11-25-2015 HUCMMINUTES
Regular Meeting — Hutchinson Utilities Commission
Wednesday, November 25, 2015
Call to order — 3:00 p.m.
President Hanson called the meeting to order. Members present: President Anthony
Hanson; Vice President Donna Luhring; Secretary Mark Girard; Commissioner Monty
Morrow; Commissioner Dwight Bordson; Attorney Marc Sebora; General Manager
Jeremy Carter.
Guests: Miles Seppelt and Bob VVendorff.
1. Conflict of Interest
Commissioner Bordson declared a conflict of interest in voting on the Consent
Agenda as he is listed in the payment of bills.
2. Approve Consent Agenda
a. Approve Minutes
b. Ratify Payment of Bills
A motion was made by Secretary Girard, seconded by Commissioner Morrow to
approve the Consent Agenda. Motion was unanimously carried.
3. Approve Financial Statements
GM Carter presented the financial statements. After discussion, a motion was
made by Vice President Luhring, seconded by Commissioner Bordson to approve
the financial statements. Motion was unanimously carried.
4. Open Forum
5. Communication
a. Economic Development — Miles Seppelt
i. Miles presented the Economic Development Activity Report to include:
strategies on current business retention and expansion; attracting new
businesses; marketing efforts; and programs to integrate school and local
businesses.
b. City Administrator — Matthew Jaunich
i. Continuing to work on the 2016 budgets.
ii. There is a Truth in Taxation hearing next Thursday.
iii. The ribbon cutting and commissioning of the City solar project will be next
Wednesday at 11:00 a.m.
iv. Administrator Jaunich extended a thank you to Jeremy Carter and the HUC
staff in helping the City Parks Department set up the holiday lights at Library
Square.
1
c. Divisions
i. Randy Blake —
1. With the recent mechanic resignation, HUC is down from 5 to 4
mechanics. This position will not be filled at this time.
2. IHI presented information to HUC on battery storage last week.
3. Working on specifications for the Plant 1 heating capital expenditure
project in 2016.
ii. Dave Hunstad —
1. Finishing up School Road and Roberts Road projects.
2. HUC's crew is helping the City of Brownton with directional boring, at
their request.
iii. John Webster -
1 . Met with Heartland Corn, City of Fairfax and New Ulm. Heartland Corn
wants to take capacity off Fairfax/New Ulm and come directly to HUC
along with requesting more capacity than they have at New Ulm. An
agreement has been submitted to Heartland Corn. HUC extended an
offer to New Ulm to reduce their capacity agreement by the same
amount.
2. Expecting the 3M transport agreement to be approved next month.
3. Working on the HTI amendment to transfer their contract to TDK.
4. Heartland Corn requested an operations and maintenance agreement
with HUC.
5. Working on the Greater Minnesota Gas and United Farmers Cooperative
agreements.
iv. Jared Martig -
1. Attended the CIP summit at MMUA with Jeremy Carter and Nick Nelson.
2. Will be reviewing the BS&A software system with his department and
discuss the consideration of migrating to that system in 2016.
d. Legal — Attorney Sebora
i. Nothing to report.
e. General Manager — Jeremy Carter
i. Dave Hunstad and GM Carter met with a vendor regarding potential solar
projects.
ii. Working with MMUA on draft documents to be used for municipalities in the
event of increased solar projects in Hutchinson.
iii. Meeting with Mark Sebora, Dan Lang and MIRES next Monday to discuss
HUC's base load contract.
iv. Finalizing the 2016 budget and the capital expenditure documentation.
v. Working with Brenda Ewing on the job evaluation and compensation study.
Recommendations will not be made before the 2016 budget is approved.
They may be made the first quarter of 2016.
vi. GM Carter and John Webster have met regarding pack gas.
2
f. HR Director — Brenda Ewing
i. Nothing to report.
6. Policies
a. Review Policies -None
b. Approve Changes
i. Explanation of Billing Procedure
The changes were made to add clarity and clean up the policy language.
ii. Use of Telephone and E-mails
This policy language was omitted from the personnel policies since HUC
has other guiding policies or documents that address these areas
(Employee Conduct and Discipline sections of the employee handbooks, IT
policy and the APPA safety manuals).
iii. Personal Visitors and U.S. Mail
This policy language was omitted from the personnel policies since HUC
has language in the Discipline section of the employee handbooks that
guide employee behavior as it relates to personal or non-HUC work related
matters.
iv. After Hours Reconnection Policy
The changes were made to add clarity and clean up the policy language. In
addition, the holidays HUC observes were added to the policy for customer
informational purposes.
v. Landlord Acknowledgement
The changes were made to add clarity and clean up the policy language.
vi. Inserts with Utility Bills
The changes were made to add clarity and clean up the policy language.
After discussion, a motion was made by Secretary Girard, seconded by Vice
President Luhring to approve policy changes. Motion was unanimously carried.
(Changes attached.)
3:58 — at this time Attorney Sebora left the meeting.
7. Unfinished Business
a. Discuss Updated 2016 Preliminary Budget
GM Carter gave a presentation on the preliminary budget review summary for
both the electric and gas divisions. The 2016 budget will be scheduled for
approval at the December 16 regular commission meeting. (Summary
attached.)
3
8. New Business
a. Approve 3M Natural Gas Purchase Agreement
John Webster presented the 3M Natural Gas Purchase Agreement which
allows 3M to purchase their natural gas in greater than monthly increments.
After discussion, a motion was made by Commissioner Morrow, seconded by
Secretary Girard to approve the 3M Natural Gas Purchase Agreement. Motion
was unanimously carried. (Agreement attached.)
b. Declare HUC Employee Recognition/Holiday Dinner as an Open Meeting on
Friday, December 11 at 6:00 p.m.
A motion was made by Secretary Girard, seconded by Vice President Luhring
to declare HUC's employee recognition/holiday dinner as an open meeting on
Friday, December 11 at 6:00 p.m. Motion was unanimously carried.
c. Approve Rescheduling the December 30, 2015 Regular Commission Meeting
to Wednesday, December 16, 2015 at 3:00 p.m.
A motion was made by Commissioner Morrow, seconded by Secretary Girard
to reschedule the December 30, 2015 regular commission meeting to
Wednesday, December 16, 2015 at 3:00 p.m.
d. 2016 Commission Officers
President Hanson reported the HUC by-laws prevent him from being appointed
as president again therefore the Board will start succession planning in
preparation for the reorganization of officer positions in January 2016.
9. Adjourn
There being no further business, a motion was made by Vice President Luhring,
seconded by Commissioner Bordson to adjourn the meeting at 4:27 p.m. Motion
was unanimously carried.
Mark Girard, Secretary
ATTEST: `160 -�.
Anthony Hans n, Presi Jent
lI
Explanation of Billing Procedure
A bill for services is sent to the address provided by the customer approximately 3 to 5
days after the meters have been read. The customer t4e-R has approximately 10 days to
pay the bill in full by the stated due date. In accordance with state law, the City of
Hutchinson and its related entities shall have 35 days to pay bills in full.
Bills paid after the due date will incur the following charges:
• A 1 % per month late payment charge on any unpaid balance.
• A $15 processing fee.
A late notice warning of pending disconnection is mailed WhiGh allows the customer
and provides the customer with approximately 10 to 20 days to pay the bill or contact
the Customer Service Department to make other arrangements. Examples of other
arrangements may include agreement +„ establishing a budget payment _plan or
payments by other agencies on the customer's behalf. Failure to make payment by
the stated date and time will be considered a violation of the notice of pending
disconnection. If full payment or other arrangements have not been made by the
deadline, HUC personnel are sent to the meter location to disconnect utility services
(see disconnection of services section).
• A notice will also be included on the next month's billing warning of pending
disconnection;. sesteme Customers should refer to previously sent
disconnection letter for details of date and time of disconnection.
IT IS THE CUSTOMER'S RESPONSIBILITY TO PAY BILLS ON TIME AND IN
FULL.
A dishonored payment will be assessed a $30 processing fee.
A dishonored payment made to avoid disconnection, to get reconnected, or for a
deposit for service will be assessed a $30 processing fee; plus:
a. A $40 trip charge to deliver a door hanger, a notice advising thug
customer they have 24 hours to make the full notice_payment good with.
Acceptable forms of payment include cash, money order or credit card.
b. A $40 trip charge to disconnect service if payment is not received W44 ill
the form of cash, money order or credit card.
C. A $40 trip charge to reconnect service, with payment shall made w+tI4
in the form of cash, money order or credit card.
IT IS THE CUSTOMER'S RESPONSIBILITY TO KEEP HUC FULLY ADVISED OF
ANY CHANGE OF ADDRESS.
EXEMPT
AMME
NON-EXEMPT
RIP
EXEMPT
Employees aFe diseawaged 4am having personal maii deliVeFed to 14UC.. All ineoming mail is-
NON-EXEMPT
Employees are diseour-a" bed 4E)I.l
.-10.-0.7 paFt of a rest period o,- kineh Po..;.,.J
After Hours Reconnection Policy
We after hour FeGE)RReGt*ORS Will be de -Re fFem &00 p.m. to 8:00 a.m. oR weekends and
holidays neF fFE)M 9:00 p.m. to 7�30 a.m. IVIE)Rday thmugh Friday, eXGIWdiRg .
No after hours reconnections will be done from 9:00 p.m. to 7:30 a.m. Monday
through Friday nor from 9:00 p.m. to 8:00 a.m. on weekends and holidays.
After hours reconnection fees:
.{ $150 Reconnection Fee will be charged for any reconnection that is done:
• From 4:00 p.m. to 9:00 p.m. on Monday through Friday,
• From 8:00 a.m. to 9:00 p.m. on Saturdays
A $200 Reconnection Fee will be charged for any reconnection that is done:
• From 8:00 a.m. to 9:00 p.m. on Sundays or Holidays
Payments must be made prior to reconnecting utilities. Credit card payments will be
accepted from 7:30 a.m. to 4:00 p.m. Monday through Friday, excluding holidays.
Holidays include the following: New Year's Day, Martin Luther King Day,
President's Day, Memorial Day, Independence Day, Labor Day, Veterans Day,
Thanksgiving Day, Christmas Eve Day, and Christmas Day.
Landlord Acknowledgement
A signed Landlord Acknowledgement provides the following:
• AGkRowledges who Confirmation and documentation of the landlord/owner is.
• Requests HUC to provide utility service to tenants.
•11 nderstandl& The understanding that the tenant will be responsible for all
utilities utility costs between the date service is required by the tenant and the
date the tenant requests read-out of services.
• The landlord/owner Aagrees to be responsible for and t.�) pay all utility charges
from the read-out date given by tenant until services are established with a new
tenant.
UndeFstand The understanding that failure to pay these charges could result in
disconnection of electric service. HUC wi4 J,, not be responsible for any damages
alleged to be caused by service disconnection. Disconnection/reconnection fees
apply.
• The Liandlord/owner has the option to saN contact HUC to assure that
tenant has put the utility service in the tenant's name.
• The -landlord /owner can request the disconnection of services as long as the
account is in the landlord /owner's name. Disconnection/reconnection fees
apply.
Inserts with Utility Bills
Generally, 9_ my material which applies directly to HUC business may be inserted into
monthly utility :)ifl menthly erivelepes mailings;_ uRless HUC may approve the
inclusion of gives prior appreval fer other items, as appropriate.
�^�SCHIJyg��
Hutchinson Utilities Commission
UTILITIES
2016 Preliminary Budget Review
Wednesday, November 25th, 2015
3:00 p.m.
e4
2016 Summary Budget Information
Combined Divisions
Revenues: $40,428,334
Expenses: $39,093,656
Net Profit: $1,334,678
Electric Division
Revenues: $26,589,758
Expenses: $27,593,394
Net Loss: $1,003,636
❑ Gas Division
13 Revenues: $$13,838,576
o Expenses: $11,500,262
o Net Profit: $2,338,314
Electric Division Revenue Budget Highlights
UT/CITIES
❑ 2016 Retail Customer Sales - $24,344,238
Residential sales — $51030,722
L Small general sales — $1,581,216
o Large general sales — $7,076,630
o Industrial sales — $10,511,135
o Street Lighting - $144,535
■ Net Reduction in retail customer sales ($226,000)
❑ Sales for Resales - $1,907,820
Increase of — $914,000 over 2015 budget
Increase in capacity sales - $381,500
Est. increase in energy contract sales over market sales - $532,500
❑ Other Revenues - $337,700
a Additional customer charges - $280,200
13 Interest Earnings - $57,500
Electric Division Revenues
2016 ELECTRIC BUDGETED REVENUES 2015 ELECTRIC BUDGETED REVENUES AAq
Other
Revenue,
Sales for $280,200, Interest Residential,
Resale, 1 % Earnings, $5,030,722 ,
$1,97 7,820, $57,500,0% 19%
Street Small General
Lighting, $1,581,216 ,
$144,535 , 16%
1%
Industrial,
$10,511,135 ,
39%
rge
eral,
5,630,
Street
Lighting,
$146-739
1
Sales for Other Interest
Resale, Revenue, Earnings,
$994'000,$280,200, $32,500,0%
0
4% 1 ° Residential,
-\\
$5,051,735 ,
19%
Industrial,
$10,502,648,
41%
I General
,651,099
,6%
I,
$7,218,383,
28%
350,000,000
300,000,000
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
Electric Consumption History
Annual KWHR's Sold by Class
2008 2009 2010
2011 2012 2013 2014
I
YTD 2015 Proj. YE
2015
Small General Service is Residential Large General Service 2, Industrial Total
.�tCHINS?'i
Electric Division Expense Budget Highlightshll h
is
�/TlLITIE.S
Continued reduction in staffing levels
Overall reduction in personnel costs of $16,000
Benefit Premiums
Health Ins, LTD, Basic Life & AD & D, voluntary life — 0%
Dental 7% increase (Inc. $2,400)
PILOT — $754,469 (2.75%)
Increase in Pilot expense of $370,078
❑ GRE/MISO Transmission Expense — (Inc. $340,000)
iLi Phase-out of GRE settlement agreement
13 4.5%-6.5% GRE Transmission costs
13 Purchasing more power off the market
❑ MRES Transmission Expense — (dec. of $903,568)
MIRES is no longer requesting transmission services from the SPP market
MIRES expects to save MISO members $9 million a year in future transmission fees
MIRES expects to spend 2 million in purchasing capacity/energy for MISO members
in the MISO market in 2817
MIRES anticipates selling excess capacity/energy in SPP market in 2018 to offset
costs for MISO members in 2018.
13 2017 HUC budget Impact - increase in MIRES capacity/energy costs of $ OOK-300K
over the 2016 budget & potential 3% energy rate increase in 2017 - —$323K
OElectric Division Expenses
2016 ELECTRIC BUDGETED EXPENSES
Depreciation,
$2,700,000 _
9%
Pilot/Rdway
Lighting,
$899,004,
3%
Transmission,
$1,875,000
7%
Purchasedl
Power,
$13,874,070,
50%
CIP Program,
$320,000,
1 %
Operating
Materials,
$347,950,
i"
1%
Operating
Expenses,
-----$789,713
,
3%
$1,988,770,
7%
Personnel
Costs,
$4,798,888,
18%
2015 ELECTRIC BUDGETED EXPENSES
Depreciation,
$2,700,000,
10%
Transmission,
$1,535,000
5% \
Purchased
Power,
$14,862,607,
53%
Pilot/Rdway
Lighting,
$531,130,_
2%
CIP Program,
$336,400,
°Operating
/o
1 .
Materials,
$347,200,
1%
/Operating
Expenses,
$741,683,
3%
Amortizaton,
$262,972,
1%
Personnel
Costs,
,4,814,550 ,
17%
em.
$1,873,325 ,
7%
�ptCH^INSOi'
2016 Electric Division PreliminaryBudget
�rrunEs
ELECTRIC DIVISION
Dollar
% change
YEAR
2012 Actual
2013 Actual
2014 Actual
2015 Budget
2016 Budget
Inc/(Decr.)
2015/2016
REVENUES:
Residential
5,202,559
5,176,489
5,162,073
5,051,735
5,030,722
(21,013)
-0.42%
Small General
1,723,013
1,646,365
1,612,428
1,651,099
1,581,216
(69,883)
-4.23%
Large General
7,541,929
7,256,720
7,175,480
7,218,383
7,076,630
(141,753)
-1.96%
Industrial
10,763,758
10,375,605
11,001,396
10,502,648
10,511,135
8,487
0.08%
Street Lighting
148,968
143,002
139,533
146,739
144,535
(2,204)
-1.50%
Sales for Resale
1,618,582
891,276
678,293
994,000
1,907,820
913,820
91.93%
Other Revenues
609,709
376,620
339,503
280,200
280,200
-
0.00%
Interest Earnings
28,126
37,970
14,860
324
57,500
25,000
76.92%
TOTAL REVENUES: 27,636,643 25,904,047 26,123,567 25,877,304 26,589,758 712,454 2.75%
EXPENSES:
Personnel Costs
4,096,466
4,502,229
4,495,713
4,814,550
4,798,888
(15,662)
-0.3%
Purchased Power
14,823,407
13,342,967
13,850,238
14,862,607
13,874,070
(988,537)
-6.7%
Transmission
969,927
1,289,968
1,512,071
1,535,000
1,875,000
340,000
22.15%
Generator Fuel/Chemicals
841,529
1,179,687
1,491,754
1,231,492
1,341,604
110,112
8.94%
Depreciation
2,289,199
2,612,388
2,744,769
2,700,000
2,700,000
-
0.00%
Transfers (Electric/City)
Operationg Expense
1,838,871
2,280,695
2,012,000
2,278,757
1,123,897
1,812,568
1,026,224
1,796,981
1,401,635
1,569,185
375,411
(227,796)
36.58%
-12.68%
Debt Interest
51,918
47,416
40,532
38,013
33,013
(5,000)
-13.15%
TOTAL EXPENSES: 27,192,013 27,265,413 27,071,542 28,004,867 27,593,394 (411,473) -1.47%
NET PROFIT/(LOSS) $ 444,630 $ (1,361,366) $ (947,975) $ (2,127,563) $ (1,003,636) 1,123,927 -52.83%
Gas Division Revenue Budget Highlights
Retail Customer Sales - $8,612,023
Residential sales — $4,588,522
Commercial sales — $4,023,501
■ Net Increase in retail customer sales (—$631,395)
Contract Sales (3M & HTI) - $3,578,643
Decrease in revenue from contract customers ($455,636)
❑ Other Revenues - $1,647,910
o New Ulm Transportation Fees - $730,636
Electric Division Transportation Fees - $647
a Bond Premium - $185,608
Interest Income - $57,500
n Brownton operation/maintenance
,166
revenue - $27,000
Gas Division Revenues
z�
2016 GAS BUDGETED REVENUES 2015 GAS BUDGETED REVENUES
New Ulm, Electric Other New Ulm, Electric Other
$730,636, Transfer, Revenues, 725,100 , Revenues,
o $647,166, $27,000, $ Transfer, $27,000,
5 /0 0 ° 5% $641,833 , '
Industrial, 5 /0 0 /o Interest 5% 0% Interest
$3,578,643 , Earnings, Industrial, Earnings,
26% $57,500, $4,034,279 , $32,500,
1 % 30% 0%
BondI Bond
Premium, Premium,
$185,608, $185,608,
1% 2%
Residential, Residential,
Commercial, $4,588,522 , $4,258,334 ,
$4,023,501 , o Commercial, 31%
29% 33 /o $3,722,294 ,
27%
1,600,000
1,400,000
Gas Consumption History
Annual MCF's Sold by Class
2010 2011 2012 2013 2014 YTD 2015 Proj. 2015
Commercial 0 Residential Industrial ■ Total
S
Gas Division Ex ens B 'p e udget Highlights
Continued reduction in staffing
Overall reduction in personnel
levels
costs of $92,876
Benefit Premiums
Health Ins, LTD, Basic Life & AD
Dental 7% increase (Inc. $400)
& D, voluntary life — 0%
km: Retail customer gas purchases — $4,161,898
Increase in purchases of $97,584
Contracted customers gas purchases — $3,052,857
Decrease in purchases of $463,253
PILOT — $406,252 (2.,75%)
Increase in expense of $199,272
7
Gas Division Expenses
2016 GAS BUDGETED EXPENSES
Debt Interest,
$781,500 ,
7%
Depreciation,
$1,056,000,
9% --,\
Pilot, Operating
$406,252, Expenses,
4% $400,950,
3%
Operating
Materials,
$242,050,
2%
Purchased
Gas,
$7,214,755 ,
63%
Personnel
Costs,
$1,259,800 ,
11%
CIP Program,
$138,955,
1%
2015 GAS BUDGETED EXPENSES
Pilot,
Depreciation $206,980 ,
Debt $1,056,000, 2%
Interest, 9%
$825,500,
7%
Purchased
Gas,
$7,580,424 ,
64%
Operating
Expenses,
$397,522,
3%
Operating
Materials,
$199,000,
2%
Personnel
Costs,
$1,352,676 ,
11%
CIP
Program,
;189,628 ,
2%
CHINS&
2016 Gas Division Preliminary Budget
UTlLIT1ES
GAS DIVISION
Dollar
% change
YEAR
2012 Actual
2013 Actual
2014 Actual
2015 Budget
2016 Budget
Inc/(Decr.)
2015/2016
REVENUES:
Residential
3,697,538
4,626,722
4,706,389
4,258,334
4,588,522
330,188
7.75%
Commercial
3,150,925
3,729,790
3,853,504
3,722,294
4,023,501
301,207
8.09%
Contracted Industrial
2,826,424
3,646,509
6,066,290
4,034,279
3,5781643
(455,636)
-11.29%
NU Transportation
755,472
785,149
808,575
725,100
730,636
5,536
0.76%
Electric Division Transfer
Other Revenues
1,100,000
346,215
1,100,000
244,016
700,000
244,212
641,833
212,608
647,166
212,608
5,333
-
0.83%
0.00%
Interest Earnings
28,126
37,970
14,860
32
571500
25,000
76.92%
TOTAL REVENUES: 11,904,699 14,1701156 16,393,829 131626,948 131838,576 211,628 1.55%
EXPENSES:
Personnel Costs
1,201,654
1,259,705
1,274,037
1,352,676
1,259,800
(92,876)
-6.9%
Purchased Gas
6,400,838
7,433,522
9,986,448
7,580,424
7,214,755
(365,669)
-4.8%
Depreciation
1,043,234
1,027,662
1,002,804
1,056,000
1,056,000
-
0.00%
Transfers (City)
397,853
491,077
605,176
206,980
4061252
199,273
96.28%
Operationg Expense
720,352
643,804
660,167
786,150
781,955
(4,195)
-0.53%
Debt Interest
1,326,968
1,271,801
864,000
825,500
781,500
(44,000)
-5.33%
TOTAL EXPENSES: 11,0901899 12,127,572 141392,631 1118071731 11,500,263 (307,468) -2.60%
NET PROFIT/(LOSS) $ 813,800 $ 21042,584 $ 21001,198 $ 118191F217 $ 2,338,314 5191096 28.53%
�ptCHINSO
DUtilitiesHutchinson Commission
OTI L I?1ES
Questions?
Hutchinson
Utilities
Commission
225 Michigan Street
Hutchinson
Minnesota
55350
Anthony Hanson
President
Donna Luhnng
Vice President
Mark Girard
Secretary
Monty Morrow
Commissioner
Dwight Bordson
Commissioner
Jeremy Carter
General Manager
Tel 320-587-4746
Fax 320-587-4721
AGREEMENT
THIS AGREEMENT IS MADE BY AND BETWEEN HUTCHINSON
UTILITIES COMMISSION, HEREINAFTER "HUC" AND MINNESOTA
MINING AND MANUFACTURING CO., HEREINAFTER "3M", ON THE
FOLLOWING TERMS AND CONDITIONS.
WHEREAS, 3M DESIRES TO PURCHASE, AND HUC SHALL
PROVIDE, FIRM NATURAL GAS COMMODITY FOR USE AT 3M'S
HUTCHINSON NORTH AND SOUTH PLANTS; AND,
WHEREAS, 3M DOES ACKNOWLEDGE THAT HUC WILL, IN
RELIANCE UPON THIS AGREEMENT. ENTER INTO AN AGREEMENT
TO PROVIDE FIRM NATURAL GAS COMMODITY.
WHEREAS. 3M SHALL HAVE A CHOICE OF PRICING
MECHANISMS INCLUDING BUT NOT LIMITED TO; MONTHLY INDEX,
DAILY INDEX, FIXED PRICE AND VARIOUS STRUCTURED PRODUCTS,
FOR SUPPLY PURCHASES FROM HUTCHINSON.
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;
1 . HUTCHINSON'S SOLE OBLIGATION UNDER THIS AGREEMENT
IS TO PROVIDE NATURAL GAS COMMODITY 7'O 3M.
2. HUC SHALL PURCHASE NATURAL GAS QUANTITIES AS
DIRECTED BY 3M.
3. ALL NATURAL GAS PURCHASES SHALL BE PRICED AT THE
NORTHERN, VENTURA, INDEX.
PAGE 1 OF 5
4. 3M SHALL DIRECT NUC TO PURCHASE STRUCTURED PRODUCTS BASED
ON CONTRACT TERMS AS SPECIFIED BY 3M. CONTRACT TERMS SHALL
CONSTITUTE CONTRACT ORIGINATION DATE, DELIVERY PERIOD START
DATE, DELIVERY PERIOD END DATE, TOTAL QUANTITY PURCHASED AND
CONTRACT PRICE.
5. ALL NATURAL GAS PURCHASED BY HUC FOR 3M SHALL BE DELIVERED
ON THE NORTHERN BORDER PIPELINE TO THE TRIMONT/TRIMONT
DELIVERY POINT.
6, HUC SHALL TRANSPORT ALL 3M QUANTITIES FROM THE HUC PIPELINE
TRIMONT/TRIMONT RECEIPT POINT TO THE HUTCHINSON 3M PLANTS
AS PER THE "FIRM GAS AND TRANSPORTATION AGREEMENT"
CURRENTLY IN PLACE, AND RENEWED ANNUALLY, BETWEEN HUC AND
3M.
7. HUC SHALL PROVIDE TO 3M, FOR EACH NATURAL GAS PURCHASE, A
"TRANSACTION CONFIRMATION" AS PROOF THAT THE PURCHASE WAS
COMPLETED. THE "TRANSACTION CONFIRMATION" SHALL PROVIDE
DETAILS OF THE NATURAL GAS PURCHASE SUCH AS DELIVERY PERIOD
START DATE, DELIVERY PERIOD END DATE. TOTAL QUANTITY BY
DELIVERY POINT, DELIVERY POINT AND CONTRACT PRICE.
8. PAYMENT IS DUE FROM 3M, FOR THE NATURAL GAS COMMODITY
PURCHASE, AS PER THE "FIRM GAS AND TRANSPORTATION
AGREEMENT" CURRENTLY IN PLACE, AND RENEWED ANNUALLY,
BETWEEN HUC AND 3M,
9. HUC AND 3M AGREE THAT ALL NATURAL GAS PURCHASED FOR 3M
SHALL REMAIN THE PROPERTY OF HUC UNTIL SOLD TO 3M ON A
MONTHLY BASIS AS PER THE "FIRM GAS AND TRANSPORTATION
AGREEMENT" CURRENTLY IN PLACE, AND RENEWED ANNUALLY,
BETWEEN HUC AND 3M,
PAGE 2 OF 5
1 O. HUC SHALL NOT CONSUME, REDIRECT, SELL OR OTHERWISE DISPOSE
OF ANY QUANTITIES OF NATURAL GAS PURCHASED FOR 3M UNLESS
DIRECTED BY 3M TO DO SO, IN WRITING.
1 1 . IN THE EVENT THAT 3M NO LONGER HAS THE ABILITY TO TAKE THE
CONTRACTED NATURAL GAS COMMODITY PURCHASED UNDER THIS
AGREEMENT, DUE TO PLANT TEMPORARY SHUTDOWN. PERMANENT
CLOSURE, ETC., 3M SHALL TURN BACK TO HUC AN AMOUNT EQUAL
TO THE CONTRACTED QUANTITY, FOR A FINANCIAL ADJUSTMENT TO
BE MADE BASED ON A FORMULA EQUAL TO THE QUANTITY OF GAS
TO BE TURNED BACK BY 3M, MULTIPLIED BY THE DIFFERENCE
BETWEEN THE APPLICABLE CONTRACT PRICE AND THE GDD PRICE
FOR THE DAY. THE GDD PRICE MEANS THE GAS DAILY NNG
VENTURA INDEX FOR THE DAY OF DELIVERY FOR THE DELIVERIES TO
VENTURA.
IN THE EVENT MONTHLY QUANTITIES ARE TO BE TURNED BACK TO
HUC, THE SETTLEMENT FORMULA SHALL BE EQUAL TO THE
QUANTITY OF GAS TO BE TURNED BACK MULTIPLIED BY THE
DIFFERENCE BETWEEN THE APPLICABLE CONTRACT PRICE AND THE
INSIDE FERC FIRST OF THE MONTH NNG VENTURA INDEX FOR THE
MONTH IN CONSIDERATION.
IN THE EVENT MULTIPLE MONTHLY QUANTITIES ARE TO BE TURNED
BACK TO HUC, THE SETTLEMENT FORMULA SHALL BE EQUAL TO THE
QUANTITY OF GAS TO BE TURNED BACK MULTIPLIED BY THE
DIFFERENCE BETWEEN THE APPLICABLE CONTRACT PRICE AND THE
INSIDE FERC FIRST OF THE MONTH NNG VENTURA INDEX FOR
EACH MONTH IN CONSIDERATION, AS EACH MONTHLY INDEX SETTLES
FOR THE TERM OF THE TURN BACK. AS AN ALTERNATIVE, HUC WILL
PROVIDE ONE PRICE FOR THE MULTIPLE MONTHLY QUANTITIES AND,
IF ACCEPTABLE TO 3M, THE SETTLEMENT FORMULA WOULD BE
EQUAL TO THE QUANTITY OF GAS TO BE TURNED BACK OVER THE
PAGE 3OF5
MULTIPLE MONTHS MULTIPLIED BY THE DIFFERENCE IN THE
CONTRACT PRICE AND THE AGREED TO MULTIPLE MONTH PRICE
PROVIDED BY HUC.
12. THE TERM OF THIS AGREEMENT SHALL RUN CONGRUENT WITH THE
TERM OF THE `FIRM GAS AND TRANSPORTATION AGREEMENT"
CURRENTLY IN PLACE AND RENEWED ANNUALLY, BETWEEN HUC
AND 3M. THIS AGREEMENT SHALL.. REMAIN IN PLACE UNTIL.
CANCELLED BY BOTH PARTIES.
PAGE 4OF5
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:
TITLE: 'l'c/IT
DATE: I IZ5-11
MINNESOTA MINING &
MANUFACTURING
TITLE:
C
DATE: V
PAGE 5 OF 5