franchise and every extension or renewal of such franchise shall contain a provision for its acceptance in writing by the grantee within thirty days after its passage by the council and before its submission to a vote of the people in case of a referendum° No such franchise shall be binding upon the city until its acceptance by the grantee° Such acceptance shall be construed to be an acceptance of and consent to all the terms~ conditions and limitations contained in the ordinance granting the franchise as well as of the provisions of this charter o Section 33° This ordinance shall take effect and be in force from and after January 1, 1963, and after its publication and its acceptance by the Company subject to the provisions of -41- Section 29° Passed the ~¢~ day of ,J~u~ Mayo r ATTEST: C 1 e rk -42-