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03-30-2011 HUCMRegular Meeting March 30, 2011 Members present: President Robert Hantge; Vice President Paul Nordin; Secretary Dwight Bordson; Commissioner Donald H. Walser; Commissioner Craig Lenz; Attorney Marc Sebora; General Manager Michael Kumm President Hantge called the meeting to order at 3:00 p.m. The minutes of the February 23, 2011 regular meeting were reviewed. A motion was made by Vice President Nordin, seconded by Secretary Bordson to approve the minutes as written. Motion was unanimously carried. Paul Harvego of Conway, Deuth & Schmiesing, PLLP, was welcomed to the meeting. Mr. Harvego presented the financial audit for 2010. After discussion, Mr. Harvego commended the staff and GM Kumm for a great job in 2010. Secretary Bordson made a motion, seconded by Commissioner Lenz to accept the financial audit for 2010. Motion was unanimously carried. The February 2011 payables were discussed. A motion was made by Commissioner Lenz, seconded by Secretary Bordson to ratify the payment of bills in the amount of $3,463,909.52 (detailed listing in payables book). Motion was unanimously carried. GM Kumm presented the February 2011 financial statements /budget year -to -date. After discussion, a motion was made by Commissioner Lenz, seconded by Vice President Nordin to approve the financial statements /budget year -to -date. Motion was unanimously carried. Don Walser arrived at 3:33. GM Kumm presented the HTI natural gas transportation agreement. This agreement will go into effect May 1, 2011. After discussion, a motion was made by Commissioner Lenz, seconded by Vice President Nordin to approve the HTI natural gas transportation agreement. Motion was unanimously carried. (Agreement attached.) Steve Lancaster, Director Electric Division, presented the bid tabulation for directional drilling contractor for 2010 — 2012. Every two years we go out for bids for the construction season. After discussion, a motion was made by Secretary Bordson, seconded by Commissioner Lenz to approve the bid tabulation for directional drilling contractor for 2010 — 2012 from Steile Construction. Motion was unanimously carried. (Bid tabulation attached.) GM Kumm presented the pipeline / utility crossing agreements between Hutchinson Utilities Commission and the City of Hutchinson for 1 -1/2 -inch and 6 -inch water service, and an 8 -inch sanitary sewer service. After discussion, a motion was made by Commissioner Walser, seconded by Secretary Bordson to approve the pipeline / utility crossing agreements between Hutchinson Utilities Commission and the City of Hutchinson for 1 -1/2 -inch and 6 -inch water service, and an 8 -inch sanitary sewer service. Motion was unanimously carried. (Agreements attached.) GM Kumm gave an update on the transmission owner membership in MISO. Discussion was held regarding the benefits of becoming a transmission owner member. GM Kumm presented the transmission schedules and related costs of membership. GM Kumm will present the transmission owner membership agreement for approval at the April Commission meeting. (See attached.) GM Kumm presented for review the policies and requirements booklet, sections: meter testing; right -of -way clearing; and tree removal or trimming. Staff is not recommending any changes to these policies. After review no changes were recommended by the Board. GM Kumm presented changes to the exempt and non - exempt handbooks, sections: hours and conditions of employment; flextime program (exempt only); rest periods; and meal periods. The only recommended change is section: rest periods — exempt; replacing the second and third sentences with `One rest period is taken in the morning and the other rest period is taken in the afternoon.' GM Kumm explained to accommodate shift personnel, no changes needed to rest periods — non - exempt. A motion was made by Commissioner Walser, seconded by Secretary Bordson to approve the changes to the policies and requirements booklet, section: rest periods - exempt. Motion was unanimously carried. (Changes attached.) GM Kumm discussed PILOT verbiage for the billing insert which will be included in the May billing. This will be the first bill in which the 2.75% calculation will be detailed. After discussion, the Board recommended the last sentence to read, `This is not a rate increase.' (Changes attached.) Hutchinson Utilities annual breakfast meeting is scheduled for April 13, 2011. Our ten largest electric and gas customers are invited to the annual breakfast meeting. A motion was made by Commissioner Lenz, seconded by Secretary Bordson to declare the Hutchinson Utilities annual breakfast meeting on April 13, 2011 as an open meeting. Motion was unanimously carried. (Invitation attached.) Division Reports Gas — John Webster • MNOPS is requiring daily flood reports for the next couple weeks • Damage prevention meeting held March 17 was a success with 24 sponsors and around 200 in attendance compared to around 150 last year • Working with 3M on the FERC 554 report • Attending MEA Gas Operations Learning Summit in Omaha next week Finance — Jared Martig • Management letter needs a written out -of -state travel policy • JD Edwards daily inventory software is working now Business — Jan Sifferath • To date in 2011 we have received $13,000 back through the Revenue Recapture program • Lori Johnson was hired as the new account coordinator • Human resource package in the JD Edwards software is complete • Randy Blake is writing an article to include pictures regarding the engine replacements at plant 1 which will be placed on the Hutchinson Utilities web site when complete Electric — Steve Lancaster • Met with HDR regarding the procurement specs. We hope to bring to the Board for approval at the May Commission meeting • Good visit at the Rolls -Royce engine plant in Lake Charles, Louisiana GM Kumm reported on both the Legislative Rally and the MMUA Winter Legislative Conference he attended. Legal Update Nothing to report Unfinished Business • GM Kumm is working on the follow -up with McLeod Coop for the past due territory agreement payments • Follow -up discussion held regarding the City assessment to HUC for the Industrial Boulevard SE reconstruction New Business • President Hantge reported on his attending the MMUA Winter Legislative Conference today. He went to discuss the current legislative law regarding the Governor's salary cap. • President Hantge asked how the the e- packets are working for the Commissioners • Discussion held regarding the need to review the exempt travel expenses policy. Proposed changes to include a tipping limit not to exceed 15% of bill and utilizing a separate form if no receipt available. Jan Sifferath will review the travel expenses policy. There being no further business, a motion was made by Secretary Bordson, seconded by Commissioner Lenz to adjourn the meeting at 4:50 p.m. Motion was unanimously carried. ATTEST: Robert Hantge, President Dwight Bordson, Secretary Regular Meeting March 30, 2011 Members present: President Robert Hantge; Vice President Paul Nordin; Secretary Dwight Bordson; Commissioner Donald H. Walser; Commissioner Craig Lenz; Attorney Marc Sebora; General Manager Michael Kumm President Hantge called the meeting to order at 3:00 p.m. The minutes of the February 23, 2011 regular meeting were reviewed. A motion was made by Vice President Nordin, seconded by Secretary Bordson to approve the minutes as written. Motion was unanimously carried. Paul Harvego of Conway, Deuth & Schmiesing, PLLP, was welcomed to the meeting. Mr. Harvego presented the financial audit for 2010. After discussion, Mr. Harvego commended the staff and GM Kumm for a great job in 2010. Secretary Bordson made a motion, seconded by Commissioner Lenz to accept the financial audit for 2010. Motion was unanimously carried. The February 2011 payables were discussed. A motion was made by Commissioner Lenz, seconded by Secretary Bordson to ratify the payment of bills in the amount of $3,463,909.52 (detailed listing in payables book). Motion was unanimously carried. GM Kumm presented the February 2011 financial statements /budget year -to -date. After discussion, a motion was made by Commissioner Lenz, seconded by Vice President Nordin to approve the financial statements /budget year -to -date. Motion was unanimously carried. Don Walser arrived at 3:33. GM Kumm presented the HTI natural gas transportation agreement. This agreement will go into offoct May 1, 2011. After discussion, a motion was made by Commissioner Lenz, seconded by Vice President Nordin to approve the HTI natural gas transportation agreement. Motion was unanimously carried. (Agreement attached.) Steve Lancaster, Director Electric Division, presented the bid tabulation for directional drilling contractor for 2010 — 2012. Every two years we go out for bids for the construction season. After discussion, a motion was made by Secretary Bordson, seconded by Commissioner Lenz to approve the bid tabulation for directional drilling contractor for 2010 — 2012 from Steile Construction. Motion was unanimously carried. (Bid tabulation attached.) GM Kumm presented the pipeline / utility crossing agreements between Hutchinson Utilities Commission and the City of Hutchinson for 1 -1/2 -inch and 6 -inch water service, and an 8 -inch sanitary sewer service. After discussion, a motion was made by Commissioner Walser, seconded by Secretary Bordson to approve the pipeline / utility crossing agreements between Hutchinson Utilities Commission and the City of Hutchinson for 1 -1/2 -inch and 6 -inch water service, and an 8 -inch sanitary sewer service. Motion was unanimously carried. (Agreements attached.) GM Kumm gave an update on the transmission owner membership in MISO. Discussion was held regarding the benefits of becoming a transmission owner member. GM Kumm presented the transmission schedules and related costs of membership. GM Kumm will present the transmission owner membership agreement for approval at the April Commission meeting. (See attached.) GM Kumm presented for review the policies and requirements booklet, sections: meter testing; right -of -way clearing; and tree removal or trimming. Staff is not recommending any changes to these policies. After review no changes were recommended by the Board. GM Kumm presented changes to the exempt and non - exempt handbooks, sections: hours and conditions of employment; flextime program (exempt only); rest periods; and meal periods. The only recommended change is section: rest periods — exempt; replacing the second and third sentences with 'One rest period is taken in the morning and the other rest period is taken in the afternoon.' GM Kumm explained to accommodate shift personnel, no changes needed to rest periods — non - exempt. A motion was made by Commissioner Walser, seconded by Secretary Bordson to approve the changes to the policies and requirements booklet, section: rest periods - exempt. Motion was unanimously carried. (Changes attached.) GM Kumm discussed PILOT verbiage for the billing insert which will be included in the May billing. This will be the first bill in which the 2.75% calculation will be detailed. After discussion, the Board recommended the last sentence to read, 'This is not a rate increase.' (Changes attached.) Hutchinson Utilities annual breakfast meeting is scheduled for April 13, 2011. Our ten largest electric and gas customers are invited to the annual breakfast meeting. A motion was made by Commissioner Lenz, seconded by Secretary Bordson to declare the Hutchinson Utilities annual breakfast meeting on April 13, 2011 as an open meeting. Motion was unanimously carried. (Invitation attached.) Division Reports Gas — John Webster • MNOPS is requiring daily flood reports for the next couple weeks • Damage prevention meeting held March 17 was a success with 24 sponsors and around 200 in attendance compared to around 150 last year • Working with 3M on the FERC 554 report • Attending MEA Gas Operations Learning Summit in Omaha next week Finance — Jared Martig • Management letter needs a written out -of -state travel policy • JD Edwards daily inventory software is working now Business — Jan Sifferath • To date in 2011 we have received $13,000 back through the Revenue Recapture program • Lori Johnson was hired as the new account coordinator • Human resource package in the JD Edwards software is complete • Randy Blake is writing an article to include pictures regarding the engine replacements at plant 1 which will be placed on the Hutchinson Utilities web site when complete Electric — Steve Lancaster • Met with HDR regarding the procurement specs. We hope to bring to the Board for approval at the May Commission meeting • Good visit at the Rolls -Royce engine plant in Lake Charles, Louisiana GM Kumm reported on both the Legislative Rally and the MMUA Winter Legislative Conference he attended. Legal Update Nothing to report Unfinished Business • GM Kumm is working on the follow -up with McLeod Coop for the past due territory agreement payments • Follow -up discussion held regarding the City assessment to HUC for the Industrial Boulevard SE reconstruction New Business • President Hantge reported on his attending the MMUA Winter Legislative Conference today. He went to discuss the current legislative law regarding the Governor's salary cap. • President Hantge asked how the the e- packets are working for the Commissioners • Discussion held regarding the need to review the exempt travel expenses policy. Proposed changes to include a tipping limit not to exceed 15% of bill and utilizing a separate form if no receipt available. Jan Sifferath will review the travel expenses policy. There being no further business, a motion was made by Secretary Bordson, seconded by Commissioner Lenz to adjourn the meeting at 4:50 p.m. Motion was unanimously carried. Dwight Bordson, Secretary ATTEST: RobarrHantegig, President AGREEMENT HUTCHINSON UTILITIES THIS AGREEMENT ( "AGREEMENT ") IS MADE AND ENTERED INTO COMMISSION THIS 30th DAY OF MARCH, 201 1, TO BE EFFECTIVE AS OF THE 1 ST DAY OF MAY, 201 1, BY AND BETWEEN HUTCHINSON TECHNOLOGY, 225 MICHIGAN INC. ("HTI ") WITH OFFICES LOCATED AT 40 WEST HIGHLAND PARK STREET HUTCHINSON DRIVE NE, HUTCHINSON, MINNESOTA, 55350 AND HUTCHINSON MINNESOTA UTILITIES COMMISSION ( "HUC ") A MINNESOTA MUNICIPAL UTILITY 55350 LOCATED AT 225 MICHIGAN ST SE, HUTCHINSON, MINNESOTA, 55350. HTI AND HUTCHINSON SHALL HEREINAFTER SOMETIMES BE REFERRED TO SEPARATELY AS "PARTY" OR JOINTLY AS "PARTIES." WHEREAS, HTI DESIRES TO PURCHASE, AND HUC SHALL PROVIDE, FIRM GAS FOR USE AT HTI'S HUTCHINSON HEADQUARTERS /PLANT; AND, WHEREAS, HTl DOES ACKNOWLEDGE THAT HUC WILL, IN RELIANCE UPON THIS AGREEMENT, ENTER INTO AN AGREEMENT TO PROVIDE FIRM GAS AND TRANSPORTATION. NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES MAKE THE FOLLOWING AGREEMENT: ROBERT HANTGE PRESIDENT PAUL NORDIN HUC SHALL PROVIDE, AND HTl SHALL ACCEPT, FIRM GAS VICE PRESIDENT COMMENCING MAY 1, 201 1, AT 9:00 A.M. AND TERMINATING ON DWIGHT BORDSON SECRETARY MAY 1, 2012, AT 9:00 A.M. DONALD H. WALSER COMMISSIONER CRAIG LENZ COMMISSIONER MICHAEL KUMM GENERAL MANAGER TEL 320 -587 -4746 FAx 320 -587 -4721 L 1 I . AVAILABILITY A. GENERAL FIRM TRANSPORTATION SERVICE UNDER THIS AGREEMENT SHALL BE AVAILABLE TO HTI UNDER THE TERMS AND CONDITIONS OF THIS AGREEMENT. THIS SERVICE MAY NOT BE CURTAILED OR INTERRUPTED EXCEPT PURSUANT TO THE TERMS OF THIS AGREEMENT. B. THE COST FOR ADDITIONAL CAPACITY OR NEW INSTALLATIONS UTILIZING THIS SERVICE SHALL BE BILLED TO HTI. HTI MUST SUBMIT A WRITTEN REQUEST TO HUC FOR ADDITIONAL CAPACITY /NEW INSTALLATIONS. ALL ADDITIONAL COSTS MUST BE PRE - APPROVED, IN WRITING, BY HTI. C. COMPLIANCE WITH AGREEMENTS SERVICE UNDER THIS AGREEMENT SHALL NOT COMMENCE UNTIL BOTH PARTIES HAVE FULLY EXECUTED THIS AGREEMENT AND COMPLIED WITH ALL RELEVANT REQUIREMENTS CONTAINED HEREIN. D. AGREEMENT CHANGES HUC HAS THE RIGHT TO MODIFY THIS AGREEMENT DUE TO CHANGES IMPOSED BY HUC'S CURRENT NATURAL GAS TRANSMISSION PROVIDERS AND FEDERAL, STATE AND LOCAL REGULATORS /AUTHORITIES. 2. TERM THE INITIAL TERM FOR SERVICE UNDER THIS AGREEMENT IS ONE (1) YEAR. HTI MUST NOTIFY HUC IN WRITING THREE (3) MONTHS PRIOR TO THE EXPIRATION OF THE TERM IF HTI DESIRES TO CONTINUE SERVICE UNDER THIS AGREEMENT. IF HTI HAS COMPLIED WITH ALL TERMS OF THIS AGREEMENT, AND HAS NO OUTSTANDING ARREARAGES, HTI MAY, UPON WRITTEN NOTICE PROVIDED TO HUC THREE (3) MONTHS PRIOR TO THE EXPIRATION OF THE CURRENT TERM, EXTEND THIS AGREEMENT FOR A MUTUALLY AGREED -UPON PERIOD. IF A TERM FOR THE EXTENSION CANNOT BE AGREED UPON BY HTI AND HUC, THE PARTIES AGREE TO A MINIMUM TERM OF ONE (1) YEAR. IF SUCH TIMELY NOTICE IS NOT PROVIDED BY HTI, HUC IS NOT OBLIGATED TO RENEW SERVICE FOR HTI. [21 3. RATES A. RATES FOR SERVICE THE FOLLOWING CHARGES SHALL APPLY TO THE FIRM COMMODITY AND TRANSPORTATION CAPACITY TO BE PROVIDED To HTI BY HUC: COMMODITY MONTHLY INSIDE FERC VENTURA INDEX, AS PUBLISHED BY PLATT'S "GAS DAILY ", PLUS /MINUS THE NNG VENTURA TO NBPL VENTURA MONTHLY PREMIUM. MONTHLY INDEX AS PUBLISHED IN PLATTS FERC GAS MARKET REPORT FOR NORTHERN NATURAL GAS CO. AT VENTURA, IOWA PLUS OR MINUS ANY INDEX PREMIUM OR DISCOUNT BASED ON CURRENT MARKET CONDITIONS AT THE TIME THE GAS IS PURCHASED. HUC SHALL PURCHASE HTI'S FIRM BASE LOAD NATURAL GAS REQUIREMENTS, FOR THE FOLLOWING MONTH, WITHIN 24 BUSINESS HOURS OF RECEIPT OF HTI'S FIRST OF THE MONTH BASE LOAD NOMINATION. (SEE SECTION 7, PARAGRAPH "A ") 2. MONTHLY DEMAND CHARGE MONTHLY DEMAND CHARGE PER -- $10.33 MCF OF BILLING DEMAND 3. TRANSPORTATION CHARGE TRANSPORTATION CHARGE, PER METERED MCF - - $0.83 THIS CHARGE SHALL BE ADJUSTED, STARTING ON MAY 1, 2012 AND ON EACH MAY 1 THEREAFTER, ACCORDING TO ANY CHANGE IN THE CPI -U FROM THE PREVIOUS YEAR; PROVIDED HOWEVER, THAT SUCH CHARGE SHALL NEVER BE LESS THAN $0.83. CPI -U SHALL MEAN THE ANNUAL AVERAGE CONSUMER PRICE INDEX - ALL URBAN CONSUMERS AS PUBLISHED BY THE UNITED STATES DEPARTMENT OF LABOR, BUREAU OF STATISTICS, WASHINGTON, C.C.. 4. TAXES THE ABOVE CHARGES DO NOT INCLUDE ANY TAXES. [3I B. METERING HTI SHALL PAY ALL COSTS ASSOCIATED WITH THE INSTALLATION OF METERS AND ANY OTHER EQUIPMENT NECESSARY FOR HTI TO RECEIVE SERVICE UNDER THIS AGREEMENT UNLESS OTHERWISE AGREED TO IN WRITING BETWEEN HTI AND HUC. 4. RECONNECTION CHARGE ANY TRANSPORTATION CUSTOMER RECEIVING SERVICE PURSUANT TO THIS AGREEMENT MUST PAY THE "RECONNECTION CHARGE" AS SET FORTH WHEN REQUESTING A RETURN TO HUG'S SYSTEM SUPPLY FOR ALL OR ANY PORTION OF THE TRANSPORTATION CUSTOMER'S DAILY REQUIREMENTS. THE RECONNECTION CHARGE SHALL BE CALCULATED ON A MONTHLY BASIS AND SHALL CONSIST OF A REALIGNMENT SURCHARGE THAT APPLIES TO ALL VOLUMES MEASURED BY HTI'S INDUSTRIAL METER. A. TERM SIX MONTHS - COMMENCING WITH THE FIRST MONTH FOLLOWING THE TERMINATION OF THIS AGREEMENT B. REALIGNMENT SURCHARGE THE REALIGNMENT SURCHARGE SHALL BE IN ADDITION TO THE INDUSTRIAL RATE AS PUBLISHED BY HUC. THE REALIGNMENT SURCHARGE (RS) SHALL BE CALCULATED AS FOLLOWS: RS = MONTHLY INSIDE FERC VENTURA INDEX, AS PUBLISHED BY PLATT'S "GAS DAILY ", PLUS /MINUS THE NNG VENTURA TO NBPL VENTURA MONTHLY PREMIUM MINUS HUG'S "BASE RATE" ($7.85 IN 2010). PROVIDED, HOWEVER, THAT SUCH SURCHARGE SHALL NEVER BE LESS THAN $0.00. 5. BILLING AND PAYMENT A. BILLING INVOICE WILL BE RENDERED TO HTI, OR ITS AGENT, BY THE FIFTEENTH DAY OF THE MONTH FOLLOWING THE MONTH IN WHICH SERVICE IS RENDERED BY HUC. (4] B. PAYMENT PAYMENT IS DUE FROM HTI ON OR BEFORE THE TENTH DAY FOLLOWING THE DATE THE BILL 1S ISSUED BY HUC. A LATE PAYMENT CHARGE OF ONE AND ONE-HALF PERCENT PER MONTH, OR THE LEGALLY AUTHORIZED MAXIMUM INTEREST RATE, WHICHEVER IS LOWER, SHALL BE LEVIED ON ANY UNPAID BALANCE. 6. CONDITIONS OF SERVICE A. HUC HEREBY CERTIFIES THAT IT HAS SUFFICIENT FIRM TRANSPORTATION CAPACITY TO PROVIDE THE AMOUNT OF FIRM TRANSPORTATION SERVICE TO HTI PURSUANT TO THE TERMS OF THIS AGREEMENT FOR THE TERM OF THIS AGREEMENT. C. UNLESS OTHERWISE AGREED BETWEEN HTI AND HUC, HTI WILL REIMBURSE HUC FOR THE COST OF METERING AND ANY OTHER EQUIPMENT AS REQUIRED BY HUC TO PROVIDE SERVICE TO HTI UNDER THIS AGREEMENT. ALL SUCH EQUIPMENT SHALL REMAIN THE PROPERTY OF HUC. HUC SHALL SUBMIT A WRITTEN ESTIMATE TO HTI ITEMIZING ALL COSTS ASSOCIATED WITH THE INSTALLATION OF REQUIRED METERING AND OTHER EQUIPMENT NECESSARY FOR HTI TO RECEIVE SERVICE UNDER THIS AGREEMENT. HTI MUST PROVIDE WRITTEN APPROVAL TO HUC AUTHORIZING PURCHASE OF SAID EQUIPMENT. D. UNLESS OTHERWISE AGREED TO IN WRITING BY HUC AND HTI, AUTOMATIC TELEMETERING EQUIPMENT IS REQUIRED. HTI SHALL PROVIDE TELEPHONE, COMPUTER AND OTHER INTERFACES, AS WELL AS ELECTRIC CONNECTIONS TO THE METER(S), AS AGREED TO BY HTI AND HUC. ALL MONTHLY UTILITY FEES (TELEPHONE, ELECTRICITY, ETC.) SHALL BE BORNE BY HTI. HTI SHALL PROVIDE HUC WITH ACCESS SO THAT HUC MAY OPERATE AND MAINTAIN SAID EQUIPMENT. E. HUC SHALL PROVIDE HTI (OR AGENT) WITH A DAILY USAGE REPORT VIA EMAIL FOR NOMINATION PURPOSES. 7. NOMINATIONS A. FIRST OF THE MONTH NOMINATIONS BY 7:00 A.M. CENTRAL CLOCK TIME ( "C.C.T. "), BY THE 15TH DAY OF THE MONTH PRIOR TO GAS FLOW, HTI, OR ITS DESIGNATED AGENT, SHALL PROVIDE HUC A WRITTEN ESTIMATE OF HTI'S DAILY FIRM BASE LOAD (51 LEVEL OF NATURAL GAS REQUIRED FOR THE FOLLOWING MONTH. IN THE EVENT HUC HAS NOT RECEIVED THE BASE LOAD NOMINATION FROM HTI BY THE ABOVE DESIGNATED TIME, HUC SHALL NOMINATE THE CURRENT MONTH'S BASE LOAD LEVEL FOR THE FOLLOWING MONTH. B. DAILY NOMINATIONS HTI, OR ITS DESIGNATED AGENT, SHALL NOTIFY HUC OF ANY REQUESTED CHANGE TO ITS NOMINATION, IN WRITING, BY 7:00 A.M. C.C.T AT LEAST ONE (1) BUSINESS DAY PRIOR TO THE DATE OF THE REQUESTED CHANGE, HUC SHALL GRANT SUCH REQUESTS IN ITS REASONABLE DISCRETION. C. GAS DAY THE GAS DAY SHALL RUN FROM 9:00 A.M. TO 9:00 A.M. CENTRAL STANDARD TIME. 8. DAILY SWING SUPPLY HUC AGREES TO PROVIDE DAILY SWING SUPPLY TO HTI AT THE APPLICABLE PRICE, AS PUBLISHED FOR THE DAY BY PLATT'S "GAS DAILY" IN ITS "DAILY PRICE SURVEY ($ /DTH)" FOR "NORTHERN, VENTURA" "MIDPOINT" ( "DAILY INDEX ") PLUS /MINUS $0.01. SWING SUPPLY IS DEFINED AS SUPPLY INCREASES OR DECREASES, FROM CONTRACTED LEVELS, NOMINATED AT LEAST 24 HOURS PRIOR TO THE START OF THE GAS DAY. 9. REAL-TIME BALANCING HUC SHALL PROVIDE HTI WITH REAL-TIME BALANCING, BASED ON THE FOLLOWING: BEST EFFORTS REAL-TIME SWING NOMINATED LESS THAN 24 HOURS PRIOR TO THE END OF THE GAS DAY ON A BEST EFFORTS BASIS, PRICED AT THE APPLICABLE PRICE, AS PUBLISHED FOR THE DAY BY PLATT'S "GAS DAILY" IN ITS "DAILY PRICE SURVEY ($ /DTH)" FOR "NORTHERN, VENTURA" "MIDPOINT" ( "DAILY INDEX "), PLUS /MINUS $0.15. [61 10. AGENTS A. DESIGNATION OF AGENTS HTI MAY DESIGNATE AN AGENT FOR NOMINATING VOLUMES FOR TRANSPORTATION ON HUG'S SYSTEM. HTI SHALL NOTIFY HUC IN WRITING AT LEAST FIFTEEN (1 5) BUSINESS DAYS PRIOR TO THE FIRST DAY OF THE MONTH IN WHICH SUCH SERVICES WILL BE UTILIZED THAT A THIRD PARTY HAS BEEN DESIGNATED AS HTI'S AGENT AND SHALL ACT AS AGENT FOR HTI FOR PURPOSES OF NOMINATIONS, BILLING, AND /OR OTHER FUNCTIONS AS SPECIFIED BY HTI. IF HTI UTILIZES AN AGENT FOR ANY OR ALL OF THESE PURPOSES, HTI AGREES THAT INFORMATION TO BE SUPPLIED BY HUC TO HTI MAY BE SUPPLIED ONLY TO THE AGENT AND THAT INFORMATION SUPPLIED BY THE AGENT TO HUC SHALL BE RELIED UPON BY HUC AS IF PROVIDED BY HTI. HUC SHALL BE HELD HARMLESS FOR ANY ERRORS BETWEEN HTI AND SAID AGENT. SUCH DESIGNATION SHALL REMAIN IN EFFECT UNTIL HTI NOTIFIES HUC IN WRITING THAT THE PREVIOUSLY DESIGNATED AGENT IS NO LONGER ITS AGENT. B. INFORMATION REQUIRED HTI SHALL PROVIDE THE FOLLOWING INFORMATION TO HUC CONCERNING EACH AGENT USED BY HTI FOR ANY PURPOSE: 1 . NAME AND ADDRESS OF THE AGENT OR AGENTS; 2. PRIMARY AND SECONDARY CONTACT PERSONS FOR THE AGENT OR AGENTS; 3. TELEPHONE AND FACSIMILE NUMBER FOR PRIMARY AND SECONDARY CONTACT PERSONS FOR THE AGENT OR AGENTS; AND 4. TWENTY -FOUR HOUR TELEPHONE NUMBER FOR WEEKENDS AND HOLIDAYS FOR THE AGENT OR AGENTS. [71 C. HTI To REMAIN LIABLE HTI MAY ELECT TO HAVE ITS BILL FOR SERVICES UNDER THIS AGREEMENT SENT DIRECTLY TO ITS AGENT. HOWEVER, IF HTI SELECTS THIS OPTION, HTI REMAINS FULLY LIABLE FOR ANY BILL RENDERED BY HUC. ALL DEADLINES SET FORTH IN THIS AGREEMENT SHALL CONTINUE TO APPLY, REGARDLESS OF WHETHER HOC'S BILL IS SENT DIRECTLY TO HTI OR TO HTI'S DESIGNATED AGENT. 1 1. FORCE MAJEURE. A. DEFINITION EITHER PARTY SHALL BE EXCUSED FROM PERFORMANCE UNDER THIS AGREEMENT BY FORCE MAJEURE ACTS AND EVENTS. "FORCE MAJEURE" SHALL MEAN ACTS AND EVENTS NOT WITHIN THE CONTROL OF THE PARTY CLAIMING FORCE MAJEURE, AND SHALL INCLUDE, BUT NOT BE LIMITED TO, ACTS OF GOD, STRIKES, LOCKOUTS, MATERIAL, EQUIPMENT, OR LABOR SHORTAGES, WARS, RIOTS, INSURRECTIONS, EPIDEMICS, LANDSLIDES, EARTHQUAKES, FLOODS, FIRES, STORMS, GOVERNMENT OR COURT ORDERS, CIVIL DISTURBANCES, EXPLOSIONS, BREAKAGE OR ACCIDENT TO MACHINERY OR PIPELINES, FREEZING OF WELLS OR PIPELINES, OR ANY OTHER CAUSE OF WHATEVER KIND, WHETHER SPECIFICALLY ENUMERATED HEREIN OR NOT, THAT IS NOT WITHIN THE CONTROL OF THE PARTY CLAIMING FORCE MAJEURE. B. EFFECT 1. IF HUC IS UNABLE TO PROVIDE SERVICE UNDER THIS AGREEMENT DUE TO A FORCE MAJEURE ACT OR EVENT, HUC'S OBLIGATION TO PROVIDE SERVICE UNDER THIS AGREEMENT SHALL BE SUSPENDED FOR THE DURATION OF THE ACT OR EVENT. HUC SHALL NOTIFY HTI OF THE FORCE MAJEURE EVENT AS SOON AS REASONABLY POSSIBLE BY ANY MEANS PRACTICABLE, INCLUDING, BUT NOT LIMITED TO, TELEPHONE OR FACSIMILE, AND SHALL CONFIRM THE DETAILS OF THE FORCE MAJEURE ACT OR EVENT IN WRITING WITHIN A REASONABLE AMOUNT OF TIME THEREAFTER. HUC SHALL WORK TO 181 REMEDY THE FORCE MAJEURE ACT OR EVENT AS SOON AS REASONABLY POSSIBLE AND SHALL KEEP HTI APPRISED OF THE TIME, DATE, AND CIRCUMSTANCES WHEN SERVICE UNDER THIS AGREEMENT SHALL BE RESTORED. HTI IS NOT REQUIRED TO PAY ANY CHARGES UNDER THIS AGREEMENT DURING THE TERM OF THE FORCE MAJEURE ACT OR EVENT. 2. IF HTI IS UNABLE TO TAKE SERVICE UNDER THIS AGREEMENT DUE TO A FORCE MAJEURE ACT OR EVENT, HUC'S OBLIGATION TO PROVIDE SERVICE UNDER THIS AGREEMENT SHALL BE SUSPENDED FOR THE DURATION OF THE ACT OR EVENT. HTI SHALL NOTIFY HUC OF THE FORCE MAJEURE EVENT AS SOON AS REASONABLY POSSIBLE BY ANY MEANS PRACTICABLE, INCLUDING, BUT NOT LIMITED TO, TELEPHONE OR FACSIMILE, AND SHALL CONFIRM THE DETAILS OF THE FORCE MAJEURE ACT OR EVENT IN WRITING WITHIN A REASONABLE AMOUNT OF TIME THEREAFTER. HTI SHALL WORK TO REMEDY THE FORCE MAJEURE ACT OR EVENT AS SOON AS REASONABLY POSSIBLE AND SHALL KEEP HUC APPRISED OF THE TIME, DATE, AND CIRCUMSTANCES WHEN HTI WILL RESUME SERVICE UNDER THIS AGREEMENT. HUC IS NOT REQUIRED TO PROVIDE SERVICE UNDER THIS AGREEMENT DURING THE TERM OF THE FORCE MAJEURE ACT OR EVENT. 12. LAWS, REGULATIONS, AND ORDERS. SERVICE UNDER THIS AGREEMENT IS SUBJECT TO ALL PRESENT AND FUTURE VALID LAWS, ORDERS, RULES, REGULATIONS, ETC, ISSUED BY ANY FEDERAL, STATE, OR LOCAL AUTHORITY HAVING JURISDICTION OVER THE MATTERS SET FORTH HEREIN. 13. MISCELLANEOUS PROVISIONS. A. DECLARATION OF INVALIDITY IF ANY PROVISION OF THIS AGREEMENT IS DETERMINED TO BE INVALID, VOID, OR UNENFORCEABLE BY ANY COURT OR OTHER ENTITY HAVING JURISDICTION, SUCH 191 DETERMINATION SHALL NOT INVALIDATE, VOID, OR MAKE UNENFORCEABLE ANY OTHER PROVISION, AGREEMENT OR COVENANT OF THIS AGREEMENT; AND THE PARTIES AGREE TO NEGOTIATE IN GOOD FAITH A REPLACEMENT TO SUCH INVALID, VOID OR UNENFORCEABLE PROVISION AND /OR ANY OTHER AMENDMENTS AS MAY BE NECESSARY TO ENSURE THAT THE AGREEMENT AS A WHOLE REFLECTS THE ORIGINAL INTENTIONS OF THE PARTIES. B. NO CONTINUING WAIVER NO WAIVER OF ANY BREACH OF THIS AGREEMENT SHALL BE HELD TO BE A WAIVER OF ANY OTHER OR SUBSEQUENT BREACH. C. LIMITATION ON AGREEMENT THE PARTIES EXPRESSLY ACKNOWLEDGE AND AGREE THAT IT IS NEITHER THE PURPOSE OF THIS AGREEMENT NOR THEIR INTENT TO CREATE A PARTNERSHIP, JOINT VENTURE CONTRACT OR COMPANY, ASSOCIATION OR TRUST, FIDUCIARY RELATIONSHIP OR PARTNERSHIP BETWEEN THEM. EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER PARTY SHALL HAVE ANY AUTHORITY TO ACT FOR OR ASSUME ANY OBLIGATIONS, OR RESPONSIBILITIES ON BEHALF OF, THE OTHER PARTY. D. COMPLETE AGREEMENT THIS AGREEMENT SETS FORTH ALL UNDERSTANDINGS BETWEEN THE PARTIES AS OF THE EFFECTIVE DATE HEREIN. ANY PRIOR CONTRACTS, UNDERSTANDINGS AND REPRESENTATIONS, WHETHER ORAL OR WRITTEN, RELATING TO THE MATTERS ADDRESSED IN THIS AGREEMENT ARE MERGED INTO AND SUPERSEDED BY THIS AGREEMENT. THIS AGREEMENT MAY BE AMENDED ONLY BY A WRITING EXECUTED BY BOTH PARTIES. E. GOVERNING LAW THE INTERPRETATION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF MINNESOTA, EXCLUDING, HOWEVER, ANY CONFLICT OF LAW THAT WOULD APPLY THE LAW OF ANOTHER JURISDICTION. [ 101 F. CONFIDENTIALITY REQUIRED NEITHER PARTY SHALL DISCLOSE DIRECTLY OR INDIRECTLY WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY THE TERMS OF THIS AGREEMENT TO A THIRD PARTY, EXCLUDING HTI'S AGENT, EXCEPT (1) IN ORDER TO COMPLY WITH ANY APPLICABLE LAW, LEGAL PROCESS, ORDER, REGULATION, OR EXCHANGE RULE; (11) TO THE EXTENT NECESSARY FOR THE ENFORCEMENT OF THIS AGREEMENT; AND (III) TO THE EXTENT NECESSARY TO IMPLEMENT AND PERFORM THIS AGREEMENT. EACH PARTY SHALL NOTIFY THE OTHER PARTY OF ANY DEMAND OR PROCEEDING OF WHICH IT IS AWARE WHICH MAY RESULT IN DISCLOSURE OF THE TERMS OF THIS AGREEMENT (OTHER THAN AS PERMITTED HEREUNDER) AND USE REASONABLE EFFORTS TO PREVENT OR LIMIT THE DISCLOSURE. THE PARTIES SHALL BE ENTITLED TO ALL REMEDIES AVAILABLE AT LAW OR IN EQUITY TO ENFORCE OR SEEK RELIEF IN CONNECTION WITH THIS CONFIDENTIALITY OBLIGATION. THE TERMS OF THIS AGREEMENT SHALL BE KEPT CONFIDENTIAL BY THE PARTIES HERETO FOR TWO YEARS FROM THE EXPIRATION OR TERMINATION OF THIS AGREEMENT. IN THE EVENT THAT DISCLOSURE IS REQUIRED BY A GOVERNMENTAL BODY OR APPLICABLE LAW, THE PARTY SUBJECT TO SUCH REQUIREMENT MAY DISCLOSE THE MATERIAL TERMS OF THIS AGREEMENT TO THE EXTENT SO REQUIRED, BUT SHALL PROMPTLY NOTIFY THE OTHER PARTY, PRIOR TO DISCLOSURE, AND SHALL COOPERATE (CONSISTENT WITH THE DISCLOSING PARTY'S LEGAL OBLIGATIONS) WITH THE OTHER PARTY'S EFFORTS TO OBTAIN PROTECTIVE ORDERS OR SIMILAR RESTRAINTS WITH RESPECT TO SUCH DISCLOSURE AT THE EXPENSE OF THE OTHER PARTY. G. AUTHORITY TO ENTER AGREEMENT EACH PARTY TO THIS AGREEMENT REPRESENTS AND WARRANTS THAT IT HAS FULL AND COMPLETE AUTHORITY TO ENTER INTO AND PERFORM THIS AGREEMENT. EACH PERSON WHO EXECUTES THIS AGREEMENT ON BEHALF OF EITHER PARTY REPRESENTS AND WARRANTS THAT IT HAS FULL AND COMPLETE AUTHORITY TO DO SO AND THAT SUCH PARTY WILL BE BOUND THEREBY. H. NO THIRD PARTY BENEFICIARY THERE IS NO THIRD PARTY BENEFICIARY TO THIS AGREEMENT. [ 121 THIS AGREEMENT SETS FORTH ALL TERMS AGREED UPON BETWEEN THE PARTIES, AND NO PRIOR ORAL OR WRITTEN AGREEMENTS SHALL BE BINDING. THIS AGREEMENT SHALL NOT BE ALTERED, AMENDED OR MODIFIED EXCEPT AS IN WRITING AND EXECUTED BY BOTH PARTIES. HUTCHINSON UTILITIES COMMISSION BY: NAME: ROBERT HANTGE TITLE: COMMISSION PRESIDENT DATE: -513 zO I WITNESS: DATE: 3— 3O ~ It [ 13] HUTCHINSON TECHNOLOGIES, INC. BY: ji�� NAME: TITLE: ��,.c�(nsr'. -�� �cc2 ✓ursdi DATE: a Az S WITNE S: DATE: �- {� ]k Ek \to s 0 co \) )� 2 \ § _ / u k � ~ 2 co \ E E 2 cr \ \ \\ k }� $� �a \2 !/!) / ^ §l��6 14 « \ j# kk� § !\ =,alp J! :!� ae- . $ ° � !! }k kkk {� ]k Ek \to s 0 co \) )� 2 \ § _ / u k � ~ 2 co \ E E 2 cr \ \ \\ k }� $� �a PIPELINE / UTILITY CROSSING AGREEMENT This Pipeline / Utility Crossing Agreement ( "Agreement ") is made effective this 30th day of March , 2011, by and between Hutchinson Utilities Commission ( "HUC "), a Minnesota Municipal Utility, and CITY OF HUTCHINSON (Hutchinson) WHEREAS HUC holds one or more rights -of -way across certain lands described herein (the "Lands ") and has constructed a 12 inch Natural Gas Pipeline therein described herein as ( "HUC's Facility "). WHEREAS Hutchinson has acquired or intends to acquire one or more rights -of -way across the Lands and proposes to install therein a 1 1/2" water service described herein as the ( "Hutchinson Facility "). WHEREAS HUC and Hutchinson wish to define their respective rights and liabilities with respect to the area and the manner in which Hutchinson installs its water service in, across or under the Lands ( "Crossing Area ") and the continuing rights and liabilities of the parties for the Crossing Area after Hutchinson completes the installation of its water service, all in accordance with the terms and conditions set out in this Agreement. NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises, mutual covenants and agreements herein contained, the parties agree as follows: Facility Crossing Agreement 1. LOCATION AND NOTICES (a) Location of Crossing Area (Legal Description): SEIANW1 /4, SEC. 5 all in TWP. 116N, RGE. 29W, Hassan Valley Twp., McLeod County, Minnesota (b) Notices: Grantor's Business Office Name: Hutchinson Utilities Commission Address: 225 Michigan St SE. Hutchinson, MN 55350 Contact: John Webster Phone: 320- 234 -0507 Fax: 320 -587 -4721 Alternate: 320-587-4746 Grantee's Business Office City of Hutchinson 111 Hassan St SE Hutchinson, MN Kent Exner 320 - 234 -4212 320 - 234 -4240 320 -583 -5663 (c) Field Representative: Grantor's Name: Ryan Ellenson Position: Crew Chief Address: 225 Michigan St SE Hutchinson, MN 55350 Phone: 320 -583 -1753 Fax: 320 -587 -4721 Alternate: 320 -587 -4746 Grantee's uentin Larson Senior Engineering Specialist 111 Hassan St SE Hutchinson, MN 320 -583 -7454 320 - 234 -4240 320 - 234 -4246 2. HUC hereby agrees, insofar as it has the right to do so, that Hutchinson may perform the work on the Hutchinson Facility in the Crossing Area in accordance with the terms and conditions of this agreement. 3. Hutchinson shall assume all risks for damages, bodily injuries, or loss to either property or persons, that may be incurred by Hutchinson or its agents, invitees, or licensees present on or in the vicinity of HUC's pipeline Facilities arising out of or resulting from Hutchinson activities. 4. Hutchinson shall properly and diligently perform its activities (i) so as not to unreasonably interfere with or impede the operation of HUC's pipeline Facilities and activities, (ii) in a good and workmanlike manner and in accordance with sound engineering and construction practices, and (iii) in compliance with all applicable codes, statutes, laws, regulations, permits, licenses, orders, and direction of lawful governmental authorities ( "Applicable Laws "). The minimum technical standards set forth in Applicable Laws shall govern unless this Agreement provides for more stringent standards; provided, however, that if compliance with the terms of this Agreement would result in a violation of any Applicable Laws, such Applicable Laws shall prevail and this Agreement shall be deemed to be amended accordingly. 5. Hutchinson shall notify the appropriate One -Call system at 800 - 252 -1166 and, in addition to the One -Call notice, Hutchinson's Field Representative shall contact RUC's Field Representative directly, either in person or by telephone, a minimum of 72 hours (excluding Saturdays, Sundays and Statutory Holidays) before commencement of Hutchinson Work within 25 feet of the Crossing Area and, if unable to contact that person, Hutchinson. shall serve a minimum of 72 hours ..critter. notice before commencement of Hutchinson Work. Upon notification, HUC's Field Representative will field locate and verify depth of cover over the HUC Facility. In no event shall Hutchinson commence work within 25 feet of the Crossing Area prior to HUC's Field Representative locating and verifying depth of cover of the HUC Facility All crossings of HUC's Facilities shall be at an angle between 45 and 90 degrees, with 90 degree crossings being preferred. 7. Unless otherwise indicated or ordered by governmental authority or regulations: (a) HUC's Facility shall be entitled to the upper position in the Crossing Area except for above grade facilities; (b) A minimum distance of 24 inches shall be maintained between the external surfaces of the underground Facilities; and (c) The Hutchinson Facility shall be maintained at the same depth with no side bends for the entire width of the Crossing Area. 8. HUC and Hutchinson shall coordinate and cooperate in the installation of any cathodic protection devices or test stations. As a minimum, should Hutchinson install a steel line across the Crossing Area, a permanent cell and above ground test station must be installed. It is further agreed and understood that each party shall be responsible for and bear the cost of installation and maintenance of the cathodic protection on their respective systems, and all risk and of loss associated therewith. 9. Hutchinson shall not backfill any of the proposed crossings until HUC has inspected the crossing and its pipeline facilities for compliance with the requirements set forth in paragraph 7 above, which inspection shall take place no later than seventy -two hours after notice of intent to close is given. 10. The parties intend that each shall bear its own costs and expenses incidental to typical pipeline crossings. 11. No blasting shall occur on or within 100 feet of HUC's Facilities, unless first approved in writing by HUC. 12. The parties agree that following the installation and backfilling of the Hutchinson Facility in the Crossing Area, each party shall rely primarily on its own property insurance in connection with any loss or damage occurring to its structures or facilities. Each party shall insure its own structures and facilities against loss by casualty, and the parties hereby release one another from any and all liability or responsibility to the other or anyone claiming through or under them, by way of subrogation or otherwise, for any loss or damage to such structures or facilities arising following the completed construction of the crossing to the extent covered by property insurance, even if such loss or damage shall have been caused by the negligence or wrongful act of the other party or anyone for whom such party may be responsible. Subject to the previous paragraph, (i) Hutchinson agrees to indemnify and defend HUC against and from claims or losses asserted or incurred by third parties in connection with injury or death to third parties or damage to the property of third parties, arising out of any act or omission of Hutchinson, or anyone for whom Hutchinson is responsible or attributable to Hutchinson operations; and (ii) HUC agrees to indemnify and defend Hutchinson against and from claims or losses asserted or incurred by third parties in 3 connection with injury or death to such third parties or damage to the property of third parties, arising out of any act or failure to act of HUC, or anyone for whom HUC is responsible or attributable to HUC's operations. The indemnifications set forth in this paragraph shall extend to all costs and expenses, including reasonable attorneys' fees incurred by an indemnified party in connection with any of the foregoing, and shall survive the assignment or termination of this Agreement. 13. No change, modification, or alteration of this Agreement shall be valid unless it is in writing and signed by the parties. No course of dealing between the parties shall be deemed to alter the terms hereof. 14. Neither party to this Agreement shall assign or transfer this Agreement or the rights and privileges hereby granted without the written consent of the other party, and such consent shall not be unreasonably withheld. The party intending to assign or transfer this Agreement shall give to the non - assigning party to this Agreement notice of its intent by registered mail. 15. It is the intention of the parties that this Agreement remain in effect during the entire period that either party maintains a pipeline that is or was at any time crossed by the other party's pipeline; this Agreement shall be considered to be effective for a period equal to the shorter of (i) ninety -nine years, or (ii) the longest period permitted under the laws of that state with respect to such agreements. 16. This Agreement sets forth the entire agreement between the parties and shall be deemed to supercede any and all previous agreements and understandings, if such there be, whether in writing or oral, between the parties with respect to the subject matter hereof. This Agreement shall inure to the benefit of and be binding on the parties, their successors, and assigns. 17. All conditions attached to the original pipeline easement, as drafted by HUC, shall continue to remain in effect during the entire period that HUC maintains its pipeline. TO EVIDENCE THEIR AGREEMENT, The parties have executed this Agreement as of the date first above written. CITY OF HUTCHINSON By G7�4,, � L Its: Administrator 4 HUTCHINSON UTILITIES COMMISSION By - - -- Its: Pr e PIPELINE / UTILITY CROSSING AGREEMENT This Pipeline / Utility Crossing Agreement ( "Agreement ") is made effective this 30th day of March , 2011, by and between Hutchinson Utilities Commission ( "HUC "), a Minnesota Municipal Utility, and CITY OF HUTCHINSON (Hutchinson) WHEREAS HUC holds one or more rights -of -way across certain lands described herein (the "Lands ") and has constructed a 12 inch Natural Gas Pipeline therein described herein as ( "HUC's Facility "). WHEREAS Hutchinson has acquired or intends to acquire one or more rights -of -way across the Lands and proposes to install therein a 6" water service described herein as the ( "Hutchinson Facility "). WHEREAS HUC and Hutchinson wish to define their respective rights and liabilities with respect to the area and the manner in which Hutchinson installs its water service in, across or under the Lands ( "Crossing Area ") and the continuing rights and liabilities of the parties for the Crossing Area after Hutchinson completes the installation of its water service, all in accordance with the terms and conditions set out in this Agreement. NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises, mutual covenants and agreements herein contained, the parties agree as follows: Facility Crossing Agreement 1. LOCATION AND NOTICES (a) Location of Crossing Area (Legal Description): SE1 /4NW1 /4, SEC. 5 all in TWP. 116N, RGE. 29W, Hassan Valley Twp., McLeod County, Minnesota (b) Notices: Grantor's Business Office Name: Hutchinson Utilities Commission Address: 225 Michigan St SE. Hutchinson, MN 55350 Contact: John Webster Phone: 320 - 234 -0507 Fax: 320 -587 -4721 Alternate: 320 -587 -4746 Grantee's Business Office City of Hutchinson 111 Hassan St SE Hutchinson, MN Kent Exner 320 - 234 -4212 320 - 234 -4240 320 -583 -5663 (c) Field Representative: Grantor's Name: Ryan Ellenson Position: Crew Chief Address: 225 Michigan St SE Hutchinson, MN 55350 Phone: 320 - 583 -1753 Fax: 320 -587 -4721 Alternate: 320 -587 -4746 Grantee's uentin Larson Senior Engineering Specialist 111 Hassan St SE Hutchinson, MN 320 -583 -7454 320 - 234 -4240 320 - 234 -4246 2. HUC hereby agrees, insofar as it has the right to do so, that Hutchinson may perform the work on the Hutchinson Facility in the Crossing Area in accordance with the terms and conditions of this agreement. 3. Hutchinson shall assume all risks for damages, bodily injuries, or loss to either property or persons, that may be incurred by Hutchinson or its agents, invitees, or licensees present on or in the vicinity of HUC's pipeline Facilities arising out of or resulting from Hutchinson activities. 4. Hutchinson shall properly and diligently perform its activities (i) so as not to unreasonably interfere with or impede the operation of HUC's pipeline Facilities and activities, (ii) in a good and workmanlike manner and in accordance with sound engineering and construction practices, and (iii) in compliance with all applicable codes, statutes, laws, regulations, permits, licenses, orders, and direction of lawful governmental authorities ( "Applicable Laws "). The minimum technical standards set forth in Applicable Laws shall govern unless this Agreement provides for more stringent standards; provided, however, that if compliance with the terms of this Agreement would result in a violation of any Applicable Laws, such Applicable Laws shall prevail and this Agreement shall be deemed to be amended accordingly. 5. Hutchinson shall notify the appropriate One -Call system at 800 -252 -1166 and, in addition to the One -Call notice, Hutchinson's Field Representative shall contact HUC's Field Representative directly, either in person or by telephone, a minimum of 72 hours (excluding Saturdays, Sundays and Statutory Holidays) before commencement of Hutchinson Work within 25 feet of the Crossing Area and, if unable to contact that person, Hutchinson shall serve a minimum of 72 hours written notice before commencement of Hutchinson Work. Upon notification, HUC's Field Representative will field locate and verify depth of cover over the HUC Facility. In no event shall Hutchinson commence work within 25 feet of the Crossing Area prior to HUC's Field Representative locating and verifying depth of cover of the HUC Facility 6. All crossings of HUC's Facilities shall be at an angle between 45 and 90 degrees, with 90 degree crossings being preferred. 7. Unless otherwise indicated or ordered by governmental authority or regulations: (a) HUC's Facility shall be entitled to the upper position in the Crossing Area except for above grade facilities; (b) A minimum distance of 24 inches shall be maintained between the external surfaces of the underground Facilities; and (c) The Hutchinson Facility shall be maintained at the same depth with no side bends for the entire width of the Crossing Area. 8. HUC and Hutchinson shall coordinate and cooperate in the installation of any cathodic protection devices or test stations. As a minimum, should Hutchinson install a steel line across the Crossing Area, a permanent cell and above ground test station must be installed. It is further agreed and understood that each party shall be responsible for and bear the cost of installation and maintenance of the cathodic protection on their respective systems, and all risk and of loss associated therewith. 9. Hutchinson shall not backfill any of the proposed crossings until HUC has inspected the crossing and its pipeline facilities for compliance with the requirements set forth in paragraph 7 above, which inspection shall take place no later than seventy -two hours after notice of intent to close is given. 10. The parties intend that each shall bear its own costs and expenses incidental to typical pipeline crossings. 11. No blasting shall occur on or within 100 feet of HUC's Facilities, unless first approved in writing by HUC. 12. The parties agree that following the installation and backfilling of the Hutchinson Facility in the Crossing Area, each party shall rely primarily on its own property insurance in connection with any loss or damage occurring to its structures or facilities. Each party shall insure its own structures and facilities against loss by casualty, and the parties hereby release one another from any and all liability or responsibility to the other or anyone claiming through or under them, by way of subrogation or otherwise, for any loss or damage to such structures or facilities arising following the completed construction of the crossing to the extent covered by property insurance, even if such loss or damage shall have been caused by the negligence or wrongful act of the other party or anyone for whom such party may be responsible. Subject to the previous paragraph, (i) Hutchinson agrees to indemnify and defend HUC against and from claims or losses asserted or incurred by third parties in connection with injury or death to third parties or damage to the property of third parties, arising out of any act or omission of Hutchinson, or anyone for whom Hutchinson is responsible or attributable to Hutchinson operations; and (ii) HUC agrees to indemnify and defend Hutchinson against and from claims or losses asserted or incurred by third parties in 3 connection with injury or death to such third parties or damage to the property of third parties, arising out of any act or failure to act of HUC, or anyone for whom HUC is responsible or attributable to HUC's operations. The indemnifications set forth in this paragraph shall extend to all costs and expenses, including reasonable attorneys' fees incurred by an indemnified party in connection with any of the foregoing, and shall survive the assignment or termination of this Agreement. 13. No change, modification, or alteration of this Agreement shall be valid unless it is in writing and signed by the parties. No course of dealing between the parties shall be deemed to alter the terms hereof. 14. Neither party to this Agreement shall assign or transfer this Agreement or the rights and privileges hereby granted without the written consent of the other party, and such consent shall not be unreasonably withheld. The party intending to assign or transfer this Agreement shall give to the non - assigning party to this Agreement notice of its intent by registered mail. 15. It is the intention of the parties that this Agreement remain in effect during the entire period that either party maintains a pipeline that is or was at any time crossed by the other party's pipeline; this Agreement shall be considered to be effective for a period equal to the shorter of (i) ninety -nine years, or (ii) the longest period permitted under the laws of that state with respect to such agreements. 16. This Agreement sets forth the entire agreement between the parties and shall be deemed to supercede any and all previous agreements and understandings, if such there be, whether in writing or oral, between the parties with respect to the subject matter hereof. This Agreement shall inure to the benefit of and be binding on the parties, their successors, and assigns. 17. All conditions attached to the original pipeline easement, as drafted by HUC, shall continue to remain in effect during the entire period that HUC maintains its pipeline. TO EVIDENCE THEIR AGREEMENT, The parties have executed this Agreement as of the date first above written. CITY OF HUTCHINSON B C Its: Administrator 4 HUTCHINSON UTILITIES COMMISSION By Its: Pr e PIPELINE / UTILITY CROSSING AGREEMENT This Pipeline / Utility Crossing Agreement ( "Agreement ") is made effective this 30th day of March , 2011, by and between Hutchinson Utilities Commission ( "HUC "), a Minnesota Municipal Utility, and CITY OF HUTCHINSON (Hutchinson) WHEREAS HUC holds one or more rights -of -way across certain lands described herein (the "Lands ") and has constructed a 12 inch Natural Gas Pipeline therein described herein as ( "HUC's Facility "). WHEREAS Hutchinson has acquired or intends to acquire one or more rights -of -way across the Lands and proposes to install therein an 8" sanitary sewer service described herein as the ( "Hutchinson Facility "). WHEREAS HUC and Hutchinson wish to define their respective rights and liabilities with respect to the area and the manner in which Hutchinson installs its sanitary sewer service in, across or under the Lands ( "Crossing Area ") and the continuing rights and liabilities of the parties for the Crossing Area after Hutchinson completes the installation of its sanitary sewer service, all in accordance with the terms and conditions set out in this Agreement. NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises, mutual covenants and agreements herein contained, the parties agree as follows: Facility Crossing Agreement 1. LOCATION AND NOTICES (a) Location of Crossing Area (Legal Description): SE1/4NW1 /4, SEC. 5 all in TWP. 116N, RGE. 29W, Hassan Valley Twp., McLeod County, Minnesota (b) Notices: Grantor's Business Office Name: Hutchinson Utilities Commission Address: 225 Michigan St SE. _ Hutchinson, MN 55350 Contact: John Webster Phone: 320 - 234 -0507 Fax: 320 -587 -4721 Alternate: 320-587-4746 Grantee's Business Office City of Hutchinson 111 Hassan St SE Hutchinson, MN Kent Exner 320 - 234 -4212 320 - 234 -4240 320 -583 -5663 (e) Field Representative: Grantor's Name: Position: Address: Ryan Ellenson Crew Chief 225 Michigan St SE Hutchinson, MN 55350 Phone: 320 -583 -1753 Fax: 320 -587 -4721 Alternate: 320-587-4746 Grantee's uentin Larson Senior Engineering Specialist 111 Hassan St SE Hutchinson, MN 320 -583 -7454 320 - 234 -4240 320 - 234 -4246 2. HUC hereby agrees, insofar as it has the right to do so, that Hutchinson may perform the work on the Hutchinson Facility in the Crossing Area in accordance with the terms and conditions of this agreement. 3. Hutchinson shall assume all risks for damages, bodily injuries, or loss to either property or persons, that may be incurred by Hutchinson or its agents, invitees, or licensees present on or in the vicinity of HUC's pipeline Facilities arising out of or resulting from Hutchinson activities. 4. Hutchinson shall properly and diligently perform its activities (i) so as not to unreasonably interfere with or impede the operation of HUC's pipeline Facilities and activities, (ii) in a good and workmanlike manner and in accordance with sound engineering and construction practices, and (iii) in compliance with all applicable codes, statutes, laws, regulations, permits, licenses, orders, and direction of lawful governmental authorities ( "Applicable Laws "). The minimum technical standards set forth in Applicable Laws shall govern unless this Agreement provides for more stringent standards; provided, however, that if compliance with the terms of this Agreement would result in a violation of any Applicable Laws, such Applicable Laws shall prevail and this Agreement shall be deemed to be amended accordingly. 5. Hutchinson shall notify the appropriate One -Call system at 800 - 252 -1166 and, in addition to the One -Call notice, Hutchinson's Field Representative shall contact HUC's Field Representative directly, either in person or by telephone, a minimum of 72 hours (excluding Saturdays, Sundays and Statutory Holidays) before commencement of Hutchinson Work within 25 feet of the Crossing Area and, if unable to contact that person, Hutchinson shall serve a minimum of 72 hours written notice before commencement of Hutchinson Work. Upon notification, HUC's Field Representative will field locate and verify depth of cover over the HUC Facility. In no event shall Hutchinson commence work within 25 feet of the Crossing Area prior to HUC's Field Representative locating and verifying depth of cover of the HUC Facility All crossings of HUC's Facilities shall be at an angle between 45 and 90 degrees, with 90 degree crossings being preferred. 7. Unless otherwise indicated or ordered by governmental authority or regulations: (a) HUC's Facility shall be entitled to the upper position in the Crossing Area except for above grade facilities; (b) A minimum distance of 24 inches shall be maintained between the external surfaces of the underground Facilities; and (c) The Hutchinson Facility shall be maintained at the same depth with no side bends for the entire width of the Crossing Area. 8. HUC and Hutchinson shall coordinate and cooperate in the installation of any cathodic protection devices or test stations. As a minimum, should Hutchinson install a steel line across the Crossing Area, a permanent cell and above ground test station must be installed. It is further agreed and understood that each party shall be responsible for and bear the cost of installation and maintenance of the cathodic protection on their respective systems, and all risk and of loss associated therewith. 9. Hutchinson shall not backfill any of the proposed crossings until HUC has inspected the crossing and its pipeline facilities for compliance with the requirements set forth in paragraph 7 above, which inspection shall take place no later than seventy -two hours after notice of intent to close is given. 10. The parties intend that each shall bear its own costs and expenses incidental to typical pipeline crossings. 11. No blasting shall occur on or within 100 feet of HUC's Facilities, unless first approved in writing by HUC. 12. The parties agree that following the installation and backfilling of the Hutchinson Facility in the Crossing Area, each party shall rely primarily on its own property insurance in connection with any loss or damage occurring to its structures or facilities. Each party shall insure its own structures and facilities against loss by casualty, and the parties hereby release one another from any and all liability or responsibility to the other or anyone claiming through or under them, by way of subrogation or otherwise, for any loss or damage to such structures or facilities arising following the completed construction of the crossing to the extent covered by property insurance, even if such loss or damage shall have been caused by the negligence or wrongful act of the other party or anyone for whom such party may be responsible. Subject to the previous paragraph, (i) Hutchinson agrees to indemnify and defend HUC against and from claims or losses asserted or incurred by third parties in connection with injury or death to third parties or damage to the property of third parties, arising out of any act or omission of Hutchinson, or anyone for whom Hutchinson is responsible or attributable to Hutchinson operations; and (ii) HUC agrees to indemnify and defend Hutchinson against and from claims or losses asserted or incurred by third parties in 3 connection with injury or death to such third parties or damage to the property of third parties, arising out of any act or failure to act of HUC, or anyone for whom HUC is responsible or attributable to HUC's operations. The indemnifications set forth in this paragraph shall extend to all costs and expenses, including reasonable attorneys' fees incurred by an indemnified party in connection with any of the foregoing, and shall survive the assignment or termination of this Agreement. 13. No change, modification, or alteration of this Agreement shall be valid unless it is in writing and signed by the parties. No course of dealing between the parties shall be deemed to alter the terms hereof. 14. Neither party to this Agreement shall assign or transfer this Agreement or the rights and privileges hereby granted without the written consent of the other party, and such consent shall not be unreasonably withheld. The party intending to assign or transfer this Agreement shall give to the non - assigning party to this Agreement notice of its intent by registered mail. 15. It is the intention of the parties that this Agreement remain in effect during the entire period that either party maintains a pipeline that is or was at any time crossed by the other party's pipeline; this Agreement shall be considered to be effective for a period equal to the shorter of (i) ninety -nine years, or (ii) the longest period permitted under the laws of that state with respect to such agreements. 16. This Agreement sets forth the entire agreement between the parties and shall be deemed to supercede any and all previous agreements and understandings, if such there be, whether in writing or oral, between the parties with respect to the subject matter hereof. This Agreement shall inure to the benefit of and be binding on the parties, their successors, and assigns. 17. All conditions attached to the original pipeline easement, as drafted by HUC, shall continue to remain in effect during the entire period that HUC maintains its pipeline. TO EVIDENCE THEIR AGREEMENT, The parties have executed this Agreement as of the date first above written. CITY OF HUTCHINSON By C/ Its: Admi istrator HUTCHINSON UTILITIES COMMISSION By _ Its: s I'd n t Daniel Lan From: Daniel Lang Sent: Thursday, March 24, 2011 10:16 AM To: Michael Kumm Subject: FW: MRES conversations with GRE about HUC ITA Below is a table summarizing the costs. Also below is a table summarizing the rates for the various services from MISO. The table immediately below summarizes what the total costs might be for entire year in 2011, obviously that won't occur, as you are not likely to start incurring the higher costs until July 2011, at the earliest, at least at this point. We are also working on the network contract that you will need to execute as well as the network specification sheets. GRE Schedule 9 (base network charge rate) and specifically the GRE Schedule 26 rate (MISO transmission expansion rate) continue to increase. Hutchinson Utilities Commission MISO TO Analysis- Total Projected Transmission Expenses for Jan 2011 through December 2011 $ 1,695,312 Existing MISO Load Zone - NITS Transmission Schedules ITA GRE LZ Schedule 1 123,234 32,096 chedule 2 na 286,799 chedule 3 ASM 63,000 Schedule 9 NITS na 2,845,078 Schedule 10 47,643 47,886 Schedule 16 na na Schedule 17 58,374 58,374 Schedule 26 RECB 35,210 Annual Transmission Revenue Requirement from 2010 applied to 2011 na $ 1,317,880 Summary of Total Schedules (reduced costs ) $ 292,251 $ 1,987,562 Memb Fee(Initial and Annual ) na $ 2,500 HUC Incremental Change Sum of Schds $ 1,695,312 MRES Summary for Alternatives for Addressing Issues Related to Integrated Transmission Agreement Raised by Great River Energy 1. Introduction a. Integrated Transmission Agreement (ITA) — The ITA is a grandfathered transmission agreement (GFA) that was written many years prior to implementation of the Federal Energy Regulatory Commission's (FERC) Open Access Transmission Tariff (OATT). The OATT provided for wholesale transmission customers to utilize the transmission system on a non - discriminatory basis. The implementation of the OATT concept first occurred in the late 1990s and several additions to the concepts of the OATT have been ordered by FERC since the initial orders. While the ITA has provided for a reasonable arrangement to allow parties to share in costs associated with transmission infrastructure needed to reliably serve themselves, GFAs are not generally structured to deal with the numerous changes to transmission service that have occurred over the last 10 -15 years, specifically related to the implementation of the Midwest Independent Transmission System Operator (MISO) energy markets, and license plate transmission pricing. b. Great River Energy (GRE) conversations with Hutchinson Utilities Commission (HUC) i. In July, MRES received a call from HUC inquiring about updating the Attachment O analysis that was completed in 2007. During that call, HUC also indicated that GRE had suggested that HUC may not be complying with the terms of the ITA. Specifically, GRE suggested that the market purchases made by HUC, at times when HUC was not running its local generation, were not allowed under the terms of the ITA. ii. Based on the questions from HUC, and at the request of HUC staff, MRES staff began conversations with GRE to understand the issue. MRES held four conversations with GRE staff about the issue. One of the conversations involved HUC staff as well. iii. GRE indicated that it believed only energy purchases (regardless of whether or not they were financial or physical delivery) from sources within the ITA were allowed. In other words, HUC could only purchase power and energy from parties in the ITA from Points of Input as defined in Exhibit C of the ITA when not running RUC's local generation. This is a very limited set of resources. 1 iv. GRE is taking the position that HUC cannot make general purchases from the MISO market under the terms of the ITA. Any purchase from the MISO market generally would require purchase of transmission service (firm or non - firm). v. GRE indicated that while it has had concerns about utilization of the ITA for a number of years, it has not had the staff time available to fully understand the issue or actively pursue discussions with HUC. GRE indicated that it has held detailed discussions with Willmar on itsITA arrangements for about one year now and anticipate resolving the issue in the very near future with a filing to FERC whereby Willmar will take network integrated transmission service (NITS), with the rates being effective back to January 1, 2010. MRES is not familiar with the details of this filing, but will review once a filing is made. c. The experience of MRES with others in similar situations — While MRES has not dealt with the ITA in question, MRES has dealt with similar ITAs in MISO where MRES is a party, and in other instances where MRES is not a party. In those prior situations, MRES transmission staff has urged the parties to the ITA ensure they understand the limitations to the ITA, specifically that the ITA or lack of NITS may not allow for MISO market purchases without acquiring additional transmission service (firm or non - firm). Based on the knowledge of MRES of the ITA, and experience with similar situations, MRES believes that GRE does have a legitimate concern about the ITA not providing for HUC to make market purchases for sources not defined in Exhibit C in the ITA. MRES is not aware of any FERC complaint specifically related to an ITA arrangement; however, NITS is the basis for facilitating energy transactions. 2. Alternatives — MRES staff believes that while GRE would show some patience with regard to allowing HUC to work through a decision on what to do about the concerns raised, GRE will likely grow impatient in the coming months. Based on some very limited discussions about the timing of making a decision and potentially making changes, MRES believes GRE may allow HUC, until the beginning of the year, to make the change to NITS; but, if a status quo approach is chosen by HUC, GRE would likely start the necessary internal actions to pursue resolution much sooner. In other words, while GRE may wait for HUC to take NITS starting January 1, 2011, if HUC chooses a status quo approach, they would likely want that decision from HUC in the coming weeks. a. Status Quo — In this alternative, HUC could chose to make no changes to the way it is transacting in the MISO market. This would require GRE to take some kind of action. MRES staff has not done any detailed analysis as to timing of either of the alternatives, nor has MRES staff attempted to project an outcome as to the success of GRE's potential pursuit of a remedy. If the status quo alternative is pursued, there is a higher probability that GRE will not be supportive in making any changes to the current transmission arrangements or any other issues that may arise in the near future. While this is certainly a business decision, an approach by HUC of status quo could damage HUC's relationship with GRE in the long run. For example, if HUC chose the status quo and waited for GRE to pursue other remedies, like a complaint to FERC or through the arbitrator process in the ITA against HUC, GRE could take an aggressive position in reviewing the HUC transmission cost information in the Attachment O, or perhaps not be supportive in HUC's pursuit of NITS (potentially significantly limiting HUC's ability to gain access to the MISO market for economy purchases) by not allowing the existing GFA to be canceled or not being cooperative in the MISO process to become a NITS customer. i. GRE could pursue arbitration as provided for in the ITA (Article 7) — With the requirement that any dispute be resolved via an arbitrator selected through the American Arbitration Association, it seems highly unlikely that GRE would attempt to reach resolution under the ITA due to the fact this is a complicated transmission tariff issue. HUC may be better served by pursuing this alternative, in my opinion, as the arbitrator is more likely to provide a favorable ruling than a FERC complaint due to the fact that these are complicated issues and an arbitrator likely wouldn't have experience in them. ii. GRE could pursue a complaint at FERC — GFA issues have been brought to FERC multiple times throughout the past six years, with FERC becoming increasingly inflexible in dealing with the GFA and how the GFA could potentially limit the ability of the market to function properly. b. Convert to Network Service — While this alternative does seem to be relatively straight forward, in past experiences MRES staff has had, it is critical that the existing MISO transmission owner (TO) (GRE in this case) be supportive when working with MISO to convert the service being provided under the GFA to NITS. Without support, there are numerous issues that could arise that have the potential to cause delay, increase the cost of converting the service (potentially requiring transmission studies), or potentially limit access to the MISO market due to some unknown physical transmission limitation not directly the responsibility of HUC. 3 If HUC chooses to pursue this alternative, there are three possible alternatives available to pursue to limit the financial impact to HUC due to the additional transmission costs being incurred. Each of the alternatives would provide for recognition for HUC's existing transmission assets resulting in offsetting a portion of the transmission charges to HUC. In each of the methods, HUC would complete an Attachment O for review by MISO. i. Pursue membership as a MISO TO directly — This alternative is the most direct method of receiving revenue for any transmission facilities. MRES is pursuing this method due to the need to get regional cost sharing for our planned transmission investments and our desire to actively participate in regional transmission development. In addition, while MRES cannot specifically identify any limitations for recovery of existing transmission investments, MRES would prefer to be an owner, and not be considered a second class citizen. ii. Pursue network credit via Section 30.9 of the MISO tariff — This method is still relatively new, only being utilized by some transmission customers in the MidAmerican Energy Company (MEC) transmission pricing zone in Iowa for about one year. This alternative does appear to be reasonable given that the TO is a cooperative and a responsive TO. GRE has indicated it is planning to make a filing to FERC in the next few weeks to make the needed changes to their Attachment O to allow for Willmar and any others, as may be appropriate in the future, to recover their transmission revenue requirement. It is presumed regional cost sharing would not be provided for in this method. GRE indicated it would charge a nominal administrative fee for processing of the credit. It isn't expected to be a significant cost, only a few hundred dollars a month at most. iii. Assign operational control to an existing MISO TO — This method is still relatively new as well, only being utilized by Cedar Falls in the MEC transmission pricing zone in Iowa for a few smaller transmission owners for about one year. It is the understanding of MRES that Central Minnesota Municipal Power Agency (CMMPA) is also doing this for some of its members. This alternative does appear to be reasonable given Cedar Falls is a cooperative and a responsive TO. This method would require an agreement to assign operational control over to the existing MISO TO who subsequently turns over operational control to MISO. It would also require a revenue sharing agreement with that same MISO TO. MRES is currently pursuing this alternative with one of its members. MRES anticipates this being completed by December 1, 2010. MRES would be willing to consider this for HUC, if desired. It is unclear 4 whether or not regional cost sharing could be utilized for new investments by the entity assigning operational control to an existing TO. iv. Other — There are potentially other alternatives; for example, a lease agreement with another MISO TO. It is expected that this would be similar to assigning operational control, but could cause other concerns about lag in cost recovery, and potential review by FERC of any lease expenses incurred by the MISO TO. This does not appear to be a reasonable alternative at this point. 3. Recommended Actions a. Update Attachment O Analysis completed in 2007 — MRES intends to send a data request to HUC by September 15. Analysis should be completed a couple weeks after receipt of information by MRES. MRES would suggest that HUC not wait to make a decision as to what alternative to pursue while waiting for the final Attachment O information to be finalized. b. HUC decision on how to respond to GRE concerns — MRES is not making a recommendation as to what alternative to take, but recommends that HUC keeps GRE informed as to your decision making process. MISO TRANSMISSION FACILITIES ASSIGNMENT AGREEMENT This MISO Transmission Facilities Assignment Agreement ( "Agreement ") is dated as of , 2011, and is by and between the Hutchinson Utilities Commission of Hutchinson, Minnesota, a municipal corporation of the State of Minnesota ( "Hutchinson "), and Missouri Basin Municipal Power Agency d/b /a Missouri River Energy Services, a body politic and corporate organized under the laws of the State of Iowa and existing under the intergovernmental cooperation laws of the States of Iowa, Minnesota, North Dakota and South Dakota ( "MRES "). Hutchinson and MRES are sometimes referred to singly as "Party" and collectively as "Parties ", with respect to the intent to assign operational control of qualifying transmission facilities under the terms and conditions as follows: Assignee: MRES Assignor: Hutchinson Governing Agreements: The Midwest Independent Transmission System Operator, Inc. ( "MISO ") Transmission, Energy and Operating Reserve Markets Tariff ( "Tariff'), effective March 1, 2005 and subsequent revisions; Transmission Owner Agreement ( "TO Agreement ") between MRES and MISO dated August 24, 2007; and future MISO Revenue Sharing Agreement for the GRE Zone and Xcel Zone, to be negotiated and implemented by the Parties. Contract Term: This Agreement shall become effective as of the later of April 1, 2011 or the date that Hutchinson enters into a Network Integrated Transmission Agreement with MISO adding Hutchinson as a network customer. The initial term of this Agreement shall expire on May 31, 2019. This Agreement shall automatically renew for additional periods of one (1) year unless either Party gives written notice to the other Party of its intention to terminate this Agreement not less than one (1) year prior to the end of the original term or any extension thereof unless mutually agreed otherwise. Transmission Facilities: Transmission facilities operated at 115 kV and 69 kV integrated into the GRE rate zone of MISO, which integrated facilities are more fully set forth on Attachment "A" (the "Hutchinson Transmission Facilities "). Assignment: Hutchinson does hereby transfer operational control of the Hutchinson Transmission Facilities, as set forth in Attachment "A ", to MRES during the term of this Agreement and any renewal terms. Hutchinson shall retain physical control of the Hutchinson Transmission Facilities along with the obligations to repair, maintain and insure these facilities in accordance with good utility practices. MRES has no liability for, and by execution of this agreement assumes no liability for, the Hutchinson Transmission Facilities. Reassignment: Hutchinson acknowledges and agrees that MRES will fully reassign and convey operational control of qualifying transmission facilities to MISO in accordance with MISO requirements and Federal Energy Regulatory Commission ( "FERC ") law and policy. NERC Compliance Responsibility: Hutchinson retains all responsibilities to comply with the North American Electric Reliability Corporation ( "NERC ") rules and regulations. Designated MISO Transmission Owner ( "TO ") Collection of Revenues: Hutchinson hereby appoints MRES as its MISO TO agent for all purposes required under the TO Agreement and for protesting or contesting, on its behalf, any errors in billing or related matters. On its behalf, Hutchinson authorizes MRES to obtain rate recovery and revenue distribution from MISO and other TOs as necessary. Disbursement of Revenues Received: MRES shall, after collecting reasonable fees and costs for its services and those of necessary engineering and legal consultants and subject to any other relevant agreements with Hutchinson (including the Transmission Owner Revenue Sharing Services Agreement between MRES and Hutchinson dated the same date hereof), disburse the revenues received from MISO and other TOs for the use of the Hutchinson Transmission Facilities to Hutchinson in an equitable manner. Other MISO Charges: Hutchinson shall be responsible for and reimburse MRES for any other miscellaneous MISO charges reasonably allocable to Hutchinson, which MRES may initially pay on Hutchinson's behalf, including but not limited to administrative and scheduling charges associated with the Hutchinson Transmission Facilities. Hutchinson shall also be responsible for and reimburse MRES for Hutchinson's allocable share of MRES costs incurred in performing it's TO agent function including all costs incurred under the TO Agreement with MISO. The terms and conditions in this Agreement shall remain in effect for the term of the transactions described herein. MRES as to its signatory and Hutchinson as to its signatory each hereby represents and warrants that the person executing this Agreement on its respective behalf is duly authorized to do so, and that, by each execution set forth below, such party is hereby duly and lawfully bound by this Agreement. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed on the day and year set forth below. MISSOURI BASIN MUNICIPAL POWER AGENCY d /b /a MISSOURI RIVER ENERGY SERVICES Title HUTCHINSON UTILITIES COMMISSION IC Title ATTACHMENT A TO TRANSMISSION FACILITIES ASSIGNMENT AGREEMENT Hutchinson Utilities Commission owns transmission facilities operated at 115 kV and 69 kV integrated in to the GRE and Xcel rate zones of the Midwest Integrated Transmission System Operator, as follows: Those transmission facilities to be assigned are specifically identified as: Sources of Evidentiary Information: Date: 52011 By: , General Manager A -1 MRES- HUTCHINSON, MINNESOTA TRANSMISSION OWNER REVENUE SHARING SERVICES AGREEMENT This Transmission Owner Revenue Sharing Service Agreement ( "Agreement ") is made and entered into this _ day of , 2011, by and between Missouri Basin Municipal Power Agency, d/b /a Missouri River Energy Services, a body corporate and politic organized under the laws of the State of Iowa and existing under the intergovernmental cooperation laws of the States of Iowa, Minnesota, North Dakota and South Dakota ( "MRES "), and the Hutchinson Utilities Commission of Hutchinson, Minnesota, a municipal corporation of the State of Minnesota ( "Municipality ") (MRES and Municipality may be referred to individually as a "Party" and collectively as "Parties "). WHEREAS, Municipality; desires to obtain revenue from certain 115 kV and 69 kV transmission facilities owned 1 5 kV an ti° kV T �' n Facilifes We ate with. 1 L ✓ 1\ ♦ Ull\l V l 1\ ♦ 11 Gi11J1111 JJ� � the Great River Energyrg ( "rDE "', by Municipality and more particularly described in a Transmission Facilities Assignment Agreement between MRES and Municipality dated the same date hereof (the "Municipality Transmission Facilities "), which facilities are integrated with the Great River Energy ( "GRE" LXcel Energy ( "Xcel ") and Midwest Independent Transmission System Operator, Inc. ( "MISO ") Transmissientransmission systems; and WHEREAS, Municipality will turn over functional control of its " 5 kV and 69 kV tmasmission the Municipality Transmission Facilities to MRES under- Transmission " aspursuant to the terms of the came date Transmission Facilities Assignment Agreement; and WHEREAS, Municipality has received Network Integrated Transmission Service (NITS) from MISO, and MRES had previously turned over to MISO functional control to N4190-of other transmission facilities owned and/or controlled by MRES as part of the MISO Transmission, Energy and Operating Reserve Market Tariff ( "Tariff') and the Transmission Owner Agreement between MISO and MRES dated August 24, 2007; and WHEREAS, MRES will also assign functional control to MISO of the 115 -V and 69 kV f6eil fies Municipality Transmission Facilities covered under the Transmission Facilities Assignment Agreement; and further the Parties agree to cooperate to achieve the objectives of this Agreement to provide Attachment O data, to follow MISO/FERC requirements, to exchange information, audits and records appropriate to supporting this Agreement, and to be protective of the status of all entities as non - taxable; NOW THEREFORE, the Parties agree as follows: 1.0 INCORPORATION OF RECITALS SCHEDULES AND EXHIBITS All recitals, schedules and exhibits identified in this Agreement and attached hereto are hereby incorporated into the Agreement by this reference. 2.0 PROVISION OF SERVICES. 2.1 Based upon the information provided by Municipality, MRES shall take all steps required to include the revenue requirement related to Mu ieipa ityls tr^„sY,.,issio f eilities elud,- the Municipality Transmission Facilities Assignment Agreement i ^1.161°a in the Annual Transmission Revenue eluded Requirement for the GRE and Xcel pricing zones in MISO on an annual basis and shall share with Municipality the Municipality's share of revenues attributed to the 11: u ieipality's assigned r a nsfnissie wilitiesMunicipality Transmission Facilities that MRES receives from MISO as set forth in this Agreement. 2.2 Municipality shall provide MRES annually, at a time specified by MRES, wi&the following: 2.2.1 A copy of Municipality's most recent audited financial statement 2.2.2 A copy of the - Municipality's Attachment O, calculating the annual revenue requirement for the integrated transmission assets for which MISO transmission revenue is requested. This can be of either the levelized form or the non - levelized form for utilities operating on a cash basis, as MRES specifies. 2.2.3 Execution of a notarized Statement of Authenticity as to the correctness of the financial statements and the resulting Attachment O calculations. 2.2.4 Written notification to MRES with the details of how revenues are to be transferred to the Municipality. 2.2.5 Any other information that MRES reasonably requests for the purpose of carrying out its obligations under this Agreement. 3.0 MISO TRANSMISSION FACILITIES ASSIGNMENT AGREEMENT. This Agreement will be established prier -wand executed in conjunction with the Transmission Facilities Assignment Agreement. 4.0 TERM. This Agreement shall become effective upon the effective date of the Transmission Facilities Assignment Agreement between the Parties. The "o Transmission Rate ., al period normally begins T 1 , ends T 31 , (]meep for- e initial period hat will ee' 'enee o"YYthe later of-April 1, 2014—,of the date that „nieip l;tJ , begins to take network trnr,rissio se a tl..ug from MISO based on the MISO Tariff -. cipality will not be entitled to receive payments under this Agreement, as described in Section 5 0 unless and until the Municipality Transmission Facilities are integrated into MISO for transmission revenue sharing purposes and Municipality begins to take network transmission service from MISO under the MISO Tariff. The initial term of this Agreement expires May 31, 2019. This Agreement shall automatically renew for additional periods of one (1) year unless either Party gives written notice to the other Party of its intention to terminate this Agreement not less than one (1) year prior to the end of the original term or any extension thereof, unless mutually agreed otherwise. 5.0 PAYMENT. MRES anticipates receiving monthly transmission revenue sharing payments from MISO paid through GRE and Xcel and paid through terms of a the-individual zonal revenue sharing agreements to be negotiated and signed between MRES, GRE, Xcel, MISO and possibly other MISO transmission owners owning transmission facilities in the GRE and Xcel pricing zones. MRES will establish reasonable accounting procedures to distribute shared monthly transmission revenue received from MISO through GRE or Xcel on a prorated basis of the summation of MISO approved MISO Attachment O annually updated combined filings from MRES, Municipality, and other cities. MRES wi11may deduct N=RES ez'��es--from the revenues with the balanee fapNefdedrevenue remitted to Municipality.. costs incurred by MRES in performing the services hereunder and a reasonable administrative charge payable to MRES for such services. In the unlikely event that significant payments are required to MISO, such as if refunds of transmission revenues are ordered by MISO or FERC, Municipality will reimburse MRES on a timely basis after proper notification. 6.0 TERMINATION. 6.1 MRES MISO Transmission Owner Status The continuation of MRES as a MISO Transmission Owner is essential to the collection and processing of the transmission revenue cash flow which is the fundamental premise for this Agreement. If for any reason, MRES ceases, voluntarily or involuntarily, to be a MISO Transmission Owner, this Agreement will terminate and the Parties will work together to attempt to find an alternate Transmission Owner to process Municipality's transmission revenue and to distribute any remaining revenues. 6.2 Default in Payment. Upon default by Municipality in making any payments lawfully required by MRES Municipality herein, this Agreement may be terminated at the option of MRES, provided, however, before any such termination, MRES shall give Municipality written notice pursuant to Section 9.0 specifying the default and stating that this Agreement will be terminated and forfeited within thirty (30) days after delivery of such notice, unless such default is remedied within fifteen (15) days. 6.3 Contrary to Law. If at any time during the term of this Agreement, either MRES or Municipality deteredetermines that it's continued performance under the terms of this Agreement is contrary to law, then this Agreement may be immediately terminated by written notice provided by the terminating Party to the other Party. 7.0 FORCE MAJEURE. 7.1 Notice. In the event either Party fails wholly or in part to carry out its obligations under this Agreement, and such failure is occasioned by or is in consequence of a Force Majeure citienCondition (as defined below) and if such Party gives written notice and particulars of the Force Majeure eondifienCondition to the other Party as soon as reasonably possible, then the obligations of the Party giving such notice insofar as they are affected by such Force Majeure eendi-tio Condition will be suspended during the continuance of the Force Majeure eenditie Condition. 7.2 Force Majeure Conditions. Force Majeure senditionsConditions are those events or conditions not caused by, and beyond the reasonable control of, the affected Party. Force Majeure eemlitionsConditions include, without limitation: acts of God;i natural disaster,; war, insurrection or other unlawful act against public order or authority; explosion, fire, freezing or other accidents or acts of sabotage causing breakage of, machinery, transmission lines, or equipment such that they prevent a Party from performing its obligations hereunder. 7.3 Payment Obligation. The Parties agree that a change in price or market condition does not constitute a Force Majeure Condition. 8.0 LIMITATION OF LIABILITY. MRES and its officers, directors, employees and agents, shall not be liable for special, indirect, incidental, punitive or consequential damages under, arising out of, due to, or in connection with its performance or non - performance of this Agreement or any of its obligations herein, whether based on contract, tort (including, without limitation, negligence), strict liability, warranty, indemnity or otherwise. 9.0 NOTICES. Any notice. or other communication required or permitted under this Agreement (collectively a "Notice ") shall be: (a) in writing and (b) addressed by the sender to the other Party at the address or number and in the manner set forth below. Any change in the information set forth below shall be made in writing and delivered according to this section. If to MRES: Director, Legal 3724 West Avera Drive P. O. Box 88920 Sioux Falls, SD 57109 -8920 0 If to Municipality General Manager Hutchinson Utilities Commission XXXX Hutchinson, MN XXXX Except as otherwise provided in this Agreement, each notice shall be effective and shall be deemed delivered on the earlier of: (i) its actual receipt, if delivered personally, by courier service, email, or by fax (on the condition that a copy of the notice is mailed as set forth below on the same day and the sending Party has confirmation of transmission receipt of the notice), or (ii) on the third day after the notice is postmarked for mailing by first class, postage prepaid, certified, or registered, United States mail, with return receipt requested (whether or not the return receipt is subsequently received by the sender). 10.0 REPRESENTATIONS OF MRES. MRES represents and warrants as follows: 10.1 MRES is duly organized, validly existing and in good standing under the laws of the State of Iowa and is authorized to conduct business in the states in which it does business. 10.2 MRES has taken all such action; as may be necessary and proper to authorize this Agreement, the execution and delivery hereof, and the consummation of transactions contemplated hereby. 10.3 This Agreement is a legal, valid and binding obligation of MRES enforceable in accordance with its terms. 11.0 MUNICIPALITY REPRESENTATIONS. Municipality represents and warrants as follows: 11.1 Municipality is a municipal electric utility duly organized, validly existing and in good standing under the laws of the State of Minnesota. 11.2 Municipality has taken all such action, as maybe necessary and proper to authorize this Agreement, the execution and delivery hereof, and the consummation of transactions contemplated hereby. 11.3 This Agreement is a legal, valid and binding obligation of Municipality enforceable in accordance with its terms. 12.0 MISCELLANEOUS 12.1 Assignment. No Party hereto shall assign this Agreement or delegate any of its duties, obligations, responsibilities or rights without the prior written consent of the other Party, which consent shall not be unreasonably withheld. 12.2 Third Parties. Nothing in this Agreement shall be construed as giving any person, firm, corporation or other entity, other than the signatory Parties hereto and their respective successors and permitted assigns, any right, remedy or claim under or in respect to this Agreement or any provision hereof. 12.3 Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of South Dakota. 12.4 Savings Clause. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions herein, and the Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted. 12.5 Exclusive Remedies. The duties and obligations imposed by this Agreement and the rights and remedies available hereunder shall be limited as follows. The exclusive remedy of Municipality under this Agreement is to recover funds remiRe to- received by MRES €er undist ibuted tfmsfnissien revenues and f as described in Section 5.0 which .are attributable to the Municipality Transmission Facilities, if and to the extent MRES fails to remit these funds to Municipality as required by this Agreement. The exclusive remedy of MRES under this Agreement shall be the recovery from Municipality of funds for overpayments of transmission revenues or-and costs which may be refunded erTemitted "(including adders, true - ups, penalties, etc.), implementation costs or charges, and fees for t-rmsmissien- services provided by MRES. The Parties hereto waive every other claim or form of damage arising at law or in equity. 12.6 Modification. This Agreement shall not be amended, changed, modified, waived, discharged or terminated except in writing signed by the Party or Parties against which enforcement of the change, waiver, modification or amendment is sought. 12.7 Counterparts /Facsimile Copies. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be an original, but all of which together shall constitute enone and the same instrument. A facsimile copy of this Agreement and any signature thereon shall be considered for all purposes as an original. 12.8 Further Assurances. The Parties hereto shall execute any and all further assurance, documents or writings reasonably requested by the other Party to carry out the terms and provisions of this Agreement. 6 12.9 Headings. The headings in this Agreement are for the purposes of reference only and shall not limit or otherwise affect the meaning of the respective sections. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed on the day and year set forth below. MISSOURI BASIN MUNICIPAL POWER AGENCY d /b /a MISSOURI RIVER ENERGY SERVICES IN Title HUTCHINSON UTILITIES COMMISSION Title 8 MRES Summary for Alternatives for Addressing Issues Related to Integrated Transmission Agreement Raised by Great River Energy 1. Introduction a. Integrated Transmission Agreement (ITA) — The ITA is a grandfathered transmission agreement (GFA) that was written many years prior to implementation of the Federal Energy Regulatory Commission's (FERC) Open Access Transmission Tariff (GATT). The OATT provided for wholesale transmission customers to utilize the transmission system on a non - discriminatory basis. The implementation of the OATT concept first occurred in the late 1990s and several additions to the concepts of the OATT have been ordered by FERC since the initial orders. While the ITA has provided for a reasonable arrangement to allow parties to share in costs associated with transmission infrastructure needed to reliably serve themselves, GFAs are not generally structured to deal with the numerous changes to transmission service that have occurred over the last 10 -15 years, specifically related to the implementation of the Midwest Independent Transmission System Operator (MISO) energy markets, and license plate transmission pricing. b. Great River Energy (GRE) conversations with Hutchinson Utilities Commission (HUC) i. In July, MRES received a call from HUC inquiring about updating the Attachment O analysis that was completed in 2007. During that call, HUC also indicated that GRE had suggested that HUC may not be complying with the terms of the ITA. Specifically, GRE suggested that the market purchases made by HUC, at times when HUC was not running its local generation, were not allowed under the terms of the ITA. ii. Based on the questions from HUC, and at the request of HUC staff, MRES staff began conversations with GRE to understand the issue. MRES held four conversations with GRE staff about the issue. One of the conversations involved HUC staff as well. iii. GRE indicated that it believed only energy purchases (regardless of whether or not they were financial or physical delivery) from sources within the ITA were allowed. In other words, HUC could only purchase power and energy from parties in the ITA from Points of Input as defined in Exhibit C of the ITA when not running HUC's local generation. This is a very limited set of resources. 1 iv. GRE is taking the position that HUC cannot make general purchases from the MISO market under the terms of the ITA. Any purchase from the MISO market generally would require purchase of transmission service (firm or non - firm). v. GRE indicated that while it has had concerns about utilization of the ITA for a number of years, it has not had the staff time available to fully understand the issue or actively pursue discussions with HUC. GRE indicated that it has held detailed discussions with Willmar on itsITA arrangements for about one year now and anticipate resolving the issue in the very near future with a filing to FERC whereby Willmar will take network integrated transmission service (NITS), with the rates being effective back to January 1, 2010. MRES is not familiar with the details of this filing, but will review once a filing is made. c. The experience of MRES with others in similar situations — While MRES has not dealt with the ITA in question, MRES has dealt with similar ITAs in MISO where MRES is a party, and in other instances where MRES is not a party. In those prior situations, MRES transmission staff has urged the parties to the ITA ensure they understand the limitations to the ITA, specifically that the ITA or lack of NITS may not allow for MISO market purchases without acquiring additional transmission service (firm or non - firm). Based on the knowledge of MRES of the ITA, and experience with similar situations, MRES believes that GRE does have a legitimate concern about the ITA not providing for HUC to make market purchases for sources not defined in Exhibit C in the ITA. MRES is not aware of any FERC complaint specifically related to an ITA arrangement; however, NITS is the basis for facilitating energy transactions. 2. Alternatives — MRES staff believes that while GRE would show some patience with regard to allowing HUC to work through a decision on what to do about the concerns raised, GRE will likely grow impatient in the coming months. Based on some very limited discussions about the timing of making a decision and potentially making changes, MRES believes GRE may allow HUC, until the beginning of the year, to make the change to NITS; but, if a status quo approach is chosen by HUC, GRE would likely start the necessary internal actions to pursue resolution much sooner. In other words, while GRE may wait for HUC to take NITS starting January 1, 2011, if HUC chooses a status quo approach, they would likely want that decision from HUC in the coming weeks. a. Status Quo — In this alternative, HUC could chose to make no changes to the way it is transacting in the MISO market. This would require GRE to take some kind 2 of action. MRES staff has not done any detailed analysis as to timing of either of the alternatives, nor has MRES staff attempted to project an outcome as to the success of GRE's potential pursuit of a remedy. If the status quo alternative is pursued, there is a higher probability that GRE will not be supportive in making any changes to the current transmission arrangements or any other issues that may arise in the near future. While this is certainly a business decision, an approach by HUC of status quo could damage HUC's relationship with GRE in the long run. For example, if HUC chose the status quo and waited for GRE to pursue other remedies, like a complaint to FERC or through the arbitrator process in the ITA against HUC, GRE could take an aggressive position in reviewing the HUC transmission cost information in the Attachment O, or perhaps not be supportive in HUC's pursuit of NITS (potentially significantly limiting HUC's ability to gain access to the MISO market for economy purchases) by not allowing the existing GFA to be canceled or not being cooperative in the MISO process to become a NITS customer. i. GRE could pursue arbitration as provided for in the ITA (Article 7) — With the requirement that any dispute be resolved via an arbitrator selected through the American Arbitration Association, it seems highly unlikely that GRE would attempt to reach resolution under the ITA due to the fact this is a complicated transmission tariff issue. HUC may be better served by pursuing this alternative, in my opinion, as the arbitrator is more likely to provide a favorable ruling than a FERC complaint due to the fact that these are complicated issues and an arbitrator likely wouldn't have experience in them. ii. GRE could pursue a complaint at FERC — GFA issues have been brought to FERC multiple times throughout the past six years, with FERC becoming increasingly inflexible in dealing with the GFA and how the GFA could potentially limit the ability of the market to function properly. b. Convert to Network Service — While this alternative does seem to be relatively straight forward, in past experiences MRES staff has had, it is critical that the existing MISO transmission owner (TO) (GRE in this case) be supportive when ,working with MISO to convert the service being provided under the GFA to NITS. Without support, there are numerous issues that could arise that have the potential to cause delay, increase the cost of converting the service (potentially requiring transmission studies), or potentially limit access to the MISO market due to some unknown physical transmission limitation not directly the responsibility of HUC. 3 If HUC chooses to pursue this alternative, there are three possible alternatives available to pursue to limit the financial impact to HUC due to the additional transmission costs being incurred. Each of the alternatives would provide for recognition for RUC's existing transmission assets resulting in offsetting a portion of the transmission charges to HUC. In each of the methods, HUC would complete an Attachment O for review by MISO. i. Pursue membership as a MISO TO directly — This alternative is the most direct method of receiving revenue for any transmission facilities. MRES is pursuing this method due to the need to get regional cost sharing for our planned transmission investments and our desire to actively participate in regional transmission development. In addition, while MRES cannot specifically identify any limitations for recovery of existing transmission investments, MRES would prefer to be an owner, and not be considered a second class citizen. ii. Pursue network credit via Section 30.9 of the MISO tariff — This method is still relatively new, only being utilized by some transmission customers in the MidAmerican Energy Company (MEC) transmission pricing zone in Iowa for about one year. This alternative does appear to be reasonable given that the TO is a cooperative and a responsive TO. GRE has indicated it is planning to make a filing to FERC in the next few weeks to make the needed changes to their Attachment O to allow for Willmar and any others, as may be appropriate in the future, to recover their transmission revenue requirement. It is presumed regional cost sharing would not be provided for in this method. GRE indicated it would charge a nominal administrative fee for processing of the credit. It isn't expected to be a significant cost, only a few hundred dollars a month at most. iii. Assign operational control to an existing MISO TO — This method is still relatively new as well, only being utilized by Cedar Falls in the MEC transmission pricing zone in Iowa for a few smaller transmission owners for about one year. It is the understanding of MRES that Central Minnesota Municipal Power Agency (CMMPA) is also doing this for some of its members. This alternative does appear to be reasonable given Cedar Falls is a cooperative and a responsive TO. This method would require an agreement to assign operational control over to the existing MISO TO who subsequently turns over operational control to MISO. It would also require a revenue sharing agreement with that same MISO TO. MRES is currently pursuing this alternative with one of its members. MRES anticipates this being completed by December 1, 2010. MRES would be willing to consider this for HUC, if desired. It is unclear 4 whether or not regional cost sharing could be utilized for new investments by the entity assigning operational control to an existing TO. iv. Other — There are potentially other alternatives; for example, a lease agreement with another MISO TO. It is expected that this would be similar to assigning operational control, but could cause other concerns about lag in cost recovery, and potential review by FERC of any lease expenses incurred by the MISO TO. This does not appear to be a reasonable alternative at this point. 3. Recommended Actions a. Update Attachment O Analysis completed in 2007 — MRES intends to send a data request to HUC by September 15. Analysis should be completed a couple weeks after receipt of information by MRES. MRES would suggest that HUC not wait to make a decision as to what alternative to pursue while waiting for the final Attachment O information to be finalized. b. HUC decision on how to respond to GRE concerns — MRES is not making a recommendation as to what alternative to take, but recommends that HUC keeps GRE informed as to your decision making process. 5 MISO TRANSMISSION FACILITIES ASSIGNMENT AGREEMENT This MISO Transmission Facilities Assignment Agreement ( "Agreement ") is dated as of , 2011, and is by and between the Hutchinson Utilities Commission of Hutchinson, Minnesota, a municipal corporation of the State of Minnesota ( "Hutchinson "), and Missouri Basin Municipal Power Agency d/b /a Missouri River Energy Services, a body politic and corporate organized under the laws of the State of Iowa and existing under the intergovernmental cooperation laws of the States of Iowa, Minnesota, North Dakota and South Dakota ( "MRES "). Hutchinson and MRES are sometimes referred to singly as "Party" and collectively as "Parties ", with respect to the intent to assign operational control of qualifying transmission facilities under the terms and conditions as follows: Assignee: MRES Assignor: Hutchinson Governing Agreements: The Midwest Independent Transmission System Operator, Inc. ( "MISO ") Transmission, Energy and Operating Reserve Markets Tariff ( "Tariff'), effective March 1, 2005 and subsequent revisions; Transmission Owner Agreement ( "TO Agreement ") between MRES and MISO dated August 24, 2007; and future MISO Revenue Sharing Agreement for the GRE Zone and Xcel Zone, to be negotiated and implemented by the Parties. Contract Term: This Agreement shall become effective as of the later of April 1, 2011 or the date that Hutchinson enters into a Network Integrated Transmission Agreement with MISO adding Hutchinson as a network customer. The initial term of this Agreement shall expire on May 31, 2019. This Agreement shall automatically renew for additional periods of one (1) year unless either Party gives written notice to the other Party of its intention to terminate this Agreement not less than one (1) year prior to the end of the original term or any extension thereof unless mutually agreed otherwise. Transmission Facilities: Transmission facilities operated at 115 kV and 69 kV integrated into the GRE rate zone of MISO, which integrated facilities are more fully set forth on Attachment "A" (the "Hutchinson Transmission Facilities "). Assignment: Hutchinson does hereby transfer operational control of the Hutchinson Transmission Facilities, as set forth in Attachment "A ", to MRES during the term of this Agreement and any renewal terms. Hutchinson shall retain physical control of the Hutchinson Transmission Facilities along with the obligations to repair, maintain and insure these facilities in accordance with good utility practices. MRES has no liability for, and by execution of this agreement assumes no liability for, the Hutchinson Transmission Facilities. Reassignment: Hutchinson acknowledges and agrees that MRES will fully reassign and convey operational control of qualifying transmission facilities to MISO in accordance with MISO requirements and Federal Energy Regulatory Commission ( "FERC ") law and policy. NERC Compliance Responsibility: Hutchinson retains all responsibilities to comply with the North American Electric Reliability Corporation ( "NERC ") rules and regulations. Designated MISO Transmission Owner ( "TO ") Collection of Revenues: Hutchinson hereby appoints MRES as its MISO TO agent for all purposes required under the TO Agreement and for protesting or contesting, on its behalf, any errors in billing or related matters. On its behalf, Hutchinson authorizes MRES to obtain rate recovery and revenue distribution from MISO and other TOs as necessary. Disbursement of Revenues Received: MRES shall, after collecting reasonable fees and costs for its services and those of necessary engineering and legal consultants and subject to any other relevant agreements with Hutchinson (including the Transmission Owner Revenue Sharing Services Agreement between MRES and Hutchinson dated the same date hereof), disburse the revenues received from MISO and other TOs for the use of the Hutchinson Transmission Facilities to Hutchinson in an equitable manner. Other MISO Charges: Hutchinson shall be responsible for and reimburse MRES for any other miscellaneous MISO charges reasonably allocable to Hutchinson, which MRES may initially pay on Hutchinson's behalf, including but not limited to administrative and scheduling charges associated with the Hutchinson Transmission Facilities. Hutchinson shall also be responsible for and reimburse MRES for Hutchinson's allocable share of MRES costs incurred in performing it's TO agent function including all costs incurred under the TO Agreement with MISO. The terms and conditions in this Agreement shall remain in effect for the term of the transactions described herein. MRES as to its signatory and Hutchinson as to its signatory each hereby represents and warrants that the person executing this Agreement on its respective behalf is duly authorized to do so, and that, by each execution set forth below, such party is hereby duly and lawfully bound by this Agreement. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed on the day and year set forth below. MISSOURI BASIN MUNICIPAL POWER AGENCY d /b /a MISSOURI RIVER ENERGY SERVICES Title HUTCHINSON UTILITIES COMMISSION Title 2 ATTACHMENT A TO TRANSMISSION FACILITIES ASSIGNMENT AGREEMENT Hutchinson Utilities Commission owns transmission facilities operated at 115 kV and 69 kV integrated in to the GRE and Xcel rate zones of the Midwest Integrated Transmission System Operator, as follows: Those transmission facilities to be assigned are specifically identified as: Sources of Evidentiary Information: Date: , 2011 By: , General Manager A -1 Rest Periods Employees may take one 15- minute paid rest period during each four -hour work period. One Brest periods is taken in the morning and the other rest period is taken in the aftemoon.afe taken during the second and third houfs and between the simth and seventh hotws of the workda�-. During the summer-, the aftemeen rest period shall be taken when the Direeter- deems it Rest periods shall not be cumulative and shall not be utilized to compensate for other absences. PILOT Verbiage for Billing Insert The Hutchinson Utilities Commission believes it is important that you, the customer, understand that a portion of your payment is transferred to the City of Hutchinson to support the City's General Fund. Effective November 29, 2006, pursuant to Resolution 174 and the Hutchinson Utilities Commission By- Laws, Hutchinson Utilities Commission pays the City of Hutchinson 2.75% of its gross operating revenue. Hutchinson Utilities Commission refers to this as Payment in Lieu of Taxes or "PILOT ". This money is part of the rate structure that each customer is billed for their electric and natural gas. Sales tax is not included in this calculation. At the bottom of your bill is a calculation to reflect the amount of money transferred to the City of Hutchinson. As mentioned, the 2.75% has been included in the rates since 2006. in e4eet, Tthis is not a rate increase. You Are Invited for the Hutchinson Utilities Commission Annual Breakfast Meeting Wednesday, April 13, 2011 7:00 to 8:oo a.m. Location: Hutchinson Utilities Commission 225 Michigan Street SE Hutchinson, Minnesota Agenda . 2oo6 & 2010 Rate Comparisons Fuel Cost Adjustment Natural Gas Supply Diversity Power Cost Adjustment Electric Supply Diversity . Energy Conservation; Dollars Allocated to Large Commercial and Industrial Accounts Please RSVP by April 1, zo» Kim Koski: 320- 234 -0501 or kkoski@ci.hutchinson.mn.us ��jCNllfo+ dTlllilEg W� „f R RIVER URI MY 'wR1