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03-24-2010 HUCMSpecial Meeting March 24, 2010 Members present: President Dwight Bordson; Vice President Robert Hantge; Secretary Craig Lenz; Commissioner Donald H. Walser; Commissioner Paul Nordin; Attorney Marc Sebora; General Manager Michael Kumm President Bordson called the meeting to order at 1:00 p.m. GM Kumm explained that Big Stone II power development costs were going to be rolled into the wholesale power costs eventually and over time it would be paid back; HUC has already rolled this cost into the wholesale power cost, with no effect on the rates. GM Kumm went on to discuss agenda item #2 as it is closely related to agenda item #1. HUC's objective has always been to provide baseload power supply and HUC is currently negotiating with MRES for a baseload power supply agreement. We hope to present the agreement for approval at the April Commission meeting. The agreement will provide stable pricing for many years. We've met with RW Beck and now we're just waiting for the amended agreement. GM Kumm mentioned that if it were not for HUC's involvement with MRES or Big Stone II, that it is highly unlikely that we would be negotiating this purchase power agreement. The Big Stone II project and the currently negotiated deal with MRES are both purchase power agreements which has been our objective and still is for providing baseload power in accordance with HUC's integrated resources plan. After further discussion, a motion was made by Vice President Hantge, seconded by Secretary Lenz to approve the repayment of the Big Stone II development costs. Motion was unanimously carried. GM Kumm presented the energy contract with Xcel Energy. This agreement has already been signed. After previous conversation with three of the five Commissioners, it was approved verbally; we just need ratification. Secretary Lenz made a motion, seconded by Commissioner Walser to ratify the energy contract with Xcel Energy. Motion was unanimously carried. There being no further business, a motion was made by Secretary Lenz, seconded by Vice President Hantge to adjourn the meeting at 1:33 p.m. Motion was unanimously carried. ATTEST: Dwight Bordson, President Craig Lenz, Secretary Special Meeting March 24, 2010 Members present: President Dwight Bordson; Vice President Robert Hantge; Secretary Craig Lenz; Commissioner Donald H. Walser; Commissioner Paul Nordin; Attorney Marc Sebora; General Manager Michael Kumm President Bordson called the meeting to order at 1:00 p.m. GM Kumm explained that Big Stone II power development costs were going to be rolled into the wholesale power costs eventually and over time it would be paid back; HUC has already rolled this cost into the wholesale power cost, with no effect on the rates. GM Kumm went on to discuss agenda item #2 as it is closely related to agenda item #1. HUC's objective has always been to provide baseload power supply and HUC is currently negotiating with MRES for a baseload power supply agreement. We hope to present the agreement for approval at the April Commission meeting. The agreement will provide stable pricing for many years. We've met with RW Beck and now we're just waiting for the amended agreement. GM Kumm mentioned that if it were not for HUC's involvement with MRES or Big Stone II, that it is highly unlikely that we would be negotiating this purchase power agreement. The Big Stone II project and the currently negotiated deal with MRES are both purchase power agreements which has been our objective and still is for providing baseload power in accordance with HUC's integrated resources plan. After further discussion, a motion was made by Vice President Hantge, seconded by Secretary Lenz to approve the repayment of the Big Stone II development costs. Motion was unanimously carried. GM Kumm presented the energy contract with Xcel Energy. This agreement has already been signed. After previous conversation with three of the five Commissioners, it was approved verbally; we just need ratification. Secretary Lenz made a motion, seconded by Commissioner Walser to ratify the energy contract with Xcel Energy. Motion was unanimously carried. There being no further business, a motion was made by Secretary Lenz, seconded by Vice President Hantge to adjourn the meeting at 1:33 p.m. Motion was unanimously rn rriarl ATTEST: Dwig t Bor ,son, President REPAYMENT AGREEMENT This Repayment Agreement (the "Agreement ") is made and entered into this day of . 2010, by and between Missouri Basin Municipal Power Agency, a body corporate and politic organized under Iowa Code Chapter 28E and doing business as Missouri River Energy Services (the "A enc "), Western Minnesota Municipal Power Agency, a municipal corporation and political subdivision of the State of Minnesota ( "Western Minnesota "), and Hutchinson Utilities Commission, a municipal corporation and political subdivision of the State of Minnesota ( "Hutchinson "). RECITALS A. The Agency, Western Minnesota and Hutchinson are parties to a Power Sale Agreement (P -BSP I1) dated May 1, 2005, as amended pursuant to the adoption of an amended Exhibit A dated June 28, 2005 (collectively, the "BSPII Agreement"), pursuant to which the parties made certain agreements with respect to the proposed development, construction and operation of the Big Stone II Plant. All capitalized terms used in this Agreement shall have the meanings given to them in the BSPII Agreement, unless otherwise expressly provided in this Agreement. B. Section 4(b) of the BSPII Agreement requires Hutchinson to repay the Agency and Western Minnesota the Hutchinson Development Costs if the Big Stone II Plant does not achieve Commercial Operation for any reason, including termination of the Participation Agreement. Section 4(b) of the BSPII Agreement requires the Agency to calculate the total Hutchinson Development Costs and provide Hutchinson with an invoice of these costs, and Hutchinson is required to pay the invoiced costs within 30 days of its receipt of the invoice. C. The Participation Agreement was terminated by the participants in the Big Stone II Plant on October 30, 2009, thereby triggering Hutchinson's obligation to repay the Hutchinson Development Costs pursuant to Section 4(b) of the BSPII Agreement. D. The Agency and Western Minnesota are willing to extend the terms of Hutchinson's repayment of the Hutchinson Development Costs, and Hutchinson is willing to agree to such extended terms, pursuant to the terms and conditions of this Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Hutchinson Development Costs. The parties acknowledge and agree that the Hutchinson Development Costs, as incurred and known as of the date of this Agreement, are $ (the "Known Costs "), as calculated in accordance with the terms of the BSPII Agreement. The Known Costs shall be paid by Hutchinson pursuant to the terms of Section 2 below. Any Hutchinson Development Costs which are incurred after the date of this Agreement, or which, although previously incurred, become known to the Agency or Western Minnesota after the date of this Agreement ( "Post- Agreement Costs," as defined in Section 3 below), shall be paid by Hutchinson pursuant to the terms of Section 3 below. Repayment Agreement Page I 2. Repayment Terms. Hutchinson shall pay the Known Costs according to the following terms: a. Interest. The outstanding balance of the Known Costs shall bear interest, from the date of this Agreement until the Known Costs are paid in full, at a fixed rate of interest of four percent (4.0 %) per annum. b. Pa ents. Hutchinson shall pay the Known Costs, and all interest accrued thereon, in sixty (60) equal monthly installments of $ . The first payment shall be due on April 1, 2010, and monthly payments shall be due and payable on the first day of each month thereafter until March 1, 2015, at which time the entire outstanding balance of the Known Costs, with all interest accrued thereon, shall be paid in full. All payments shall first be applied to payment of costs, fees and expenses, then to any accrued interest, and then to the Known Costs. C. Place of Payment. All payments due hereunder shall be made payable to Western Minnesota and shall be delivered to 3724 West Avera Drive, P.O. Box 88920, Sioux Falls, South Dakota 57109 -8920, or such other place as Western Minnesota may designate. d. Prepa ent. Hutchinson may prepay the Known Costs, and any accrued interest, in whole or in part at any time without penalty, subject to the terms of this subsection. Hutchinson shall provide written notice to the Agency prior to the submission of any prepayment. A prepayment shall not be applied to or suspend any regularly scheduled payments due under subsection (b) above, but instead shall reduce the balance of the Known Costs and any unpaid Post - Agreement Costs and may result in Hutchinson making a reduced number of payments under this Agreement. e. No Offset. The obligation of Hutchinson to make the payments described in this Agreement shall not be subject to any rights of setoff, recoupment or counterclaim which Hutchinson may otherwise have against the Agency or Western Minnesota; provided, however, that nothing contained in this Agreement shall be construed to prevent or restrict Hutchinson from asserting any rights which it may have against the Agency or Western Minnesota under this Agreement or under any provision of law. 3. Post - Agreement Costs. If and to the extent additional Hutchinson Development Costs are incurred by, or become known to, the Agency or Western Minnesota after the date of this Agreement ( "Post- Agreement Costs "), as determined pursuant to the terms of the BSPII Agreement, such Post - Agreement Costs shall be added to the next monthly installment due pursuant to Section 2 above, unless otherwise agreed in writing by the parties. All Post - Agreement Costs shall be due and payable in full by Hutchinson within fifteen (15) days of Hutchinson's receipt of an invoice for such costs. In the event Post - Agreement Costs are incurred or become known after Hutchinson has paid in full the Known Costs, the Agency or Western Minnesota shall invoice Hutchinson for the Post - Agreement Costs and such costs shall be due and payable within fifteen (15) days of Hutchinson's receipt of the invoice. All Post- Repayment Agreement Page 2 Agreement Costs shall accrue interest at the rate described in Section 2(a) above from the date such costs are invoiced to Hutchinson until the date such costs are paid in full by Hutchinson. 4. Post - Agreement Credits. If and to the extent Hutchinson becomes entitled to any refund of, or credit against, the Hutchinson Development Costs after the date of this Agreement ("Post- Agreement Credits "), as determined pursuant to the terms of the BSPII Agreement, such Post - Agreement Credits shall be treated as prepayments under Section 2(d) above and shall be credited against the Known Costs and any unpaid Post - Agreement Costs as described therein, unless otherwise agreed in writing by the parties. In the event a Post - Agreement Credit arises after Hutchinson has paid in full the Known Costs, the Agency or Western Minnesota shall promptly reimburse Hutchinson for such Post - Agreement Credit. 5. Representations and Warranties. Each party to this Agreement represents and warrants that: (a) such party is duly organized, validly existing and in good standing under the laws of the state of its formation; (b) such party has the power and authority to enter into and perform its obligation under this Agreement and is not prohibited from doing so; (c) such party has taken all actions required by Applicable Law to approve, execute and perform this Agreement; (d) the execution and performance of this Agreement will not conflict with or constitute a breach of or default under any law, rule, regulation, order, judgment, writ, decree, award or other legal requirement of any court or other agency of government, the documents of such party's formation, or any contract, agreement or instrument by which such party is bound; and (e) this Agreement is a legal, valid and binding obligation of such party enforceable in accordance with its terms, except as may be limited by laws of general applicability limiting the enforcement of creditor's rights or by the exercise of judicial discretion in accordance with general principles of equity. 6. Defense of Big Stone II Claims. In the event the Agency and/or Western Minnesota are required to defend against any claims, charges, demands or lawsuits arising out of or related to the Big Stone II Agreements, the Big Stone II Plant, or the Big Stone Transmission Facilities, Hutchinson shall reimburse Agency and/or Western Minnesota for Hutchinson's pro rata share (based on the Hutchinson Big Stone Entitlement) of the costs and expenses of defense incurred by the Agency and Western Minnesota, including reasonable attorneys' fees. Such costs and expenses shall constitute and be treated as Post - Agreements Costs payable by Hutchinson pursuant to the terms of Section 3 above. 7. Prosecution of Big Stone II Claims. In the event the Agency and/or Western Minnesota determine, in their sole discretion, that it is advisable to prosecute any claims, charges, demands or lawsuits to recover any sums paid under the Big Stone II Agreements, or to obtain, establish title to, or secure any interest in any property relating to the Big Stone II Plant or the Big Stone Transmission Facilities, the Agency and/or Western Minnesota shall notify Hutchinson of such determination and Hutchinson shall have thirty (30) days from the date of such notice to determine whether it will share in the costs and expenses of, and the potential recovery from, such proceeding. If Hutchinson elects to do so, Hutchinson shall reimburse the Agency and Western Minnesota for Hutchinson's pro rata share of the costs and expenses of prosecution, including reasonable attorneys' fees, which shall be paid by Hutchinson within fifteen (15) days of its receipt of an invoice for such costs and expenses, and shall be entitled to its pro rata share of any monetary recovery from such proceeding which constitutes the reimbursement of Hutchinson Repayment Agreement Page 3 Development Costs, which shall be treated as a Post - Agreement Credit pursuant to the terms of Section 4 above. If Hutchinson elects not to do so, Hutchinson shall not be required to share in any costs and expenses of such proceeding and shall not be entitled to any monetary or other recovery resulting therefrom, regardless of the nature of the recovery. Nothing contained herein shall give Hutchinson the right to direct or have involvement in decisions relating to any proceeding described in this section. 8. Mutual Release. Hutchinson, on behalf of itself and its officers, directors, agents, successors and assigns, releases and forever discharges the Agency and Western Minnesota and their respective officers, directors, agents, successors and assigns from any and all claims, actions, demands, liabilities, obligations, damages, costs and expenses, whether known or unknown, arising from or in any way related to the BSPII Agreement, the Big Stone II Agreements, the Big Stone II Plant, or the Big Stone Transmission Facilities. The Agency and Western Minnesota, on behalf of themselves and their respective officers, directors, agents, successors and assigns, release and forever discharge Hutchinson and its officers, directors, agents, successors and assigns from any and all claims, actions, demands, liabilities, obligations, damages, costs and expenses, whether known or unknown, arising from or in any way related to the BSPII Agreement, the Big Stone II Agreements, the Big Stone II Plant, or the Big Stone Transmission Facilities. Notwithstanding the foregoing, nothing contained in this Agreement shall in any way release or discharge the parties' obligations with respect to the payment of the Hutchinson Development Costs, as described in the BSPII Agreement and this Agreement. 9. Default. The occurrence of any of the following will constitute an event of default under this Agreement: (a) any breach or default in the payment or performance of this Agreement by Hutchinson, (b) the insolvency, dissolution, liquidation, merger or consolidation of Hutchinson; (c) any appointment of a receiver, trustee or similar officer of any property of Hutchinson; (d) the commencement of any proceeding under any bankruptcy, insolvency, receivership, dissolution, liquidation or similar law by or against Hutchinson; or (e) the failure by Hutchinson to maintain the minimum credit ratings described in Section 23 of the BSPII Agreement. 10. Remedies. If any event of default described in Section 9 above occurs, the Agency and/or Western Minnesota, upon written notice of default to Hutchinson, and in addition to any and all other remedies available under this Agreement or at law or in equity, may: (a) declare the full outstanding balance of the Known Costs and all Post - Agreement Costs, together with all interest accrued thereon, immediately due and payable; and (b) apply a default rate of interest to the outstanding balance of the Known Costs and Post - Agreement Costs, which default rate of interest shall be 1.0% plus one - twelfth of prime rate per month, as reported in the Money Rates Section of the Wall Street Journal, and shall apply from the date of such notice until all amounts due under this Agreement are paid in full. None of the remedies provided herein shall be an exclusive remedy, and the Agency and Western Minnesota shall have the right to seek any other remedy at law or in equity in lieu of or in addition to any remedies provided for in this Agreement. 11. Attorneys' Fees. In the event the Agency or Western Minnesota initiates any litigation or proceeding to enforce its rights under this Agreement, the Agency and Western Minnesota, in addition to all other relief, shall be entitled to reasonable attorneys' fees, out -of- Repayment Agreement Page 4 pocket costs, and disbursements relating to such litigation or proceeding. 12. Notices. All notices and other communications under this Agreement shall be made as provided in Section 20 of the BSPII Agreement. 13. Severability. If any provision contained in this Agreement shall for any reason be held to be invalid, illegal, void or unenforceable in any respect, such provision shall be deemed modified so as to constitute a provision conforming as nearly as possible to such invalid, illegal, void or unenforceable provision while still remaining valid and enforceable, and the remaining provisions contained herein shall not be affected thereby. 14. Time Is of the Essence. Time shall be of the essence with respect to this Agreement and the consummation of the transactions contemplated hereby. 15. Binding Effect; Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns. Hutchinson may not assign any of its rights or delegate any of its obligations hereunder, except upon the express written consent of the Agency and Western Minnesota. 16. Waivers. No waiver of any payment under this Agreement shall operate as a waiver of any other payment. No delay or failure of the Agency or Western Minnesota in the exercise of any right or remedy provided for under this Agreement shall be deemed a waiver of such right, and no exercise of any right or remedy shall be deemed a waiver of any other right or remedy of the Agency or Western Minnesota. 17. Governing Law. This Agreement shall be governed by the laws of the State of South Dakota, without giving effect to principles of conflicts of laws. 18. Entire Agreement; Amendment. This Agreement, and the terms of the BSPII Agreement relating to payment of the Hutchinson Development Costs, contain and constitute the entire agreement between the parties regarding the subject matter hereof and supersede all prior agreements and understandings between the parties relating to such subject matter. In the event of a conflict between the terms of this Agreement and the terms of the BSPII Agreement, the terms of this Agreement shall govern. This Agreement may not be amended, modified or terminated except by an instrument in writing signed by all parties to this Agreement. [Signature Page Follows] Repayment Agreement Page 5 IN WITNESS WHEREOF, the parties have executed this Repayment Agreement on the day and year first above written. ATTEST: Secretary/Treasurer ATTEST: Secretary ATTEST: Repayment Agreement MISSOURI BASIN MUNCIPAL POWER AGENCY d/b /a MISSOURI RIVER ENERGY SERVICES Chairman WESTERN MINNESOTA MUNICIPAL POWER AGENCY President HUTCHINSON UTILITIES COMMISSION By Its DWIGHT BORDSON Page 6