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01-02-2014 HUCMMINUTES Regular Meeting — Hutchinson Utilities Commission Thursday, January 2, 2014 (December Regular Meeting) Call to order — 3:01 p.m. President Bordson called the meeting to order. Members present: President Dwight Bordson, Vice President Anthony Hanson; Secretary Monty Morrow; General Manager Michael Kumm; Attorney Marc Sebora. Members absent: Commissioner Mark Girard Swearing in of New Commissioner — Donna Luhring Attorney Marc Sebora swore in the newly elected commissioner, Donna Luhring. 2. Approve Minutes of November 27, 2013 Regular and December 18, 2013 Special Meetings The minutes of the November 27, 2013 regular and December 18, 2013 regular meetings were reviewed. A correction was made to the November 27, 2013 regular meeting minutes, section Approve Bad Debt Write -Off, adding $4,316.12 as the total charge -offs for 2013. After discussion, a motion was made by Vice President Hanson, seconded by Secretary Morrow to approve the November 27, 2013 regular meeting minutes as amended and the December 18, 2013 special meeting minutes. Motion was unanimously carried. 3. Ratify Payment of Bills for November 2013 The November 2013 payables were discussed. A motion was made by Secretary Morrow, seconded by Vice President Hanson to ratify the payment of bills in the amount of $4,005,204.36 (detailed listing in payables book). Motion was unanimously carried. 4. Approve Financial Statements /Budget Year to Date Jared Martig presented the November 2013 financial statements /budget year -to- date. After discussion, a motion was made by Secretary Morrow, seconded by Vice President Hanson to approve the financial statements /budget year -to -date. Motion was unanimously carried. 5. Presentation on 2013 Conservation Improvement Program Nick Nelson, HUC Energy Conservation Administrator, gave a presentation on the 2013 Conservation Improvement Program. Information was based on the 2011 financial report. Future program plans include partnering with Missouri River Energy Services (MRES) at no charge to HUC as it is a benefit of being a member of MRES. (Presentation attached.) 6. Review Policies and Requirements Booklet GM Kumm presented the policies and requirements booklet, sections: • Landlord Acknowledgement • Inserts with Utility Bills • Inaccessible Utility Equipment /Meters • Identity Theft — "Red Flag Program" Discussion held regarding possible changes to the Landlord Acknowledgement if HUC considers implementing certification of outstanding accounts in the future. No changes were recommended. 7. Approve Changes to Exempt and Non - Exempt Handbooks GM Kumm presented changes to the exempt and non - exempt handbooks, sections: • Wage and Salary Information - Pay Period, Paydays • Payroll Deductions • Overtime Changes made to section Payroll Deductions were for clean -up purposes. No changes were recommended for sections, Wage and Salary Information — Pay Period, Paydays; and Overtime. A motion was made by Vice President Hanson, seconded by Commissioner Luhring to approve the changes to the exempt and non - exempt handbooks. Motion was unanimously carried. (Changes attached.) 8. Approve Changes to Parallel Generation Policy GM Kumm presented changes to the Parallel Generation Policy. The Board suggested adding alternative language on page 11, item #10 and page 5, item #10(c). After discussion, this policy was tabled until the January regular commission meeting. 9. Approve Changes to Policy on Payments of Hutchinson Utilities Commission Payables Jared Martig presented changes to the Policy on Payments of Hutchinson Utilities Commission Payables. The date was changed from 2013 to 2014 in the second to last paragraph. This is a part of HUC annual review of policies. A motion was made by Secretary Morrow, seconded by Commissioner Luhring to approve the changes to the Policy on Payments of Hutchinson Utilities Commission payables. Motion was unanimously carried. (Policy attached.) 10. Approve 3M Transportation Agreement John Webster presented the 3M Transportation Agreement explaining it is the same contract as last year. A motion was made by Vice President Hanson, seconded by Secretary Morrow to approve the 3M Transportation Agreement. (Agreement attached.) 2 11. Approve BP Operational Agency Agreement John Webster presented the BP Operational Agency Agreement explaining there was a decrease in the amount charged for swing gas and a reduced rate when purchasing from a third party. Also, a two year deal was negotiated versus a one year deal in the past. HUC should realize a savings of $3,000 - $5,000 annually. A motion was made by Vice President Hanson, seconded by Commissioner Luhring to approve the BP Operational Agency Agreement. (Agreement attached.) 12. Approve Changes to the Commercial /Industrial Deposit Requirement Vice President Hanson presented the changes to the Commercial /Industrial Deposit Requirement. Previous changes were made to the Residential and Commercial Deposit Requirements policy. Due to feedback from customers regarding those deposit requirement changes, the Board recommended Jan Sifferath research other alternatives. The alternative changes allow HUC to take into consideration a repurposed building to determine a deposit amount. Also, additional verbiage was added which allows HUC to accept an irrevocable letter of credit from an FDIC insured financial institution. After discussion, a motion was made by Secretary Morrow, seconded by Vice President Hanson to approve the changes to the Commercial /Industrial Deposit Requirement. (Changes attached.) 13. Discuss Industrial CIP Rebate Nick Nelson presented three rebate options for 3M and HTI: 1. Continue with existing $40,000 of CIP dollars allocated to 3M and HTI based on their prorated share of energy savings. 2. Consider providing HTI with their full dollar amount based on the $300 /KW saved and 3M with a fair amount based on projects done and the projected savings, which would result in additional rebate amounts beyond the 2013 budget. 3. Rebate on a first come, first served basis. No changes. Nick recommended HUC request each industrial customer submit rebate applications as each project is completed. After discussion regarding the three options, the Board tabled this agenda item until January's regular commission meeting. President Bordson abstained from discussion due to conflict of interest. 14. Approve Requisition #5680 for Purchase of Vehicles Steve Lancaster presented requisition #5680 for purchase of vehicles through a state bid which was budgeted for in 2014. After discussion, the Board tabled until the January regular commission meeting. 3 15. Discuss Joint Meeting with City Discussion held regarding the scheduling of the yearly joint meeting with City. President Bordson will contact Mayor Cook to discuss potential dates and agenda items. 16. Communication from the City Administrator City Administrator Carter was absent. Division Reports Electric — Steve Lancaster • Unit 1 General Electric portion complete. Finance — Jared Martig • Sent City of Brownton invoices of approximately $250,000. • Sales tax audit complete. HUC owes $25,600 reduced from the original amount of approximately $45,000. • HUC's sales tax refund will be $125,000. Business — Jan Sifferath • Working with Nick Nelson in setting up the CIP program with MRES. • Working on pay equity report due at the end of the month. Natural Gas — John Webster • Knife River Concrete is requesting natural gas next year. • KDUZ is interested in natural gas service. • Hutchinson Manufacturing will receive additional natural gas service for their preheat process. • Working with City of Brownton regarding natural gas issues with United Farmers Coop. United Farmers Coop has mentioned they may be interested in selling their pipeline. • Last night, HUC heater froze off in Brownton. It switched over to the second run so there was no loss of service to the customers. 17. Legal Update Nothing to report. Unfinished Business • Discuss Separate Business Unit for Wholesale Business Mike Kumm and Jared Martig are working on this. • Discuss Pre -Pay for Natural Gas Nothing to report New Business None n There being no further business, a motion was made by Vice President Hanson, seconded by Commissioner Luhring to adjourn the meeting at 4:32 p.m. Motion was unanimously carried. Monty Morrow, Secretary ATTEST: 11 1/ ght ordso , President 5 File Edit Function Search Viers A id— kc r) IAN VAN BEEK Energy Star Appliance Rebates Application Status P.ognr t0a9 Mrtrwt Sara Preiel.Y CDvm leted Energy Stec Applieecea �N���' %'- ,-- - - - - - -- — Rocs: �ia.lKa i„ Dnta....,•nl �1 <ar�ei a iso9too3a #A— u+ I , Uuemlrry ', t M.w.al YaMdarror �epprt!Ynl $tglyy r Aqx- D.a..ed .— — Irrainq -0 All r. ltcae..eJ Oaln ( I�i''a'i,:. EEECTFtOupa _ . _�� tna.r.h..Dd. 1".7 Itrr __ '� $rje fewl/Harre Mr..rue 1 nvH Sar.y. __ ., ') full l.•.'=. Dr..A Ilea... 'lea Si+ 1'.PYI twl '. • ' _.... 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TALL Programs Combined BESTraK Report of fneendvea and Savinp by Store AM MDY Jun Jul M X Jan Filb Mu "": O-W city rarnv 1211 1421 1121 1131 1101 1201 Inl i' 3,366.00 Elac Inc6MNM: 3.366.00 3,125.50 4.191.00 13.916.90 933.00 $86.00 6.914.00 1.66 .ac I... .... t- . _ _ 325 *3 _ .hh0 W M 00 /50.36 41S.01) 1X350 60 1.915IXI -00 17 _ 4,397.00 rdal Incentives: 3.721.00 10,335.50 1,391.00 26,726.90 1,606,00 1,636.60 e,e29 1,99 .00 Direct lnslall Colt .00 .00 .00 .00 .00 .00 .00 $674 425.62 rhe... 23.76 3AI0.11 9243 5674 425.62 163.16 695.31 2.21 1648 kW: 9.12 941 11.26 6602 2.21 10.68 21.02 J ,%Vh -. 21.201 30403 79.679 166567 6.617 19.793 60.368 26 "": 1211 1611 1121 1131 1101 1201 1611 11 F 19c Incentives: 3,366.00 3,195.50 4.79/.00 13.910.90 933.00 566.00 6.916.00 1.86 cias lncenuvr.' 100.01 7oml lncendves: _ _325.00 3.721.00 _5.551120 10,335.50 _ 4,397.00 11.120.90 1.409.00 1,636.60 6.828.00 59 Direct 1-11 Cost .00 .00 .00 .00 .00 .00 .00 7h.- 23.79 3,41611 9243 $674 425.62 163.16 99631 6 kW: 9.77 9.61 11.26 4602 2.21 1648 21.02 Page 2 Prepared: 1717017013 J Lli� Y- 2013 Dran9e Oin 9Aad WMe R#m, D6taa Bdd Repot Rae Cole 5 4 Eleetricel Revanua 1.5% CIP F.W. Gar Revenue 2014 CIP PR(7(,R11YS Calculations based on 2012 audited financial mooe f 25,360,776.00 f 300,103.39 .i S 9,674,667.00 less Elec 7ranarnisslon 51,100,000.00 lev New Ulm $ 755,472.00 lass 3M $2.826,424.00 Balance d Gar $4,992.991.00 Total CIP Expenditure (Cp-ea .5% CIP Fund, Total CIP Required Spending Rounded ded to f 405,666.35 Sales Elme f 410.000.00 911 Supen+sion (CIP) s B 000 00 Total 911 s B 000 00 916 Misc Selling Expense (CIP) 91601 L (CIP) 916.02 eba Tr Planing (CIP) 916 03 Other Programs (CIP) 916 03 01 Resdential 916 03 02 Comnrercial 916 03 03 Indumnal 9160304 Marketing 916 03 05 DOC -CIP Assessment Total 916 Taal Sales Ezcense HOC System Improvement, Total CIP Expenditure (Cp-ea 4 TO 000 00 5 30 000 00 4 30.000 00 General Fund 4 11 "111 "1110, S25 000 LI 4 T6 it. to s 130 000 00 s 25 00000 4 21 000 00 4 432 000 00 f 440,000.00 �. 3 $ 440.000.00 6 f 24.964.96 f 405,666.35 f 410.000.00 s B 000 00 s B 000 00 4 TO 000 00 5 30 000 00 4 30.000 00 General Fund 4 11 "111 "1110, S25 000 LI 4 T6 it. to s 130 000 00 s 25 00000 4 21 000 00 4 432 000 00 f 440,000.00 �. 3 $ 440.000.00 6 Exempt & Non - Exempt Payroll Deductions The utilities areHUC is required to deduct federal and state income taxes, Social Security tax, and any court - ordered deductions such as child support from paychecks /direct deposits. T#e "*i',zHUC is also required to deduct the employee's contribution to the Public Employee Retirement Association (PERA). Other deductions may be made from a paycheck /direct deposit such as deferred compensation, and insurance premiums. These payroll deductions may be made only with the employee's written consent. Amended January 2, 2D432014 Policy on Payments of Hutchinson Utilities Commission Payab /es The Hutchinson Utilities Commission Accountant and Financial Manager are hereby authorized to issue warrant(s) drawn from the proper funds. (Resolution 153 was amended on March 25, 2009 and reads as follows): Resolution 153 authorizes HUC Accountant or HUC Financial Manager to transfer funds by wire or other electronic means. Claims shall be paid upon proper presentation during the year 2-0132014. This policy shall be reviewed on an annual basis. a -ZC.H)N r6* 6 AGREEMENT UTr [ I'nES Hutchinson THIS AGREEMENT is MADE BY AND BETWEEN HUTCHINSON Utilities Commission UTILITIES COMMISSION, HEREINAFTER "HUC" AND MINNESOTA MINING AND MANUFACTURING CO., HEREINAFTER "3M ", ON THE 225 Michigan Street FOLLOWING TERMS AND CONDITIONS. Hutchinson Minnesota WHEREAS, 3M DESIRES TO PURCHASE, AND HUC SHALL 55350 PROVIDE, FIRM GAS 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 GAS AND TRANSPORTATION. WHEREAS, THE PURCHASE PRICE OF THE CONTRACT QUANTITIES SHALL BE BASED ON THE MONTHLY INSIDE FERC VENTURA INDEX, AS PUBLISHED BY PLATT'S "GAS DAILY ", PLUS /MINUS THE NNG VENTURA TO NDPL VENTURA MONTHLY PREMIUM. Tel 320 - 587 -4748 PAGE 1 OF 4 Fax 320- 587 -4721 NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF WHICH 1S HEREBY ACKNOWLEDGED, THE PARTIES MAKE THE FOLLOWING Dwight Bordson President AGREEMENT: Anthony Hanson Vice President HUC SHALL PROVIDE, AND 3M SHALL ACCEPT, FIRM GAS Monty Morrow Secretary COMMENCING ..JANUARY 1, 2014, AT 9:00 A.M. AND TERMINATING Craig Lerz ON .JANUARY 1, 2015, AT 9:00 A.M.. Commissioner Mark Girard Commissioner Michael Kumm General Manager Tel 320 - 587 -4748 PAGE 1 OF 4 Fax 320- 587 -4721 1 . 3M SHALL PAY HUC BY THE FOLLOWING SCHEDULE DURING THE TERM OF THIS AGREEMENT: FLOW THROUGH ALL NATURAL GAS METERS COMMODITY INDEX TRANSPORTATION $0.36 /DTH MONTHLY PEAK DAY DEMAND $9.00 /MCF 2. HUTCHINSON AGREES TO PROVIDE DAILY SWING SUPPLY TO 3M AT THE APPLICABLE PRICE, AS PUBLISHED FOR THE DAY BY PLATT'S "GAS DAILY" IN ITS "DAILY PRICE SURVEY ($ /DTH)" FOR "NORTHERN, VENTURA" "MIDPOINT" ( "DAILY INDEX ") PLUS / M[NUS $0.01, SWING SUPPLY IS DEFINED AS SUPPLY INCREASES OR DECREASES, FROM CONTRACTED LEVELS, NOMINATED AT LEAST 24 HOURS PRIOR TO THE START OF THE GAS DAY. 3. HUTCHINSON SHALL PROVIDE 3M WITH REAL -TIME BALANCING, BASED ON THE FOLLOWING: BEST EFFORTS REALTIME SWING NOMINATED LESS THAN 24 HOURS PRIOR TO THE END OF THE GAS DAY ON A BEST EFFORTS BASIS, PRICED AT THE APPLICABLE PRICE, AS PUBLISHED FOR THE DAY BY PLATT'S "GAS DAILY" IN ITS "DAILY PRICE SURVEY ($ /DTH)" FOR "NORTHERN, VENTURA" "MIDPOINT" ( "DAILY INDEX "), PLUS /MINUS $0.15, 4. 3M SHALL. PROVIDE TO HUC, BY THE END OF THE 1 5TH DAY OF THE MONTH PRIOR TO GAS FLOW THE BASE LOAD LEVEL OF NATURAL GAS REQUIRED FOR THE FOLLOWING MONTH. IN THE EVENT HUC HAS NOT RECEIVED THE BASE LOAD NOMINATION FROM SM BY THE END OF THE 1 5TH DAY OF THE MONTH PRIOR TO THE GAS FLOW PAGE 2OF4 HUC SHALL NOMINATE THE CURRENT MONTH'S BASE LOAD LEVEL FOR THE FOLLOWING MONTH 5. DURING THE TERM OF THIS AGREEMENT, HUC SHALL NOT DE LIABLE FOR STOPPAGE OF FLO"' ON THE PIPELINE, NORTHERN BORDER PIPF.I.INE COMPANY E.QUIPMF_NT FAILURE, OR ANY O`iHF.R FORCE NIAJEURE WHICH AFFECTS THE FLOW OF GAS TO THE HUC BORDER STATIONS, OR ANY ACT OF GOD WI IIC; I INTERRUPTS FLOW 0" GAS ON THE PIPELINE:. 6. PAYMENT IS DUE FROM 3M ON OR BEFORE THE TENTH DAY FOLLOWING THE DATE THE BILL 1S ISSUED BY HUC. PAGE 3OF4 THIS AGREEMENT SFTS 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 NAME: TITLE: DATE: MINNESOTA MINING & MANUFACTURING TITLE: - ` ?. " DATE,: Q? QO1 PAGE 4 OF 4 OPERATIONAL AGENCY AGREEMENT This Agency Agreement (the "Agreement') is made and entered into this 1st day of January 2014, (the "Effective Date ") by and among Hutchinson Utilities Commission ( "Counterparty "), a municipal utility, and BP Canada Energy Marketing Corp. ( "BP "), a Delaware corporation. Counterparty and BP are sometimes referred to herein individually as a "Party" or collectively as the "Parties ". ARTICLE I. DEFINITIONS AND INTERPRETATION. 1.1 Definitions. The following terms when used herein shall have the meanings set forth below `Bankruptcy" means with respect to any Party, (i) the filing by such Party of a petition or the commencement of, or the acquiescence in the commencement of, a proceeding or cause of action under any bankruptcy, insolvency or similar law providing for the protection from its creditors, or a Party having any such proceeding or cause of action filed or commenced against it; (ii) the seeking by such Party of the appointment of a trustee, receiver, liquidator, custodian or other similar official over it or any substantial part of its property, or consenting to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it; (iii) the making of an assignment or any general arrangement for the benefit of its creditors; (iv) such Party admitting its inability to pay its debts as they fall due; (v) such Party becoming bankrupt or insolvent (however documented or evidenced); or (vi) such Party making an general assignment for the benefit of its creditors. "Business Dav'means all Days except Saturdays, Sundays or Federal Reserve Bank holidays. "Commodity Charges" shall mean all commodity charges, ACA surcharges, GRI surcharges and other tariff charges assessed by a Pipeline pursuant to the approved tariff or governing documents of such Pipeline as a result of the actual transportation of Gas. "Day" means a period of 24 consecutive hours, starting at 9:00 a.m. Central Clock Time on any calendar day. "Delivery Point(s)" shall mean the delivery point(s) specified in the Transportation Agreements. "Demand Charges" shall mean any and all demand/reservation charges assessed by a Pipeline pursuant to the approved tariff of such pipeline. "Fuel" means the quantity of Gas consumed by a Pipeline in transporting Gas and includes any provision by such pipeline for lost and unaccounted for Gas, as determined in accordance with the approved tariff or governing documents of such pipeline. "Gas" means any mixture of hydrocarbons and non - combustible gases in a gaseous state consisting primarily of methane. "Gas Supplier" meanslthe seller of Gas to the Counterparty under the terms of a Gas Supply Contract, which could be BP or another third party. "_Gas Supply Contracts" means the contracts for the sale of Gas from an entity to Counterparty; as such contracts are identified on Exhibit A. "Gas Supply Obligations" means any Gas purchased by Counterparty from a party or entity under any of the Gas Supply Contracts. "Imbalance Charges" means any fees, penalties, costs or charges, (in cash or in kind) assessed by a Pipeline as a result of any differences between the actual measured quantities and scheduled quantities at a receipt or delivery point on any Day, whether as a result of a failure to satisfy the Pipeline's balance and /or nomination requirements, a violation of a volumetric condition imposed by the Pipeline on any point, or any other conditions /restraints allowing for any such assessment under the applicable tariff or governing documents. "Month" means the period beginning on the first Day of the calendar month and ending immediately prior to the commencement of the first Day of the next calendar month. "Pi eline" means any one, as applicable, of the pipelines (or storage facilities), including local distribution companies (LDCs), identified in the applicable Transportation Agreement(s). "Pipeline Capacity" means the capacity on the applicable Pipeline as contracted for by Counterparty pursuant to the applicable Transportation Agreement(s). `Receipt Point(s)" shall mean the receipt point(s) identified in the Transportation Agreements where the Counterparty receives Gas under the Gas Supply Contracts. "Term" shall have the meaning as set out in Article VI of this Agreement. "Transportation Agreements" means a contract for transportation or storage service entered into by and between Counterparty and the Pipeline as such agreements are identified on Exhibit A. ARTICLE 11. APPOINTMENT OF AGENT 2.1 BP as Agent. Counterparty hereby appoints BP to serve as its exclusive agent to manage and administer the Gas Supply Contracts and the Transportation Agreements with respect to the specific duties set forth in Article III throughout the Term of this Agreement. BP shall have no authority to undertake actions on behalf of the Counterparty that are beyond the scope of the authorizations stated in this Agreement. Counterparty does not appoint BP to act as its general agent, or as an agent for any other purpose other than the express authorizations granted in this Agreement. In no event shall BP, in its capacity as agent or otherwise, take title to the Gas being transported under the Transportation Agreements. 2.2 Implementing Notices. Counterparty shall provide each Pipeline with notices under the applicable Transportation Agreement of the appointment of BP as agent in time for BP to administer and manage the contracts for which it has been given responsibility. Counterparty further agrees to take any and all actions necessary to facilitate such appointment, including but not limited to executing documents required by the Pipeline. 2.3 Governmental Requirements. The Parties agree that BP's services under this Agreement may be subject to local, state, or Federal laws, rules, and regulations ( "Governmental Requirements "). The Parties agree to comply with all Governmental Requirements applicable to this Agreement, and Counterparty agrees that it shall not require or request BP to perform any action, or to omit to perform any action, that BP reasonably believes is required under applicable Governmental Requirements. 2.4 Standard of Care. BP will perform its duties under this Agreement with the same standard of care that a similarly situated reasonably prudent party would perform the same duties for a similarly situated counterparty. 2.5 Fiduciary ObliEation Disclaimer and Waiver. Notwithstanding the designation of BP as Counterparty's agent under the terms of this Agreement, Counterparty agrees that BP is not acting in a fiduciary capacity on Counterparty's behalf and accordingly the Parties do not have a relationship that imposes a higher duty of trust or confidence on BP than the standard imposed with respect to two parties engaged in an arms length agreement, and accordingly Counterparty expressly waives any and all claims that BP owes a fiduciary obligation to the Counterparty. In furtherance of the foregoing, Counterparty acknowledges that BP currently engages in substantially similar agency activities for other counterparties, and nothing herein shall in any manner be deemed to limit or prohibit BP's performance of such agency practices on behalf of such other parties, even to the extent that the Counterparty and any such other party may be involved in a business agreement with BP acting as agent for both parties. ARTICLE III. PERFORMANCE OBLIGATIONS 3.1 BP's Specific Responsibilities. BP shall satisfy the following responsibilities under the terms of this Agreement: (a) based on the timely instructions received from the Counterparty (or the party responsible for conveying any such instructions under the Gas Supply Contracts) with respect to the Gas Supply Obligations, prepare and submit daily and monthly nominations, as applicable, to facilitate Counterparty's receipt of such Gas at the applicable Receipt Point(s) from the party or entity identified under any Gas Supply Contracts and the transport of Counterparty's Gas using the Pipeline Capacity, less Fuel, to the Delivery Point(s); (b) on each Day, manage the applicable Pipeline Capacity on the Pipeline so as to minimize Imbalance Charges, if possible, related to the receipt and delivery of the Gas; (c) manage any critical Day events or operational issues affecting the Pipeline or any other industry developments or circumstances of which BP has become aware that may have a material effect on the transportation of Gas hereunder, including the suggestion of balancing alternatives to the Counterparty during any period; (d) manage the receipt and payment of invoices on the Pipelines on the Counterparty's behalf, with such invoicing being reflected in the charges owed to BP under the terms of this Agreement; (e) communicate to Counterparty any applicable Federal or state regulatory matter of which BP has become aware which may impact BP's performance of the services made the subject of this Agreement; (f) upon request, post any unused Pipeline Capacity for release in accordance with existing rules, regulations and governing tariffs; and (g) maintain an ongoing familiarity with the terms of the Transportation Agreements, including the pipeline tariffs and governing documents applicable thereto. 3.2 Counterparty's Responsibilities. In order to enable BP to perform its duties and obligations under this Agreement, Counterparty shall: (a) if required under the terms of the Gas Supply Contracts, timely provide information to BP to facilitate BP's nomination and scheduling obligations and other obligations under Sections 3.1 and 3.3 (if applicable) such that BP may timely nominate and schedule delivery of the Gas from the Receipt Point(s) to the Delivery Point(s), or cause the responsible party under the Subject Gas Supply Contracts to timely supply such information to BP; (b) take all actions in a timely manner required to effectuate BP's responsibilities, such as executing applicable agency agreements with the Pipelines, in order to enable BP to provide the services provided for under this Agreement; (c) provide any relevant information, contracts or related documentation in respect of the Gas Supply Contracts, and/or the Transportation Agreements as necessary; (d) on each Day, take any action not expressly the responsibility of BP under this Agreement to receive or cause to be received at the applicable Receipt Point(s) under the Transportation Agreements, quantities of Gas in the aggregate equivalent to the timely instructions provided to BP regarding such quantity of Gas scheduled for delivery to the Counterparty under the Gas Supply Contracts at the Receipt Point(s) to ensure that imbalances will not occur, such as updating and notifying BP of any operational changes or circumstances, if applicable, that may impact Counterparty's Gas requirements as soon as possible; (e) maintain in full force and effect during the Term, without suspension, the Gas Supply Contracts and the Transportation Agreements; (f) communicate to BP any applicable Federal or state regulatory matters of which the Counterparty becomes aware which may impact the Gas Supply Contracts or the Transportation Agreements; and (g) hold title at all times during the Tenn of this Agreement to any Gas made the subject of BP's agency services under this Agreement. 3.3 Gas Supply Services: (a) BP shall sell gas to Customer in accordance with the following general terms: (i) During the Term of this Agreement, BP shall provide Customer with Gas supply in accordance with Customer's requests for gas supply. All such gas will be delivered to Customer at the Receipt Points on a Firm, Firm Variable or Interruptible basis (as such terns are defined in the Gas Supply Contract with BP) as determined in consultation between BP and Customer from time to time. Customer shall pay BP for gas delivered and sold to it by BP, and BP shall pay Customer for gas delivered and sold to it by Customer, according to the pricing terms set out in Exhibit B. Not less than five Business Days prior to each month in which Gas is to be delivered to Customer, Customer shall advise BP of any Baseload Quantities of Gas it desires to purchase from BP on a Firm basis under the terms and conditions of the Gas Supply Contract by and between BP and Customer. When Customer requires additional Gas beyond the Gas supplied under the Gas Supply Contract(s) or by BP under 3.3(ii) above on any Day, BP shall sell and deliver each MMBtu of such additional Gas to the Customer under the terms and conditions set forth in the Gas Supply Contract by and between BP and the Customer at the Receipt Point(s) up to the level of Customer's remaining Pipeline Capacity on a Firm (Variable Quantity) basis provided Customer has advised BP of such additional Gas requirement no less than twenty four (24) hours prior to the start of the relevant gas Day and on an Interruptible basis where Customer has advised BP of such additional Gas requirement less than twenty four (24) hours prior to the start of the relevant gas Day. (iv) When Customer has excess Gas beyond its Gas requirements, BP shall purchase Gas in a quantity equivalent to each MMBtu of the excess Gas at the Receipt Point(s) under the terms and conditions set forth in the Gas Supply Contract by and between BP and the Customer on a Firm (Variable Quantity) basis if BP is advised of such excess Gas no less than twenty four (24) hours prior to the start of the relevant gas Day and on an Interruptible basis if advised of such excess Gas less than twenty four (24) hours prior to the start of the relevant gas Day at the applicable price specified in Exhibit B or as otherwise agreed to by the Parties. (v) From time to time, BP and Customer may agree, but are not obligated to agree, pursuant to the terms and conditions set forth in the Gas Supply Contract by and between BP and Customer for the sale of gas to Customer at Customer's Citygate that is in addition to gas transported through the Customer's Pipeline Capacity ( "Citygate Sales "). BP shall be permitted to charge Customer a transportation charge for such Citygate Sales as set forth in Exhibit B in addition to any commodity price that BP and Customer may agree to. (vi) provide Customer with 24 hour, 7 days per week, telephone access to BP employee that will receive and implement any supply adjustments that may be requested by Customer and are acceptable to the Pipelines.. (b) Notwithstanding the foregoing, BP shall confirm each gas purchase or sale transaction contemplated herein between BP and Customer by sending Customer a transaction confirmation in accordance with the confirmation procedure provided for in the Gas Supply Contract between BP and Customer and such transactions shall be subject to the terms and conditions of the Gas Supply Contract between BP and Customer. 3.4 Cover Damages. If BP fails to nominate and schedule the daily volumes required for the receipt and delivery of the Gas in accordance with the timely instructions received from the Counterparty (or the party responsible for conveying any such instructions under the Gas Supply Contracts), and as a result Counterparty is unable to receive such Gas at the Delivery Point(s), then Counterparty may cover the amount of Gas that was requested by Counterparty but that was not nominated/scheduled by BP with other Gas supplies using commercially reasonable efforts, and the cost of cover, if any, actually incurred by Counterparty shall be reimbursed by BP. Notwithstanding anything to the contrary set forth in this Agreement, the Parties acknowledge and agree that (a) BP shall not have any responsibility for determining the quantity of Gas, if any, that Counterparty should purchase under the Gas Supply Contracts to satisfy its requirements, (b) BP shall not be responsible for supplying any Gas to Counterparty under the terms of this Agreement, and (c) BP's responsibilities under this Agreement with respect to the Gas Supply Obligations are expressly limited to nominating and scheduling Gas on the Counterparty's behalf according to the Counterparty's instructions, which have been made in Counterparty's sole discretion and judgment, provided that they have been timely provided to BP, in addition to performing the other limited activities set forth in Sections 3.1 and 3.3 (if applicable). 3.5 Risk Allocation. Notwithstanding Section 3.3(b), Counterparty assumes all risks of (i) the failure of the Gas Supplier under the Gas Supply Contracts to deliver Gas at the applicable Receipt Point(s), (ii) the curtailment, interruption or the unavailability of the Pipeline Capacity due to an event of force majeure or otherwise, either in whole or in part, on the Pipeline, and (iii) the failure of the Gas to be transported and delivered to the Delivery Point(s) for any reason whatsoever not attributable to BP's failure to nominate and schedule in accordance with its duties under this Agreement. For purposes of clarity, with respect to the Gas Supply Obligations, BP shall have no liability to Counterparty under this Agreement by reason of any failure by a Gas Supplier, for any reason whatsoever, to deliver Gas under a Gas Supply Contract at the Receipt Point(s). Provided, however, if BP is the Gas Supplier under any of the Gas Supply Contracts, nothing in this section is intended to release or modify in any manner BP's obligations thereunder. 3.6 Responsibility for Charges. BP shall reimburse Counterparty for any liabilities, costs, damages, Imbalance Charges, Demand Charges and /or Commodity Charges actually incurred by Counterparty solely as a result of BP's negligent or willful failure to perform its obligations under Sections 3.1 or 3.3 (if applicable). Notwithstanding the preceding sentence, BP shall not be responsible for any of the foregoing if BP's failure to perform was caused in whole or in part by (i) Counterparty's failure to perform its obligations under Section 3.2, (ii) BP's adherence to instructions received from "or on behalf of the Counterparty, or (iii) as a result of BP enforcing its rights and remedies due to a breach of this Agreement by Counterparty. Counterparty shall be responsible for any and all liabilities, costs, damages, Imbalance Charges, Demand Charges and /or Commodity Charges incurred by Counterparty which are not the express responsibility of BP under this Agreement. 3.7 Timelv Instructions. The timeliness of the instructions provided by the Counterparty (or by the party responsible for conveying any such instructions under the Gas Supply Contracts) for purposes of Sections 3.1, 3.2 and 3.4 shall be determined by ascertaining whether BP was given a commercially reasonable amount of time from BP's receipt of the nomination and scheduling instructions from the Counterparty (or the responsible party) prior to the nominating and scheduling deadlines established by the applicable Pipeline. ARTICLE IV. CONSIDERATION 4.1 _Agent's Compensation. In consideration of BP's performance of the agency services set forth under this Agreement, the Counterparty shall pay BP a fee of $0.001 for each MMBtu of third party Gas that is actually delivered by a Gas Supplier at the Receipt Point(s). 4.2 Audit Rights. A Party shall have the right, at its own expense, upon reasonable written notice to the other Party and at reasonable times on any Business Day, to examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of the other Party only to the extent reasonably necessary to verify the accuracy of any statement, charge, payment, or computation made under this Agreement This right to examine, audit, and to obtain copies shall not be available with respect to proprietary information not directly relevant to this Agreement All invoices and billings shall be conclusively presumed final and accurate and all associated claims for under or overpayments shall be deemed waived unless such invoices or billings are objected to in writing, with adequate explanation and/or documentation, within one year after the Month that the service activities made the subject of the invoices or billings is performed. All retroactive adjustments under this section shall be paid in full by the Party owing payment within thirty (30) Days of the written notice after the substantiation of such inaccuracy. ARTICLE V. ACCOUNT STATEMENTS On or before the 10`h Day of each Month, BP shall deliver to Counterparty a statement that sets out for the previous Month a detailed calculation showing the amounts owed under is Agreement (whether for the reimbursement of transportation services paid to the Pipeline by BP on the Counterparty's behalf, the consideration owed to BP under Article IV, or otherwise), including any adjustments made in accordance with Articles IV or V. On or before the later of the 20`' Day of the Month or ten (10) Days subsequent to the date that the statement is delivered by BP, the net amount of each statement shall be paid by the Party owing such amount to the Party owed such amount. In the event that the payment date is not a Business Day, the payment shall be due on the next Business Day. Any amounts owing by BP to Counterparty under Section 3.4 for cover damages shall be supported by appropriate documentation and information, and such amounts, if any, shall be netted in accordance with this section in the Month following the incurrence of such costs by Counterparty. If the invoiced party disputes an invoice in good faith, it shall nevertheless submit any undisputed portion of the invoice to the other Party. Provided further, that the disputing Party must, prior to disputing any invoice, provide supporting documentation for the dispute in accordance with industry practice to the other Party. The Parties shall attempt to resolve the dispute, and in the event they cannot, the Parties may exercise any and all rights and remedies available to such Party under this Agreement, at law or in equity. In addition to any such rights and remedies, if the disputing Party does not prevail in any subsequent litigation or proceeding with respect to such dispute, it shall also owe the other Party interest at a rate equal to the lower of (i) the then - effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent (2 9/6) per annum, or (ii) the maximum applicable interest rate allowed by law. All payments or reconciliations under this Agreement shall be made in United States currency. Payments under this Agreement shall be effected by wire transfer remittance as follows: To Counterparty: To BP: BANK: Citizens Bank & Trust Co. BANK: Bank ONE, Chicago, IL, Branch #100 ABA: 091901862 ABA: 071000013 ACCT: 000086 ACCT: 11 -22183 ARTICLE VI. TERM. This Agreement shall remain in effect from the period commencing on the Effective Date and ending December 31, 2016, and shall continue on a year to year basis thereafter unless terminated on not less than ninety (90) days written notice given by one of the Parties to the other (such period being the "Term "). Each Party's obligations regarding payment and indemnification hereunder shall survive the termination of this Agreement for a period of time equal to the time for which the applicable statute of limitations applies. ARTICLE VII. TAXES 7.1 Tax Matters. Each Party is responsible for the economic benefits and burdens related to the consideration received by such Party under this Agreement. Accordingly, each Party shall report to the Internal Revenue Service or any other applicable taxing authority, all information relevant to the economic benefits and burdens related to this Agreement and shall maintain the necessary records for such tax reporting. Each Party shall indemnify, defend and hold the other Party harmless as to any costs or liabilities claimed against or incurred by such other Party in connection with claims for Taxes made by third parties or entities, including governmental entities, arising out of the activities made the subject of this Agreement to the extent that such costs or liabilities arise from or relate to all or any portion of the obligations attributable to such Party. References to "costs" in connection with this section shall include all reasonable and necessary attorneys' fees and expenses, consultants' fees, travel expenses, and court costs, including costs incurred to enforce the indemnity obligations. 7.2 Responsibility for Sales and Similar Taxes. Counterparty shall be solely responsible for all taxes, fees, levies, penalties, licenses or charges imposed by any government authority (collectively "Taxes ") that are currently imposed on the purchase and delivery of the Gas Supply Obligations, including any Taxes attributable to the Counterparty's capacity on the Pipeline under the Transportation Agreements, and any new Taxes that might be imposed on such continued purchases and deliveries. With respect to BP's compensation under this Agreement, BP shall be responsible for any Taxes associated with such consideration. ARTICLE VIII. DEFAULT AND REMEDIES 8.1 Events of Default. The following actions or inactions by a Party shall constitute an "Event of Default" under this Agreement: (a) breach of any obligation under this Agreement (save and except for any breach by Counterparty of Sections 3.2(e) which is addressed hereinafter in subsections (c) -(f) or any breach by BP addressed in Section 3.4), if such breach is not cured by the Party in breach within ten (10) Business Days after written notice of such breach from the non - defaulting Party; (b) the Bankruptcy of a Party; (c) Counterparty allows a Gas Supply Contract or a Transportation Agreement to be suspended, in whole or in part, for a period of greater than five (5) consecutive Days; (d) Counterparty allows any Gas Supply Contract under which BP is a Gas Supplier to be terminated without having a replacement contract with BP for substantially the same quantity on the same material terms and conditions within three (3) Business Days after the original Gas Supply Contract with BP was terminated; (e) Counterparty allows any Gas Supply Contract to be terminated, other than one under which BP is the Gas Supplier, without having a replacement contract with another Gas supplier for substantially the same quantity on the same material terms and conditions within three (3) Business Days after the original Gas Supply Contract was terminated, or Counterparty fails to give BP prior written notice of such replacement contract within three (3) Business Days after such contract has been e4tered into by the Counterparty; or (f) Counterparty allows any of the Transportation Agreements to be terminated. 8.2 Remedies. If an Event of Default has occurred and is continuing, the non - defaulting Party may suspend performance on written notice to the defaulting Party and, at its election, terminate this Agreement on written notice to the defaulting Party. The non - defaulting Party must elect to terminate this Agreement within twenty (20) Business Days of the Event of Default or re- commence performance. During any time that BP suspends performance in accordance with this Section, it shall have no obligation to perform any services of any nature under this Agreement, until such time as the Counterparty has remedied the breach and provided notice thereof to BP. In the event BP resumes performance either as a result of not electing to terminate this Agreement or by informing the Counterparty in writing that it rescinds its suspension of performance, Counterparty shall take all necessary steps with its Gas Suppliers under the Gas Supply Contracts and/or the Pipelines under the Transportation Agreements to facilitate BP's performance under this Agreement. Termination of this Agreement shall not preclude or limit the non- defaulting Party from pursuing any other remedy available at law or in equity in respect of the Event of Default under this Agreement, including the pursuit of damages. ARTICLE IX. MISCELLANEOUS 9.1 No Partnership or Joint Venture. The obligations and liabilities of the Parties are intended to be several and not joint, and nothing contained in this Agreement shall be construed to create an association, trust, partnership or joint venture between the Parties, and each Party shall be liable individually and severally for its own obligations under this Agreement. Both Parties agree that their relationship is strictly as one of principal and agent, as limited by this Agreement and to the express purposes set forth in this Agreement. 9.2 Compliance with Governmental Requirements. BP and Counterparty shall comply with (i) the nomination and scheduling requirements on the terms and conditions set forth in this Agreement, as such requirements are provided in writing, orally or otherwise to BP by Counterparty (or the party responsible for conveying any such instructions under the Gas Supply Contracts), (ii) the Transportation Agreements covering the Pipeline Capacity, and the applicable tariffs or governing documents, and (iii) all applicable Governmental Requirements affecting the transportation and sale of Gas that are related to this Agreement. Without limiting the generality of the foregoing, if during the Term of this Agreement any governmental agency of competent jurisdiction should determine that the obligations and duties contemplated in this Agreement cannot be performed in accordance with applicable Governmental Requirements, wholly or in part, the Parties shall immediately suspend performance under this Agreement. BP and Counterparty shall, within ten Days of such a determination, meet to determine whether this Agreement can be revised so that the transactions contemplated herein can be performed fully in accordance with applicable Governmental Requirements. In the absence of a superseding written agreement between the Parties following such event and following such meeting, this Agreement shall terminate with no damages being owed by either Party to the other. 9.3 Further Assurances. The Parties agree to execute and deliver such additional instruments or documents as may be necessary to carry out the purposes of this Agreement. 9.4 Assignment. Neither Party may assign this Agreement to any third party without the express written consent of the other Party, which consent may not be unreasonably withheld. Any attempted assignment of this Agreement in violation of this Section shall be void and of no force and effect. This Agreement shall inure to the benefit of and bind the respective successors heirs, representatives and permitted assigns of the Parties. 9.5 Governing Law and Jurisdiction. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Minnesota, without regard to its conflicts of laws rules or principles. The Parties hereby submit to the jurisdiction and venue of the courts in the State of Minnesota for purposes of any litigation related to the Agreement. 9.6 Notices. Any communications between the Parties hereto or notices provided herein to be delivered may be delivered to the following addresses: If to Counterparty: If to BP: Hutchinson Utilities Commission BP Canada Energy Marketing Corp. 225 Michigan Street PO Box 3092 Hutchinson, MN 55350 Houston, TX 77253 -3092 Phone: 320 - 234 -0507 Phone: 713- 323 -2000 Fax: 320 - 587 -4721 Fax: 713 - 323 -0203 All notices and communications required or permitted to be delivered hereunder shall be in writing and shall be considered as properly delivered (i) when delivered in person, (ii) on the next delivery Day after placed with an overnight delivery service (including Federal Express, Emery, DHL, Air Borne and other similar overnight delivery services) and designated for next -Day service with proof of delivery, or (iii) if delivered by facsimile, upon the sending Party's transmission of such notice or communication with proof of successful transmission, provided that the Day on which such facsimile is transmitted is a Business Day. If the Day on which the facsimile is transmitted is not a Business Day or the transmission is made after 5:00 p.m. on a Business Day at the recipient's location, then such facsimile shall be deemed to have been delivered and received on the next following Business Day. Any Party shall have the right to change its address for notices hereunder to any other location within the continental United States by giving thirty (30) Days notice to the other Parties in the manner set forth hereinabove. 9.7 Release and Indemnity. BP agrees to fully indemnify, defend and hold Counterparty harmless, including its respective directors, officers, employees, agents and representatives, from and against any and all claims, causes of action, disputes, demands, threats of litigation or arbitration, costs, expenses, damages, injuries, obligations, }iabilities, losses, liens, encumbrances, judgments, settlements, interests, awards of every kind and character without limitation, including any and all reasonable attorney's fees and expenses as well as costs of court or arbitration, arising from, under or as a result of claims related to title, personal injury (including death), and property damage, whether created by law, contract, strict liability, tort, judgment, voluntary settlement or in equity (collectively all of the foregoing being "Claims "), made by all persons or entities to the extent that such Claims are attributable to the negligence or willful misconduct of BP in performing its duties under this Agreement, unless BP is being indemnified for such Claims by Counterparty under this Agreement. Similarly, Counterparty agrees to fully indemnify, defend and hold BP harmless, including its respective directors, officers, employees, agents and representatives, from and against any and all Claims made by all persons or entities to the extent that such Claims are related in any manner to the Transportation Agreements or the Gas Supply Contracts, unless the Counterparty is being indemnified for such Claims by BP under this Agreement. 9.8 Limitation on Damages. Save and except to the extent it is related to any Party's indemnity obligations under this Agreement, no Party, nor its directors, trustees, agents, officers, or employees, shall be liable to any other Party, its directors, trustees, agents, officers, or employees, for any punitive, consequential, incidental, indirect, exemplary or special damages arising out of a claim related to this Agreement, whether as a result of breach of contract, breach of warranty, tort liability (including both negligence and strict liability), strict liability or otherwise. 9.9 Authority to Execute. Each of the Parties to this Agreement represents and warrants that, as of the Effective Date, (i) it has full and complete authority to enter into and perform this Agreement; (ii) the person who executes this Agreement on its behalf has full and complete authority to do so and is empowered to bind it thereby; and (iii) it is not insolvent and has not sought protection from its creditors in Bankruptcy or is otherwise the subject of Bankruptcy. 9.10 Miscellaneous. This Agreement may be executed in multiple counterparts, each of which shall constitute an original and all of which together shall constitute one and the same instrument. The headings and subheadings contained in this Agreement are used solely for convenience and do not constitute a part of this Agreement between the Parties and shall not be used to construe or interpret the provisions of this Agreement. Each provision of this Agreement is intended to be severable. If any provision of this Agreement is determined to be illegal, invalid or unenforceable, for any reason, then, insofar as is practical and feasible, the remaining portions of this Agreement shall be deemed to be in full force and effect as if such invalid provision was not contained herein. Except as expressly otherwise provided in this Agreement, all covenants, indemnities, representations, warranties, acknowledgments, agreements, rights and obligations of the Parties under this Agreement, that are capable of having effect after the termination of this Agreement for any reason, shall survive and remain in full force and effect beyond, and not be affected by, the termination of this Agreement. 9.11 Waiver. One or more waivers of any provision of this Agreement by a Party shall not be construed as a waiver of a subsequent breach or requirement of the same provision, and the consent by a Party to or approval of any act or omission by a Party requiring the other Party's consent or approval shall not be deemed to waive or render unnecessary such other Party's consent to or approval of any subsequent similar act or omission by such Party. Any and all waivers of this Agreement shall only be binding on a Party to the extent that the waiver is in writing. 9.12 Entirety and Amendments. This Agreement constitutes the entire agreement between the Parties regarding the services to be provided under this Agreement, and supersedes and replaces any prior and contemporaneous communications, understandings and agreements between Counterparty and BP related to such subject matter, whether written or verbal, express or implied. No modification, amendment, supplementation or alteration of the terms and provisions of this Agreement shall be or become effective except by written amendment executed by the duly authorized representative of the Parties. 9.13 Definitions. To the extent that any defined terms used in this Agreement are not otherwise defined herein, they shall have the definition set forth in the Gas Supply Contract by and between BP and the Counterparty. 9.14 Supersede & Replace Prior Agreement. This OAA supersedes and otherwise replaces in its entirety the Natural Gas Services Addendum dated January 1, 2013 (the "Prior Agreement "), which Prior Agreement is hereby terminated and deemed for all purposes to be of no further force or effect as of the effective date hereof. IN WITNESS WHEREOF, and with the intent to be legally bound, the Parties hereto have caused this Agreement to be executed by their duly authorized officers or representatives as of the Effective Date. HUTCHINSON UTILITIES COMMISSION BP CANADA ENERGY MARKETING CORP. BY L�cy.'�!� 1` i a sir LIZ 5 J By: Name: /,L ti-- n Name: Title:. — r rS Title: Date: Date: Exhibit A Gas Supply Contracts 1. Base Contract for Sale and Purchase of Natural Gas dated January 1, 2004. Transportation Ajzreements 1. Northern Natural Gas Contract #s 21279 and 102733 Exhibit B Pricing The following prices are applicable to gas sales pursuant to Section 3.3 of the Operational Agency Agreement: 1. Baseload Volume (a) All monthly Firm Gas baseload purchases will be priced based on market conditions at the time Hutchinson makes their monthly Firm Gas baseload purchases. Hutchinson will have the flexibility to purchase monthly firm baseload gas by month or multi -month purchases. (b) Hutchinson shall have a choice of pricing mechanisms including but not limited to: monthly index, daily index, fixed price, and various structured products, for gas supplies from BP, subject to any applicable credit requirements being satisfied. 2. Firm (Variable Ouantity) (a) If being purchased by Customer at Northern Border Trimont, the price per MMBtu shall be the Gas Daily NNG Ventura Index for the day of delivery minus $0.0075. 3. Interruptible (less than 24 hours notice) (a) If being purchased by Customer at Northern Border Trimont, the price per MMBtu shall be the Gas Daily NNG Ventura Index for the day of delivery plus $0.12. Customer may at any time request a proposal from BP to convert any of the foregoing prices to fixed prices. BP shall make a proposal to Customer quoting a fixed price and the period of time for which that fixed price shall be applicable together with any other terms and conditions applicable to its proposal. Any such proposal shall take effect only upon a written confirmation thereof being executed by the authorized representatives of BP and Customer. 4. Buyer Turn Back Provision. Subject to the terms set forth in this Section, to the extent that any Firm (Variable Quantity) purchased by Buyer pursuant to Section 3.3(iii) or Interruptible purchased by Buyer pursuant to Section 3.3(iv), exceeds Buyer's Gas Requirements on a Day ( "Excess Gas ") , Buyer shall turn back to Seller an amount of Gas equal to the Excess Gas, for a financial adjustment to be made based on a formula equal to (i) the amount of Gas to be turned back by Buyer, multiplied by (ii) the difference between (a) the applicable Contract Price and (b) the GDD Price for the Day minus $0.0075 for Firm (Variable Quantity) and the GDD Price for the Day minus $.12 for Interruptible. The GDD Price means Gas Daily NNG Ventura Index for the day of delivery for deliveries to Ventura. Deposit Requirement — Commercial /Industrial Commercial /Industrial Customers: An application for service shall be filled out prior to receiving service. The application shall be accompanied with identification, preferably photo identification, and their Federal Tax ID number. In addition, a deposit is required for all Commercial /Industrial customers, prior to the utilities being placed in their name. An internal credit check is performed for all customers moving into HUC service territory. If the results of the credit check indicate the customer owes HUC due to previously provided services, then the outstanding balance shall be paid plus a deposit, prior to the customer receiving service. Existing Commercial /Industrial Customers Moving Within Service Territory: A deposit will be waived if the Commercial /Industrial customer has a 24 -month payment history with HUC indicating the Commercial /Industrial customer has not been disconnected or issued any dishonored checks. A deposit for existing Commercial /Industrial customers moving within HUC service territory will be required prior, to customer having utilities placed in their name, for the following reasons: 1. If the customer has been disconnected or issued any dishonored checks in the previous 24 months. 2. Subsequent credit information indicates the initial application for service was falsified. If a deposit is required of a customer, and; 1. If customer has no deposit with HUC, the customer will pay the deposit amount for the customer's new address. 2. If customer already has a deposit with HUC and this deposit amount is greater than the new deposit required for customer's new address, HUC will transfer the deposit from the customer's previous address to the customer's new address. The balance of the deposit at the customer's previous address will be applied to the customer's final bill for the customer's previous address. 3. If customer already has a deposit with HUC and this deposit amount is less than the new deposit required for customer's new address, HUC will transfer the deposit from the customer's previous address to the customer's new address. The customer will pay the balance of the deposit amount for the customer's new address, prior to the utilities being placed in their name. If a deposit is required of a customer, and the customer would like a written explanation as to why they need to make a deposit, then one will be provided. Amount of Deposit: The deposit shall be equal to the two highest bills for the past twelve months rounded to the nearest dollar. In the event that the building will be used for a different purpose from the previous tenant/owner, then similar use will be taken into consideration to determine the amount of deposit. The deposit may also be made by posting a performance bond or an Irrevocable Letter of Credit from an FDIC insured financial institution. These options perfeFrnaRGe beRd will not earn any interest. The perfermanGe be and will be terminated after 24 consecutive months of timely payments. In the event of a new building with no billing history, then similar construction will be used to establish the average monthly usage. Refusal or Disconnection of Service: Commercial /Industrial service may be refused or disconnected for failure to pay a deposit request. Interest: Interest earned on deposits is applied to the account as a credit on a calendar year basis. When Commercial /Industrial customer moves out of our services, the account is finaled out with interest applied to the account as credit, and the deposit amount is applied to the final bill. If this results in a credit balance, a check is issued to the customer for that credit amount. The rate of interest is determined by the Minnesota Department of Commerce and HUC obtains that information annually. Refund: HUC shall refund the deposit of a Commercial /Industrial customer after 24 consecutive months of on -time payments (no late payment fees). If a customer is late in making payment, then the deposit will be retained, until such time as the customer makes 24 consecutive monthly on -time payments (no late payment fees). Method of Refund: Any deposit or portion thereof refunded to a Commercial /Industrial customer shall be refunded by check. Refund at Termination of Service: On termination of Commercial /Industrial service, and if the customer has a deposit with HUC, HUC shall credit the deposit, with accrued interest, to the customer's final bill and return the balance within 30 days of issuing the final bill.