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08-29-2018 HUCCPHUTCHINSON UTILITIES COMMISSION AGENDA REGULAR MEETING August 29t', 2018 3:00 p.m. 1. CONFLICT OF INTEREST 2. APPROVE CONSENT AGENDA a. Approve Minutes b. Ratify Payment of Bills 3. APPROVE FINANCIAL STATEMENTS 4. OPEN FORUM 5. COMMUNICATION a. City Administrator b. Divisions C. Legal d. General Manager 6. POLICIES a. Review Policies i. Cold Weather Rule ii. Terminating Electric/Natural Gas Service by Customer iii. Definition of Your Bill iv. Hours & Conditions of Employment v. Flextime Program — Exempt Only vi. Rest Periods vii. Meal Periods viii. Attendance/Tardiness ix. Use of Facilities during off -duty Hours -Non Exempt Only x. Inclement Weather b. Approve Changes 7. UNFINISHED BUSINESS a. None 8. NEW BUSINESS a. Approve United Natural Gas Capacity Contract b. Approve Energy Conservation Rebate for Hutchinson Public School C. Approve Requisition #007671- Blade Replacement d. Approve Exception Agreement between HUC and MCPA e. Approve HDR Change Order Request f. Declare an Open Meeting for HUC's Annual Open House Being Held on Tuesday, October 9 from 4.00p.m to 7-00p.m. 9. ADJOURN MINUTES Regular Meeting — Hutchinson Utilities Commission Wednesday, July 25, 2018 Call to order — 3:00 p.m. President Monty Morrow called the meeting to order. Members present: President Monty Morrow; Vice President Anthony Hanson; Secretary Robert Wendorff; Commissioner Don Martinez; Commissioner Matt Cheney; General Manager Jeremy Carter; Attorney Marc Sebora; Peter Mikhail with Kennedy -Graven; Paul Harvego with Conway, Deuth & Schmiesing Audit Firm Swearing in of New Commissioner - Matt Cheney Attorney Sebora swore in the newly appointed commissioner, Matt Cheney. 2. Conflict of Interest Commissioner Cheney declared conflict of interest in voting on agenda item 3b Ratify Payment of Bills; he recently completed a job for HUC, which is in this month's payment of bills. Matt will be abstaining. 3. Approve Consent Agenda a. Approve Minutes b. Ratify Payment of Bills Motion by Commissioner Hanson, second by Commissioner Wendorff to approve the Consent Agenda. Motion carried unanimously. 4. Approve 2017 Financial Audit — Presentation by Paul Harvego Paul Harvego with Conway, Deuth & Schmiesing audit firm presented the 2017 Hutchinson Utilities Commission independent audit report. The financial statements of the Commission are presented fairly in the firm's opinion. Mr. Harvego reviewed the Statement of Net Position. Assets did increase in 2017 along with Noncurrent liabilities. However, Net Position overall had no significant changes. Cash and Investment balances show that HUC is covering expenses well, and the operating balance is stable. Restricted balances included bonded debt. Electric Division stayed consistent from 2016 with Operating Revenues and Expenses. Natural Gas Division did increase in 2017 by $1 M in Operating Revenues and Expenses. The change in Net Position for both Electric and Natural Gas Division is still consistent. Mr. Harvego summarized the Communications portion of the report and the general recommendations that consist of staff cross -training, capital asset accounting and Authorized signors. Mr. Harvego added that management is doing a fantastic job. Motion by Commissioner Wendorff, second by Commissioner Martinez to approve the 2017 Financial Audit. Motion carried unanimously. 5. Approve Financial Statements Jared Martig presented the financial statements. Electric Division showed an increase of $45K in interest expense due to the new bonds. Overall purchased power increased by $61 K. Natural Gas Division was nearly identical to June 2017. Motion by Commissioner Hanson, second by Commissioner Martinez to approve the financial statements. Motion carried unanimously. 6. Open Forum 7. Communication a. City Administrator— Matthew Jaunich i. City is working on 2017 Audit Report ii. Continuing to work on Century Ave project iii. Work on Century Townhomes have started iv. High Field Apartments are looking to add Units 4 &5. b. Divisions i. Dan Lang, Engineering Services Manager — nothing to report ii. Dave Hunstad, Electric Transmission/Distribution Manager — 1. Had a couple of outages for June, everything has been repaired. 2. Will be working on Uponor electric project in the next couple of weeks. iii. Randy Blake, Production Manager - 1 . Engines are on pads. Pictures are available on G:Drive 2. Repairing fences and gates that needed to be removed/disassembled to make room for engines coming in. 3. Tried to go combined cycle last week with Unit 1 and the superheater pipe between the boiler and steam turbine sprung a leak. Investigation to repair is active. iv. John Webster, Natural Gas Division Manager- nothing to report v. Jared Martig, Financial Manager- Continuing to work with BS&A on inventory. c. Human Resources- Brenda Ewing— Nothing to Report d. Legal — Marc Sebora — Nothing to report e. General Manager — Jeremy Carter i. Catching up on various tasks. ii. Received COS Study executive report back last Friday. Will be reviewing reports. Commissioner Hanson inquired about the timeline of the COS study. GM Carter noted these documents are high level and the completed book will include more detail. Staff is aware of the rate changes and is starting to work on a new rate code to set up another billable item. The new rate structure will start in Sept 2018 and customers will see the change in October 2018 and then again in October 2019. Most customers will not notice a significant change. 8. Policies a. Review Policies i. Offensive behavior/sexual harassment 2 ii. Retirement iii. Resignation iv. Solicitation on Utility Premises v. Employee Gifts vi. Flowers vii. Petty Cash No changes recommended at this time. b. Approve Changes i. Purchasing Policy — updating the threshold. At the last Legislative session, the threshold increased from $100,000 to $175,000. This increase goes into effect 8/1/2018 ii. Deposit Requirement -Residential — as noted. Updated language and moved paragraphs around to easier explain and have proper positioning. There were no changes to context. iii. Deposit Requirement-Commercial/Industrial — as noted. Updated language and moved paragraphs around to easier explain and have proper positioning. There were no changes to context. Motion by Commissioner Martinez, second by Commissioner Wendorff to approve the policy changes as recommended. Motion carried unanimously. 9. Unfinished Business 10. New Business a. Approval of Parallel Generation Contract Mr. Hunstad presented the Parallel Generation Contract; he noted that there is a customer in town that is looking to install a 10.72KW Solar "Net Metering" rooftop system. HUC does have a policy in place that follows State Statute 216b.1638 for Co -generation and small power production for facilities of 40KW or less. The attached contract is the first step to ensure that all obligations are met prior to energizing the system. Commissioner Hanson inquired how this compares to others in town. Mr. Hunstad informed the Commission that there are two 40KW or less "Net Metering" Solar parallel generation contracts in place today. GM Carter added HUC has had a policy in place for this Co -generation and small power production and Staff is following the policy. Motion by Commissioner Hanson, second by Commissioner Martinez to approve Parallel Generation Contract. Motion carried unanimously. At this time, President Morrow looked to the Commission to entertain a Motion to go to Closed Session pursuant to Minnesota statute 13d.05, subd. 3(b) under the 3 attorney client privilege to discuss litigation strategy involving Corval Constructors, Inc. vs. City of Hutchinson, Hutchinson Utilities Commission. Motion by Commissioner Hanson, second by Commissioner Martinez to go into Closed Session pursuant to Minnesota statute 13d.05, subd. 3(b) under the attorney client privilege to discuss litigation strategy involving Corval Constructors, Inc. vs. City of Hutchinson, Hutchinson Utilities Commission at 3:35p.m. Motion carried unanimously. Members present for the closed session: President Monty Morrow; Vice President Anthony Hanson; Secretary Robert Wendorff; Commissioner Don Martinez; Commissioner Matt Cheney; General Manager Jeremy Carter; Attorney Marc Sebora; Peter Mikhail with Kennedy -Graven Motion by Commissioner Wendorff, second by Commissioner Cheney to move from closed meeting back to open meeting. Motion was unanimously carried. The meeting was reopened at 4:45p.m. President Morrow looking to Mr. Sebora on next step. Mr. Sebora suggested entertaining a motion to table item 10b Approval of Fagen Final Contract to next Commission meeting. Motion by Commissioner Hanson, second by Commissioner Martinez to table item 10b Approval of Fagen Final Contract to next Commission meeting. Motion carried unanimously. President Morrow added item 10C Rescind Advertising for Bids- Units 6 & 7 Electrical Work. Motion by Commissioner Martinez, second by Commissioner Wendorff to Rescind Advertising for Bids- Units 6 & 7 Electrical Work. Motion carried unanimously. Mr. Sebora asked President Morrow to take action to set a special meeting for next Wednesday, August 1 at 10a.m. and to include item 10b. President Morrow asked the Commission if there is a motion to set a special meeting next Wednesday, August 1 at 10a.m. Motion by Commissioner Martinez, second by Commissioner Hanson to set a Special Meeting Wednesday, August 1 at 10a.m. Motion carried unanimously. 11. Adjourn There being no further business, a motion by Commissioner Hanson, second by Commissioner Cheney to adjourn the meeting at 4:50p.m. Motion carried unanimously. ATTEST: Monty Morrow, President 12 Robert Wendorff, Secretary MINUTES Special Meeting — Hutchinson Utilities Commission Wednesday, August 1, 2018 Call to order — 10:00 a.m. President Morrow called the meeting to order. Members present: President Monty Morrow; Vice President Anthony Hanson; Secretary Robert Wendorff; Commissioner Don Martinez; Commissioner Matt Cheney; General Manger Jeremy Carter; Attorney Marc Sebora Others present: Peter Mikhail with Kennedy -Graven, Chris Novak with Corval, and Angie Radke. The purpose of the special meeting is to have a closed session pursuant to Minn. Stat. § 13D.05, Subd. 3(b), for attorney -client privileged communications concerning Corval Constructors, Inc, v. City of Hutchinson and Hutchinson Utilities Commission along with discussing bid award and bid process for the Plant 1 Units 6 & 7 Installation Project. President Morrow asked the Commission if there was a motion to approve the Agenda. Motion by Commissioner Wendorff, second by Commissioner Hanson to approve the Agenda. Motion carried unanimously. Motion by Commissioner Hanson, second by Commissioner Martinez to close the meeting to discuss pursuant to Minn. Stat. § 13D.05, Subd. 3(b), for attorney -client privileged communications concerning Corval Constructors, Inc. v. City of Hutchinson and Hutchinson Utilities Commission. Motion carried unanimously. The meeting closed at 10:02a.m. Members present for the closed session: President Monty Morrow; Vice President Anthony Hanson; Secretary Robert Wendorff; Commissioner Don Martinez; Commissioner Matt Cheney; General Manager Jeremy Carter; Attorney Marc Sebora; Peter Mikhail with Kennedy -Graven Motion by Commissioner Martinez, second by Commissioner Wendorff to move from closed meeting back to open meeting. Motion was unanimously carried. The meeting was reopened at 10:15a.m. Commissioner Morrow asked GM Carter and Marc Sebora to provide a brief synopsis of what to do going forward. GM Carter discussed HUC has Resolution 18-04 (Attached) to rescind bid award to Fagen, reject all bids, and re -bid the Plant 1 units 6 & 7 Installation Project. HUC would like to 1) rescind Fagen's Inc previously awarded bid as they did not acknowledge receipt of Addendum No. M-2 in its bid making Fagen's bid nonresponsive to the material terms of the bid invitation 2) HUC would like to reject all bids for the Plant 1 Units 6 & 7 Installation Project and rebid; the original bid documents provided discretionary items to the bidders which did not allow a fair basis for comparing bid proposals. HUC and HDR need to revise the bid documents before rebidding and 3) Commission shall prepare a revised invitation for bids to ensure sufficient fairness in the process, and shall rebid the Plant 1 Units 6 & 7 Installation Project. HUC will be asking the Commission to re -advertise the installation portion of the project and move forward from there. Mr. Sebora noted that sums it up. Mr. Sebora added key components need to be addressed, the bid specifications need to be fair to everyone that is going to bid. President Morrow asked if there were any questions from commissioners. There being no additional questions or discussions a motion by Commissioner Hanson, second by Commissioner Martinez to adopt resolution 18-04. Motion carried unanimously. Resolution 18-04 is adopted. President Morrow asked GM Carter what the timeline would be. GM Carter noted that HUC would like to move forward in a week to 10 days. Within this timeframe, HUC and HDR will be working on cleaning up the documents, and making sure all discretionary items are no longer in the documents. This process will also help with electrical bids. After changes have been made to the documents, Staff will ask the Commission to set a Special Meeting to approve Advertisement of Bids for Installation. The bid process will take 30 days. Even though we have done this process before, HUC still needs to have equal opportunity to allow ample time for companies to review and send in bids. After 30 days, the bids will be opened and reviewed to make sure all specifications have been meet. Once bids have been reviewed, Staff will ask the Commission to have a Special Meeting to Award the Bid. After the bid is awarded, Staff and HDR will review the contract. This review process will make sure all specifications and contract language has been met and is correct along with making sure all bonds have been received. Once the contract has been reviewed, Staff will ask the Commission to have a Special Meeting to Approve the Contract. For the Electrical contract, Staff will start moving forward about 2-3 weeks after Advertisement of bids on Mechanical portion has been started. This will give electrical contractors an idea on who may be bidding on the mechanical portion. GM Carter inquired if there were any questions on the timeline. Commissioner Hanson asked if there was anything to gain with having both mechanical and electrical bids going at the same time. GM Carter noted that a concern by having both mechanical and electrical at same time is there may not be a real solid date on when mechanical work will be done. Also, electrical contractors may want to know who they will be working with. GM Carter added, the engines need to be certified to the MISO market by August 30 this year for planning year June 1, 2020-May 31, 2021. GM Carter also added this gives Staff additional time to work on the natural pipeline now, Staff held back a little bit due to the foundation work. HUC still wants to continue with same timeframe, do a good job, and not rush a complex process. These are all critical projects; mechanical and electrical. If there are other thoughts, Staff can discuss. President Morrow appreciated the summary and asked the Commissioners to look at their schedules and try to be open for a Special Meeting to come. There being no further business, a motion by Commissioner Wendorff, second by Commissioner Cheney to adjourn the meeting at 10:33a.m. Motion was unanimously carried. Robert Wendorff, Secretary ATTEST: Monty Morrow, President RESOLUTION # 18-04 RESOLUTION TO RESCIND AWARD, REJECT ALL BIDS, AND RE -BID THE PLANT 1 UNITS 6 & 7 INSTALLATION PROJECT WHEREAS, the Commission solicited bids due July 2, 2018 for the Plant 1 Units 6 & 7 Installation Project; and WHEREAS, the Commission invited all bidders to submit clarifications and exceptions with their bid proposals, and to submit their own estimated date of substantial completion; and WHEREAS, as a result, the bid invitation was not sufficiently definite and precise to allow a fair basis for comparing bids; and WHEREAS, the Commission issued Addendum No. M-2 on June 28, 2018, which contained substantive and material changes to the specifications and requirements for valves and drawings; and WHEREAS, Fagen, Inc., was the low bidder and was awarded the contract for the Project; and WHEREAS, upon review, the Commission discovered that Fagen did not acknowledge receipt of Addendum No. M-2 in its bid; and WHEREAS, therefore, Fagen's bid was nonresponsive to the material terms of the bid invitation; and WHEREAS, by law, nonresponsive bids must be rejected; and WHEREAS, the Commission expressly reserved the right to reject any and all bids; and WHEREAS, by law, a contract based on an invalid bid process is void. NOW THEREFORE, BE IT RESOLVED BY THE HUTCHINSON UTILITIES COMMISSION, as follows: 1) That the resolution awarding the Plant 1 Units 6 & 7 Installation Project to Fagen, Inc., is hereby rescinded. 2) That all bids for the Plant 1 Units 6 & 7 Installation Project are hereby rejected. 3) That the Commission shall prepare a revised invitation for bids to ensure sufficient definiteness and fairness in the process, and shall re -bid the Plant 1 Units 6 & 7 Installation Project. Monty Movrlf'06)��H�UC P�reside�nt� 5 Date. Date: Robert Wendorff, Secretary MINUTES Special Meeting — Hutchinson Utilities Commission Thursday, August 16, 2018 Call to order — 7:00 a.m. President Morrow called the meeting to order. Members present: President Monty Morrow; Vice President Anthony Hanson; Secretary Robert Wendorff; Commissioner Don Martinez; Commissioner Matt Cheney; General Manger Jeremy Carter; Attorney Marc Sebora Others present: Angie Radke. The purpose of the special meeting is to approve advertising for bids on units 6 & 7 installation work and to approve advertising for bids on units 6 & 7 electrical work. GM Carter thanked the Commission for getting together. GM Carter stated this is the first step in a three -step process. Staff is looking for approval of the advertisement of bids. For the Installation bid, once the bids come in on Sept 21, Staff and HDR will review bids and check to see if all bidders are responsive. Next, there will be a meeting to award the bid. After the bid is awarded, Staff and HDR will review the contract and then have a meeting to have the Commission approve the contract. Staff has both the mechanical and electrical installation and substantial completion of the various project pieces running parallel in April. The timeline for mechanical installation completion is 180 calendar days, and 170 days for electrical installation. HUC is allowing 60 days for startup and commissioning for both mechanical and electrical. During commissioning different percentage run loads will be run to make sure everything is running properly and there are not any unforeseen problems. Completion is scheduled for the first week in June, which should provide plenty of time to have the engines certified to MISO by August 30 for planning year 2020. HUC is not foreseeing any issues since the engines are in the building. Overall, Staff feels this is a good timeframe. Staff and HDR did go back through the mechanical bid documents and added a completion date and did take out section 46. Staff and HDR feel all discretionary items have been taken out and the dates have been changed to mirror the timeline. Staff and HDR will be looking into the electrical documents. The electrical advertisement for bid will be advertised in September so there is a time lag. GM Carter inquired if there were any questions on timeline or any portion of the discussion. Commissioner Hanson asked if HDR was receptive to the changes in the revised bid documents. GM Carter noted HDR was receptive. After discussion, a motion by Commissioner Martinez, second by Commissioner Hanson to approve Advertisement for Bids. President Morrow thanked Staff for the hard work they have done. There being no further business, a motion by Commissioner Wendorff, second by Commissioner Cheney to adjourn the meeting at 7.15 a.m. Motion was unanimously carried. 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HUTCHINSON UTILITIES COMMISSION COMBINED DIVISIONS FINANCIAL REPORT FOR JULY, 2018 2018 2017 Di %Chnq 2018 2017 Di %Chnq Full YrBud %of Bud Combined Division Customer Revenue $ 2,953,598 $ 2,923,690 $ 29,908 1.0% $ 21,772,972 $ 20,759,660 $ 1,013,312 4.9% $ 35,763,605 60.9% Sales for Resale $ 338,970 $ 384,982 $ (46,012) (12.0%) $ 1,860,838 $ 1,254,901 $ 605,937 48.3% $ 2,519,200 73.9% NU Transportation $ 71,154 $ 70,405 $ 749 1.1% $ 499,865 $ 501,932 $ (2,066) (0.4%) $ 739,440 67.6% Electric Division Transfer $ 54,697 $ 54,308 $ 389 0.7% $ 382,880 $ 380,158 $ 2,722 0.7% $ 656,366 58.3% Other Revenues $ 74,368 $ 62,844 $ 11,524 18.3% $ 346,963 $ 405,868 $ (58,906) (14.5%) $ 492,808 70.4% Interest Income $ 34,439 $ 19,684 $ 14,755 75.0% $ 183,957 $ 83,262 $ 100,696 120.9% $ 100,000 184.0% TOTAL REVENUES $ 3,527,226 $ 3,515,913 $ 11,313 0.3% $ 25,047,476 $ 23,385,781 $ 1,661,695 7.1% $ 40,271,419 62.2% Salaries & Benefits Purchased Commodities Transmission Generator Fuel/Chem. Depreciation Transfers (Elect./City) Operating Expense Debt Interest TOTAL EXPENSES NET PROFIT/(LOSS) $ 427,646 $ 465,580 $ (37,934) (8.15%) $ 3,353,839 $ 3,227,570 $ 126,269 3.9% $ 6,363,429 52.7% $ 1,701,164 $ 1,603,316 $ 97,849 6.1% $ 12,303,642 $ 11,879,435 $ 424,207 3.6% $ 19,600,000 62.8% $ 231,696 $ 274,840 $ (43,144) (15.7%) $ 1,413,618 $ 1,392,263 $ 21,355 1.5% $ 2,630,000 53.7% $ 190,995 $ 306,532 $ (115,537) (37.7%) $ 706,624 $ 561,008 $ 145,616 26.0% $ 992,082 71.2% $ 325,667 $ 317,333 $ 8,333 2.6% $ 2,279,667 $ 2,221,334 $ 58,333 2.6% $ 3,908,000 58.3% $ 158,986 $ 154,003 $ 4,984 3.2% $ 1,112,904 $ 1,078,018 $ 34,886 3.2% $ 1,907,835 58.3% $ 142,948 $ 221,520 $ (78,573) (35.5%) $ 1,103,324 $ 1,377,985 $ (274,661) (19.9%) $ 2,490,809 44.3% $ 103,551 $ 63,382 $ 40,169 63.4% $ 724,860 $ 443,676 $ 281,184 63.4% $ 1,280,863 56.6% $ 3,282,654 $ 3,406,506 $ (123,852) (3.6%) $ 22,998,476 $ 22,181,288 $ 817,189 3.7% $ 39,173,018 58.7% $ 244,572 $ 109,407 $ 135,165 123.5%1 2,048,999 $ 1,204,493 $ 844,506 70.1% $ 1,098,401 186.5% July July YTD YTD 2018 2017 Change 2018 2017 Change Gross Margin % 32.1% 29.7% 2.4% 34.8% 32.4% 2.4% Operating Income Per Revenue $ (%) 7.5% 2.8% 4.7% 9.7% 5.5% 4.2% Net Income Per Revenue $ (%): 6.9% 3.1% 3.8% 8.2% 5.2% 3.0% 2018 HUC Budget Target 32.2% IIIIIIIIIIIIIIIIIII 10NNNNNNNN�1 5.2% fN��IINIINIdI 2.7% HUTCHINSON UTILITIES COMMISSION ELECTRIC DIVISION FINANCIAL REPORT FOR JULY, 2018 2018 2017 2 . Electric Division Customer Revenue $ 2,603,210 $ 2,556,323 $ 46,887 Sales for Resale $ 338,970 $ 384,982 $ (46,012) Other Revenues $ 51,273 $ 26,065 $ 25,208 Interest Income $ 18,614 $ 9,842 $ 8,771 TOTAL REVENUES $ 3,012,066 $ 2,977,211 $ 34,855 Salaries & Benefits $ 338,900 $ 356,410 $ (17,509) Purchased Power $ 1,495,468 $ 1,402,095 $ 93,373 Transmission $ 231,696 $ 274,840 $ (43,144) Generator Fuel/Chem. $ 190,995 $ 306,532 $ (115,537) Depreciation $ 241,667 $ 233,333 $ 8,333 Transfers (Elect./City) $ 128,224 $ 123,408 $ 4,816 Operating Expense $ 94,094 $ 157,913 $ (63,819) Debt Interest $ 47,376 $ 2,124 $ 45,252 TOTAL EXPENSES $ 2,768,421 $ 2,856,655 $ (88,234) NET PROFIT/(LOSS) $ 243,645 $ 120,556 $ 123,089 58.3% of Year Comp. %Chna 2018 2017 2 . %Chna Full YrBud %of Bud 1.8% $ 14,904,281 $ 14,680,984 $ 223,296 1.5% $ 25,325,189 58.9% (12.0%) $ 1,860,838 $ 1,254,901 $ 605,937 48.3% $ 2,519,200 73.9% 96.7% $ 151,136 $ 238,463 $ (87,327) (36.6%) $ 208,800 72.4% 89.1% $ 101,737 $ 41,631 $ 60,106 144.4% $ 50,000 203.5% 1.2% $ 17,017,991 $ 16,215,979 $ 802,012 4.9% $ 28,103,189 60.6% (4.9%) $ 2,631,333 $ 2,525,003 $ 106,330 4.2% $ 4,942,964 6.7% $ 8,699,279 $ 8,365,195 $ 334,084 4.0% $ 14,000,000 (15.7%) $ 1,413,618 $ 1,392,263 $ 21,355 1.5% $ 2,630,000 (37.7%) $ 706,624 $ 561,008 $ 145,616 26.0% $ 992,082 3.6% $ 1,691,667 $ 1,633,334 $ 58,333 3.6% $ 2,900,000 3.9% $ 897,571 $ 863,858 $ 33,713 3.9% $ 1,538,693 (40.4%) $ 720,642 $ 977,860 $ (257,218) (26.3%) $ 1,613,834 2,130.6% $ 331,635 $ 14,868 $ 316,767 2,130.6% $ 606,763 (3.1%) $ 17,092,367 $ 16,333,388 $ 758,980 4.6% $ 29,224,336 102.1% $ (74,376) $ (117,408) $ 43,032 (36.7%) $ (1,121,1471 53.2% 62.1% 53.7% 71.2% 58.3% 58.3% 44.7% 54.7% 58.5% 6.6% 58.3% of Year Comp. 2018 2017 2 . %Chna 2018 2017 2 . %Chna Full YrBud %of Bud Electric Division Residential 5,569,422 5,663,170 (93,748) (1.66%) 30,214,810 28,801,630 1,413,180 4.91% 50,432,797 59.9% All Electric 154,295 162,814 (8,519) (5.23%) 1,571,371 1,439,416 131,955 9.17% 2,611,705 60.2% Small General 1,766,562 1,725,692 40,870 2.37% 11,119,731 10,471,363 648,368 6.19% 17,085,853 65.1% Large General 7,889,020 7,231,290 657,730 9.10% 45,122,100 42,840,515 2,281,585 5.33% 79,262,499 56.9% Industrial 12,679,000 12,538,000 141,000 1.12% 77,040,000 78,941,000 (1,901,000) (2.41%) 134,707,856 57.2% Total KWH Sold 28,058,299 27,320,966 737,333 2.70% 165,068,012 162,493,924 2,574,088 1.58% 284,100,710 58.1% July July YTD YTD 2018 HUC 2018 2017 Change 2018 2017 Change Budget Target Gross Margin % 28.3% 25.2% 3.2% 26.5% 25.5% 1.0% 24.0% Operating Income Per Revenue $ (%) 7.9% 3.1% 4.8% 0.6% -1.7% 2.4% -2.0% ��IIIIIIIIIIIIIIII Net Income Per Revenue $ (%): 8.1% 4.0% 4.0% -0.4% -0.7% 0.3% -4.0% 0%-5% Customer Revenue per KWH: $0.0928 $0.0922 $0.0006 $0.0898 $0.0899 $0.0000 $0.0886 11llllllllllllllll� Total Power Supply Exp. per KWH: $0.0755 $0.0807 -$0.0052 $0.0751 $0.0736 $0.0016 $0.0750 Overall net income increased by $123,089 mostly to decreases in expenses. Sales for Resale of $338,970 consisted of $23,860 in market sales, $35,600 in the monthly tolling fee from Transalta, $163,510 in Transalta energy sales, and $116,000 in capacity sales to SMMPA. July 2017 Sales for Resale of $384,982 consisted of $98,764 in market sales, $34,400 in monthly tolling fees from Transalta, $155,818 in Transalta energy sales, and $96,000 in capacity sales to SMMPA. July 2016 Sales for Resale of $300,753 consisted of $51,862 market sales, $34,400 in Transalta tolling fees, $147,991 in Transalta energy sales, and capacity sales to SMMPA for $66,500. Overall Purchased Power increased by $93,373. MRES purchases decreased by $8,263 and market purchases/MISO costs increased by $101,636. July power cost adjustment was $.00936/kwhr bringing in an additional $262,482 in revenue for the month and $964,631 YTD. Last year's power cost adjustment for July 2017 generated $226,462 in additional revenue for the month and $988,980 for the year. HUTCHINSON UTILITIES COMMISSION GAS DIVISION FINANCIAL REPORT FOR JULY, 2018 58.3% of Year Comp. 2018 2017 2 . %Chng 2018 2017 2 . %Chna Full YrBud %of Bud Gas Division Customer Revenue $ 350,388 $ 367,368 $ (16,979) (4.6%) $ 6,868,692 $ 6,078,676 $ 790,016 13.0% $ 10,438,416 65.8% Transportation $ 71,154 $ 70,405 $ 749 1.1% $ 499,865 $ 501,932 $ (2,066) (0.4%) $ 739,440 67.6% Electric Div. Transfer $ 54,697 $ 54,308 $ 389 0.7% $ 382,880 $ 380,158 $ 2,722 0.7% $ 656,366 58.3% Other Revenues $ 23,095 $ 36,779 $ (13,684) (37.2%) $ 195,827 $ 167,406 $ 28,421 17.0% $ 284,008 69.0% Interest Income $ 15,825 $ 9,842 $ 5,983 60.8% $ 82,220 $ 41,631 $ 40,590 97.5% $ 50,000 164.4% TOTAL REVENUES $ 515,160 $ 538,702 $ (23,542) (4.4%) $ 8,029,484 $ 7,169,802 $ 859,683 12.0% $ 12,168,230 66.0% Salaries & Benefits $ 88,746 $ 109,171 $ (20,425) (18.7%) $ 722,506 $ 702,567 $ 19,939 2.8% $ 1,420,465 50.9% Purchased Gas $ 205,697 $ 201,221 $ 4,476 2.2% $ 3,604,363 $ 3,514,240 $ 90,123 2.6% $ 5,600,000 64.4% Operating Expense $ 48,853 $ 63,607 $ (14,754) (23.2%) $ 382,682 $ 400,125 $ (17,443) (4.4%) $ 876,975 43.6% Depreciation $ 84,000 $ 84,000 $ - 0.0% $ 588,000 $ 588,000 $ - 0.0% $ 1,008,000 58.3% Transfers (City) $ 30,762 $ 30,594 $ 168 0.5% $ 215,333 $ 214,160 $ 1,173 0.5% $ 369,142 58.3% Debt Interest $ 56,175 $ 61,258 $ (5,083) 0.0% $ 393,225 $ 428,808 $ (35,583) JL12L $ 674,100 58.3% TOTAL EXPENSES $ 514,233 $ 549,851 $ (35,618) (6.5%) $ 5,906,109 $ 5,847,900 $ 58,209 1.0% $ 9,948,682 59.4% PRO(FFIIITTT//(/(LL/LOSS((() $ 927 $ (11,144/9) (108.3%)l $ 2,219,548 95.7% $ 2,123,375 $ 1,321,902$ 60.6% gp)yNET //$ (((((((12,076 /801,(4((73 58.3% of Year Comp. 2018 2017 Di . %Chnq 2018 2017 Di . %Chnq Full YrBud %of Bud Gas Division Residential 6,099,812 6,583,875 (484,063) (7.35%) 277,060,795 237,016,074 40,044,721 16.90% 449,582,000 61.6% Commercial 7,954,525 9,058,290 (1,103,765) (12.19%) 216,205,006 186,538,751 29,666,255 15.90% 420,183,000 51.5% Industrial 46,791,910 50,114,912 (3,323,002) (6.639/,) 525,307,932 501,707,223 23,600,709 4.70%1 786,836,000 66.8% Total CF Sold 60,846,247 65,757,077 (4,910,830) (7.47%)l 1,018,573,733 925,262,048 93,311,685 10.08%1 1,656,601,000 61.5% July July YTD YTD 2018 HUC 2018 2017 Change 2018 2017 Change Budget Target Gross Margin % 55.3% 57.0% -1.7% 52.9% 48.5% 4.4% 51.4% IIIIIIIIIIIIIIIIIIIIIIII �� Operating Income Per Revenue $ (%) 4.8% 0.7% 4.1% 29.2% 22.2% 7.0°% 22.1°% Net Income Per Revenue $ (%): 0.2% -2.3% 2.5% 27.4% 19.0% 8.4% 18.8% �pyN�NNpNp�p�p�p�N� ��MflIII�IIIIIIIIIIIIIIIIIyy Contracted Customer Rev. per CF: $0.0036 $0.0034 $0.0001 $0.0038 $0.0039 $0.0000 $0.0035pp�pp�pp��pp��pp��ryry�I Customer Revenue per CF: $0.0130 $0.0125 $0.0006 $0.0099 $0.0098 $0.0001 $0.0088IIIIIIIIII��II�'' Total Power Supply Exp. per CF: $0.0035 $0.0032 $0.0003 $0.0036 $0.0039 ($0.0003) $0.0035 $0.0035 Natural Gas net income was nearly identical to July 2017 increasing by $12,076 with lower revenues offset by a bigger decrease in expenses. July's fuel cost credit adjustment was $1.79776/MCF totalling $32,466 for the month and $218,255 YTD. July 2017 credits totalled $44,625 for the month and $390,910 YTD. Approximately 56% of the increase in net profits year to date is a result of building the rate stabilization fund back up at the beginning of 2018. Current Assets Unnestricted/Undesignated Cash Cash Petty Cash Designated Cash Capital Expenditures - Five Yr. CIP Payment in Lieu of Taxes Rate Stabilization - Electric Rate Stabilization - Gas Catastrophic Funds Restricted Cash Bond Interest Payment 2017 Bond Interest Payment 2012 Debt Service Reserve Funds Total Current Assets Receivables Accounts (net of uncollectible allowances) Interest Total Receivables Other Assets Inventory Prepaid Expenses Sales Tax Receivable Deferred Outflows - Electric Deferred Outflows - Gas Total Other Assets Total Current Assets Capital Assets Land & Land Rights Depreciable Capital Assets Accumulated Depreciation Construction - Work in Progress Total Net Capital Assets Total Assets HUTCHINSON UTILITIES COMMISSION BALANCE SHEET - CONSOLIDATED JULY31, 2018 Electric Gas Total Total Net Change Division Division 2018 2017 Total (YTD) 9,816,251.89 7,559,467.32 17,375,719.21 11,209,100.66 6,166,618.55 680.00 170.00 850.00 850.00 - 2,750,000.00 700,000.00 3,450,000.00 1,922,035.80 1,527,964.20 882,327.00 369,142.00 1,251,469.00 1,196,331.00 55,138.00 372,736.68 - 372,736.68 314,539.41 58,197.27 - 651,306.61 651,306.61 646,058.37 5,248.24 400,000.00 100,000.00 500,000.00 500,000.00 - 1,062,064.92 - 1,062,064.92 112,865.62 949,199.30 - 1,312,733.32 1,312,733.32 1,466,325.01 (153,591.69) 522,335.64 2,188,694.02 2,711,029.66 2,188,694.02 522,335.64 15,806,396.13 12,881,513.27 28,687,909.40 19,556,799.89 9,131,109.51 2,797,606.28 19, 039.49 2,816,645.77 465,644.34 3,263,250.62 3,031,236.10 232,014.52 19,039.49 38,078.98 31,415.67 6,663.31 484,683.83 3,301,329.60 3,062,651.77 238,677.83 1,252,061.09 448,078.89 1,700,139.98 1,561,983.67 138,156.31 58,960.95 52,982.59 111,943.54 93,754.39 18,189.15 50,069.95 - 50,069.95 166,930.41 (116,860.46) 752,887.00 - 752,887.00 1,746,060.00 (993,173.00) - 250,962.00 250,962.00 582,020.00 (331,058.00) 2,113,978.99 752,023.48 2,866,002.47 4,150,748.47 (1,284,746.00) 20,737,020.89 14,118,220.58 34,855,241.47 26,770,200.13 8,085,041.34 690,368.40 3,899,918.60 4,590,287.00 4,591,691.75 (1,404.75) 89,599,449.50 41,294,704.69 130,894,154.19 128,038,822.46 2,855,331.73 (54,136,660.22) (15,594,585.00) (69,731,245.22) (66,553,159.96) (3,178,085.26) 11,066,650.65 192,584.02 11,259,234.67 1,198,405.55 10,060,829.12 47,219,808.33 29,792,622.31 77,012,430.64 67,275,759.80 9,736,670.84 67,956,829.22 43,910,842.89 111,867,672.11 94,045,959.93 17,821,712.18 Current Liabilities Current Portion of Long-term Debt Bonds Payable Bond Premium Accounts Payable Accrued Expenses Accrued Interest Accrued Payroll Total Current Liabilities Long -Term Liabilities Noncurrent Portion of Long-term Debt 2017 Bonds 2012 Bonds 2003 Bonds Bond Premium 2012 Pension Liability- Electric Pension Liability- Nat Gas Accrued Vacation Payable Accrued Severance Deferred Outflows - Electric Deferred Outflows - Nat Gas Total Long -Term Liabilities Net Position Retained Earnings Total Net Position HUTCHINSON UTILITIES COMMISSION BALANCE SHEET - CONSOLIDATED JULY31, 2018 Electric Gas Total Division Division 2018 2,342,994.12 94,752.76 33,139.53 2,470,886.41 1,295,000.00 185,608.32 518,202.21 196,350.28 9,257.90 2,204,418.71 Total Net Change 2017 Total (YTD) 1,295,000.00 1,345,000.00 (50,000.00) 185,608.32 185,608.32 - 2,861,196.33 1,756,584.72 1,104,611.61 291,103.04 126,764.65 164,338.39 42,397.43 65,640.75 (23,243.32) 4,675,305.12 3,479,598.44 1,195,706.68 16,675,000.00 - 16,675,000.00 - 16,675,000.00 - 13,900,000.00 13,900,000.00 15,195,000.00 (1,295,000.00) - - - 465,000.00 (465,000.00) 646,834.56 1,361,127.31 2,007,961.87 1,546,735.63 461,226.24 3,083,440.00 - 3,083,440.00 4,226,202.00 (1,142,762.00) - 1,027,813.00 1,027,813.00 1,408,734.00 (380,921.00) 323,735.99 102,774.05 426,510.04 378,943.50 47,566.54 73,739.62 28,580.99 102,320.61 92,050.32 10,270.29 794,370.00 - 794,370.00 569,910.00 224,460.00 - 264,790.00 264,790.00 189,970.00 74,820.00 21,597,120.17 16,685,085.35 38,282,205.52 24,072,545.45 14,209,660.07 43,888,822.64 25,021,338.83 68,910,161.47 66,493,816.04 2,416,345.43 43,888,822.64 25,021,338.83 68,910,161.47 66,493,816.04 2,416,345.43 Total Liabilities and Net Position 67,956,829.22 43,910,842.89 111,867,672.11 94,045,959.93 17,821,712.18 Hutchinson Utilities Commission Cash -Designations Report, Combined 7/31/2018 Change in Financial Balance, Balance, Cash/Reserve Institution Current Interest Rate Annual Interest July 2018 June 2018 Position Savings, Checking, Investments varies varies Total Operating Funds Debt Reserve Requirements Bond Covenants - sinking fund Debt Reserve Requirements Bond Covenants -1 year Max. P & I Total Reserve Requirement Operating Reserve Rate Stabalization Funds PILOT Funds Catastrophic Funds Capital Reserves Total Earmarked Funds varies 28,687,909.40 29,358,649.63 (670,740.23) 28,687,909.40 29,358,649.63 (670,740.23) Min 60 days of 2018 Operating Bud. Charter (Formula Only) Risk Mitigation Amount 5 Year CIP ( 2018-2022 Fleet & Infrastructure Maintenance) 2,374,798.24 2,157,083.94 217,714.30 2,188,694.02 2,188,694.02 - 4,563,492.26 4,345,777.96 217,714.30 5,868,920.00 5,868,920.00 1,024,043.29 1,024,043.29 1,251,469.00 1,251,469.00 500,000.00 500,000.00 3,450,000.00 3,450,000.00 12,094,432.29 12,094,432.29 YE YE YE YE YTD HUC 2014 2015 2016 2017 2018 Target Debt to Asset 28.8% 32.0% 32.2% 40.8% 38.4% Current Ratio 2.26 2.52 3.06 5.73 6.15 �INigM� RONA 0.05% 1.31% 2.17% 1.80% 2.03% Change in Cash Balance (From 12131114 to 713112018) Month End Electric Elec. Change Natural Gas Gas Change Total Total Change 7/31/2018 15,806,396 12,881,513 28,687,909 12/31/2017 23,213,245 (7,406,849) 10,702,689 2,178,824 33,915,934 (5,228,025) 12/31/2016 8,612,801 14,600,444 9,500,074 1,202,615 18,112,875 15,803,059 12/31/2015 6,170,790 2,442,011 9,037,373 462,701 15,208,163 2,904,712 12/31/2014 3,598,821 2,571,969 6,765,165 2,272,208 10,363,986 4,844,177 * 2017's Signifcant increase in cash balance is due to issuing bonds for the generator project. Hutchinson Utilities Commission Cash -Designations Report, Electric 7/31/2018 Change in Financial Balance, Balance, Cash/Reserve Institution Current Interest Rate Annual Interest July 2018 June 2018 Position Savings, Checking, Investments varies varies varies 28,687,909.40 29,358,649.63 (670,740.23) Total HUC Operating Funds 28,687,909.40 29,358,649.63 (670,740.23) Debt Restricted Requirements Bond Covenants - sinking fund Operating Reserve Min 60 days of 2018 Operating Bud. Rate Stabalization Funds $400K-$1.2K PILOT Funds Charter (Formula Only) Catastrophic Funds Risk Mitigation Amount Capital Reserves 5 Year CIP ( 2018-2022 Fleet & Infrastructure Maintenance) Total Designated Funds 1,062,064.92 1,008,442.29 53,622.63 4,387,223.00 4,387,223.00 372,736.68 372,736.68 882,327.00 882,327.00 400,000.00 400,000.00 2,750,000.00 2,750,000.00 8,792,286.68 8,792,286.68 RestrictionsExcess Reserves Less Designations,00 YE YE YE YE YTD APPA Ratio HUC 2014 2015 2016 2017 2018 5K-10K Cust. Target Debt to Asset Ratio (* w/Gen.) 7.4% 13.2% 16.1% 36.1% 35.4% 50.1% Current Ratio 2.48 2.95 3.57 10.70 7.45 2.43 �I RONA -3.1% -1.2% -0.4% -0.1% -0.1% NA >0% Hutchinson Utilities Commission Cash -Designations Report, Gas 7/31/2018 Change in Financial Balance, Balance, Cash/Reserve Institution Current Interest Rate Annual Interest July 2018 June 2018 Position Savings, Checking, Investments varies varies Total HUC Operating Funds Debt Restricted Requirements Bond Covenants - sinking fund Debt Restricted Requirements Bond Covenants -1 year Max. P & I Total Restricted Requirements Operating Reserve Rate Stabalization Funds PILOT Funds Catastrophic Funds Capital Reserves Total Earmarked Funds varies 28,687,909.40 29,358,649.63 (670,740.23) 28,687,909.40 29,358,649.63 (670,740.23) Min 60 days of 2018 Operating Bud. $200K-$600K Charter (Formula Only) Risk Mitigation Amount 5 Year CIP ( 2018-2022 Fleet & Infrastructure Maintenance) 1, 312, 733.32 1,148, 641.65 164,091.67 2,188,694.02 2,188,694.02 - 3,501,427.34 3,337,335.67 164,091.67 1, 481, 697.00 1, 481, 697.00 651, 306.61 651, 306.61 369,142.00 369,142.00 100, 000.00 100, 000.00 700,000.00 700,000.00 3,302,145.61 3,302,145.61 YE YE YE YE YTD HUC 2014 2015 2016 2017 2018 APGA Ratio Target Debt to Asset 55.6% 54.8% 51.5% 48.1% 43.0% TBD Current Ratio 2.07 2.17 2.59 2.72 4.70 TBD RONA 4.3% 4.7% 5.6% 5.0% 5.6% TBD co co co co co O O O O O Q Q Q Q Q N N N N N O N N N N O O 000, O 0 EC . . . . . . . . . 7 7 U d to (L o Ln Ln O Ln O O O O L, N N O) O) N CO 1-- CO LO C CO N M Ln co Ln O r 11 N O J N N N M CO CO CO Ln C "� W M CO I- R CO CO C � R 7 (� O O O O O O O O c O O 888888C y O O O O O O O O C y 15 O O O O O O O O C O O O O O O O O C R L 0 0 0 0 0 0 0 O orl- u E N N N N N N N N C a Q 1� oO oO O mo O O O O L( CO O O CO M O) M N Ln I` o M 1-- or V O) N C I� M I- CO M N M O C V V V V 1-- CO co co Ln V V V V M M o o C N N N N N N N N C O O O O O O O O O C V O O O O O O O O C O) O O O O O O O O C V O O O O O O O O C M O O O O O O O O C CO Ln Ln Ln Ln Ln Ln O Ln L! 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N V M N t o CEO N IL,..O R N Ln O N > � N V N l; R LN Cfl V O r W ti r p N � � I ~ C o N m Q U Y 0 F m N O E Q ~ m 0 d C - N U a+ e O N O O D � U U E d o O C7 ELECTRIC DIVISION Operating Revenue July 2018 CLASS AMOUNT KWH /KWH Street Lights $0.32 6 $0.05333 Electric Residential Service $577,310.45 5,569,422 $0.10366 All Electric Residential Service $16,594.68 154,295 $0.10755 Electric Small General Service $184,133.79 1,766,562 $0.10423 Electric Large General Service $769,415.88 7,889,020 $0.09753 Electric Large Industrial Service $1,055,754.44 12,679,000 $0.08327 Total $2,603,209.56 28,058,305 $0.09278 Power Adjustment $0.00936 Rate Without Power Adjustment $0.08342 Electric Division Year -to -Date 02018$A--t 02017$A-t ®2018 KWH110 02017KWH110 20,000,000 19,000,000 18,000,000 17,000,000 16,000,000 15,000,000 14,000,000 13,000,000 12,000,000 11,000,000 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 IL Street Lights Residential All Elec. Small Gen. Large Gen. Large For Resale Total Resid. Srv. Srv. Industrial NOTE: Sales for resale includes capacity sales, market sales and Transalta sales. NATURAL GAS DIVISION Operating Revenue JULY 2018 CLASS AMOUNT MCF /$ MCF Residential $77,792.95 6,100 $12.75294 Commercial $68,353.28 7,955 $8.59249 Large Industrial $204,242.25 46,792 $4.36490 Total $350,388.48 60,847 $5.75852 Fuel Adjustment-$0.00180 Rate Without Fuel Adjustment $7.55852 Natural Gas Division Year -to -Date ® 2018 $ Amount 0 2017 $ Amount ® 2018 MCF 0 2017 MCF 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Gas Residential Gas Commercial Large Industrial Total eReliability I Monthly Statistics Monthly Report - Hutchinson Utilities Hutchinson Utilities Commission Commission Year Minimum duration Substation 2018 Month Maximum duration Circuit 07 - July Annual Report? Top-level Cause Remove Major Events? 0 Yes Unscheduled No https:llreliability.publicpower.org/reports/monthly/utility/9l/?year=2018&month=7&is ann... 8/8/2018 eeliability I Monthly Statistics 10MEM IEEE 1366 Statistics Metric Jul 2018 Jul 2017 SAIDI 0.939 0.356 SAI F I 0.0644 0.00326 CAIDI 14.582 109.347 ASAI 99.9978% 99.9991 % Momentary Interruptions 0 0 Sustained Interruptions 3 2 Circuit Ranking - Worst Performing Ranked by Outage Count Circuit Substation Fdr#15 Plant 1 Fdr#11 Plant 1 Ranked by Customer Interruptions Circuit Substation Fdr#15 Plant 1 Fdr#11 Plant 1 Number of Outages 2 1 Customer Interruptions 382 78 Ranked by Customer Minutes of Duration Circuit Substation Customer Minutes of Duration Fdr#15 Plant 1 5,382 Fdr#11 Plant 1 1,326 https:llreliability.publicpower.org/reports/monthly/utility/9l/?year=2018&month=7&is, ff llmajg�� https:Hreliability.publicpower.org/reports/monthly/utility/9l/?year=2018&month=7&is ann... 8/8/2018 401 35| , Monthly— —'— � Average ~ 3O 25 201 15 10 5 O~~�-�~ Aug Sep Oct Nov Dec Jon Feb Mar Apr May Jun Jul 2017 2017 2017 2017 2017 2018 3018 2018 2018 2018 2018 2018 Historical Monthly SA|F|Chart SAIR values VV—��=-----~��--~~=___�� Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 2018 2018 Causes Ranked by Count Electrical Failure Equipment Damage Causes Ranked by Duration Electrical Failure Equipment Damage 2 Duration e eliability 0 Monthly Statistics Top 3 Outages for the Month Customers Customer Minutes of Address Interrupted Duration Interruption Start Date 250 Fremont 380 14 5„320 07/27/2018 Ave 3M Store 78 17 1,326 07/24/2018 1095 Main St 2 31 62 07/17/2018 South Total Customers Affected for the Month: Average Customers Affected per Outage: 460 153.333333 Plow 'rrj/ioa r loll,,, https:llreliability.publicpower.orglreportslmonthlylutilityl91/?year=2018&month=7&is ann... 8/8/2018 Work Order Description 11708 Units 6 & 7 11801 Unit 8 Building Spancrete Joint Replacement 11802 Unit 1 Control Building Air Conditioning 11803 Plant I Cooling Tower Piping Replacement 11804 Soft Start Motor Controllers for Air Supply Fan 11805 Replace Stage 3-5 HPC Blades 11806 Unit I CEMS Data Logger 11807 Plant 1 Pipe Replacement Engineering Electric Production Materials Labor $ 14,369,702.00 $ 10,000.00 15,000.00 350,000.00 8,000.00 2,000.00 150,000.00 30,000.00 - 7,000.00 - $ 14,939,702.00 $ 2,000.00 Total Total Percentage Budgeted Actual Difference Completed $ 14,369,702.00 $ 10,575,385.81 $ (3,794,316.19) 65% $ 10,000.00 - $ (10,000.00) $ 15,000.00 5,461.96 $ (9,538.04) 30% $ 350,000.00 - $ (350,000.00) $ 10,000.00 10,565.96 $ 565.96 100% $ 150,000.00 - $ (150,000.00) $ 30,000.00 $ (30,000.00) $ 7,000.00 $ (7,000.00) Electric Distribution Work Total Total Percentage Order Description Materials Labor Budgeted Actual Difference Completed 21801 Pole Repair or Replacement 15,000.00 - 15,000.00 - $ (15,000.00) 21802 Hutch Substation Roof Replacement 10,000.00 10,000.00 - $ (10,000.00) 21803 Station Equipment 10,000.00 10,000.00 19,415.38 $ 9,415.38 100% 21804 Duct for Reconductor 15,000.00 65,000.00 80,000.00 5,715.32 $ (74,284.68) 10% 21805 Uponer New Feed 85,000.00 50,000.00 135,000.00 32,062.49 $ (102,937.51) 65% 21806 Feeder 16 and 17 Reconductor 30,000.00 70,000.00 100,000.00 13,609.62 $ (86,390.38) 25% 21807 MITGI New Feed 80,000.00 35,000.00 115,000.00 60,058.60 $ (54,941.40) 75% 21808 New Developments 50,000.00 50,000.00 51,393.00 $ 1,393.00 60% 21809 Century Court Apartments 20,000.00 15,000.00 35,000.00 7,759.67 $ (27,240.33) 30% 21810 Century Avenue Trail Work Feeder 22 10,000.00 10,000.00 20,000.00 1,804.02 $ (18,195.98) 20% 21811 New Developments Transformers 50,000.00 50,000.00 13,539.16 $ (36,460.84) 20% 21812 Plant 14160 Generator Transformer Repl 70,000.00 5,000.00 75,000.00 $ (75,000.00) 21813 Transformer Replacements 40,000.00 14,000.00 54,000.00 6,354.30 $ (47,645.70) 21814 Century Court Apartments 10,000.00 3,000.00 13,000.00 $ (13,000.00) 21815 Meters 30,000.00 - 30,000.00 18,227.68 $ (11,772.32) 50% $ 525,000.00 $ 267,000.00 $ 792,000.00 $ 229,939.24 $ (562,060.76) Administrative Total Total Percentage Work Order Description Budgeted Actual Difference Completed 51801 Replace 2008 Super Duty Bucket Truck 140,000.00 140,000.00 51802 Replace 2007 Metering Van 25,750.00 23,887.64 1,862.36 100% 51803 Replace 2006 Production Dodge Dakota 25,000.00 26,079.22 (1,079.22) 100% 51804 Replace 2006 Ford F150 25,750.00 26,079.22 (329.22) 100% 51805 Replace Vehicle #433 37,080.00 37,080.00 $ 253,580.00 $ 76,046.08 $ (177,533.92) DescriptionWork Order 61801 Transmission Lateral to HCP - ROW Easements 61802 Transmission Lateral to HCP - Materials and Permits 61803 Lafayette InterconnectUpgrade 61804 Locator 61805 Misc Developments .r 80. Regulator Station Improvements 61807 Service Lines .0. Meters, AMI, and all Fittings .0* Industrial Metering and Regulation Natural Gas Total Total Percentage Materials Labor Budgeted Actual Difference Completed $ 500,000.00 $ 4,200.00 $ 504,200.00 $ $ (504,200.00) 1,000,000.00 4,200.00 1,004,200.00 $ (1,004,200.00) 90,000.00 18,000.00 108,000.00 $ (108,000.00) 6,000.00 - $ 6,000.00 7,674.16 1,674.16 100% 125,000.00 28,000.00 $ 153,000.00 30,135.05 $ (122,864.95) 25% 15,000.00 4,900.00 $ 19,900.00 3.21 $ (19,896.79) 55,000.00 31,500.00 $ 86,500.00 38,513.11 $ (47,986.89) 60% 90,000.00 4,900.00 $ 94,900.00 21,569.45 $ (73,330.55) 25% 80,000.00 7,000.00 $ 87,000.00 94,989.04 $ 7,989.04 90% HUTCHINSON UTILITIES COMMISSION 9T, Board Action Form iiiiiiiiiiiiiiiiiiiiiillillillillillillilliillillillillillillilliilliillillillillillillillillillilliillillillillillillilliillillillillillillilliillillillillillillillillillillilliillillillillillillilliillillillillillillilliillillillillillillillillillillilliillillillillillillilliillillillillillillilliillillillillillillillillillillilliillillillillillillilliillillillillillillilliillillillillillillillillillillilliillillillillillillilliillillillillillillilliillillillillillillillillillillilliillillillillillillilliillillillillillillilliillillillillillillillillillillilliillillillillillillilliillillillillillillilliillillillillillillillillillillilliillillillillillillilliillillillillillillilliillillillillillillillillillillilliillillillillillillilliillillillillillillilliillillillillillillillillillillilliillillillillillillilliillillillillillillilliillillillillillillillillillillilliillillillillillillilliillillillillillillilliillillillillillillillillillillilliillillillillillillilliillillillillillillilliilllI Agenda Item: Review Policies Presenter: Jeremy Carter Agenda Item Type: Time Requested (Minutes): 5 Review Policies Attachments: Yes BACKGROUND/EXPLANATION OFAGENDA ITEM: As part of HUC's standard operating procedures, a continual policy review is practiced. This month, the following policies were reviewed and no changes are recommended on these policies at this time: i. Cold Weather Rule ii. Terminating Electric/Natural Gas Service by Customer iii. Definition of your Bill iv. Hours and Conditions of Employment V. Flextime Program — Exempt Only vi. Rest Periods vii. Meal Periods viii. Attendance/Tardiness ix. Use of Facilities during off -duty Hours -Non Exempt Only X. Inclement Weather BOARD ACTION REQUESTED: None Fiscal Impact: Included in current budget: Budget Change: PROJECT SECTION: Total Project Cost: RemainingCost: Minnesota Cold Weather Rule 2016 Minnesota Statutes 216B.097 Cold Weather Rule; Cooperative or Municipal Utility Subdivision 1. Application; notice to residential customer. (a) A municipal utility or a cooperative electric association must not disconnect and must reconnect the utility service of a residential customer during the period between October 15 and April 15 if the disconnection affects the primary heat source for the residential unit and all of the following conditions are met: (1) The household income of the customer is at or below 50 percent of the state median household income. A municipal utility or cooperative electric association utility may (i) verify income on forms it provides or (ii) obtain verification of income from the local energy assistance provider. A customer is deemed to meet the income requirements of this clause if the customer receives any form of public assistance, including energy assistance, that uses an income eligibility threshold set at or below 50 percent of the state median household income. (2) A customer enters into and makes reasonably timely payments under a payment agreement that considers the financial resources of the household. (3) A customer receives referrals to energy assistance, weatherization, conservation, or other programs likely to reduce the customer's energy bills. (b) A municipal utility or a cooperative electric association must, between August 15 and October 15 each year, notify all residential customers of the provisions of this section. Subdivision 2. Notice to residential customer facing disconnection. Before disconnecting service to a residential customer during the period between October 15 and April 15, a municipal utility or cooperative electric association must provide the following information to a customer: (1) a notice of proposed disconnection; (2) a statement explaining the customer's rights and responsibilities; (3) a list of local energy assistance providers; (4) forms on which to declare inability to pay; and (5) a statement explaining available time payment plans and other opportunities to secure continued utility service. Subdivision 3. Restrictions if disconnection necessary. (a) If a residential customer must be involuntarily disconnected between October 15 and April 15 for failure to comply with subdivision 1, the disconnection must not occur: (1) on a Friday, unless the customer declines to enter into a payment agreement offered that day in person or via personal contact by telephone by a municipal utility or cooperative electric association; (2) on a weekend, holiday, or the day before a holiday; (3) when utility offices are closed; or (4) after the close of business on a day when disconnection is permitted, unless a field representative of a municipal utility or cooperative electric association who is authorized to enter into a payment agreement, accept payment, and continue service, offers a payment agreement to the customer. Further, the disconnection must not occur until at least 20 days after the notice required in subdivision 2 has been mailed to the customer or 15 days after the notice has been personally delivered to the customer. (b) If a customer does not respond to a disconnection notice, the customer must not be disconnected until the utility investigates whether the residential unit is actually occupied. If the unit is found to be occupied, the utility must immediately inform the occupant of the provisions of this section. If the unit is unoccupied, the utility must give seven days' written notice of the proposed disconnection to the local energy assistance provider before making a disconnection. (c) If, prior to disconnection, a customer appeals a notice of involuntary disconnection, as provided by the utility's established appeal procedure, the utility must not disconnect until the appeal is resolved. Subdivision 4. Application to service limiters. For the purposes of this section, "disconnection" includes a service or load limiter or any device that limits or interrupts electric service in any way. Terminating Electric/Natural Gas Service by Customer When the utility service is shut off due to a customer's request, the electric meter will be removed and the gas meter will be turned off and locked. The electric meter socket and gas meter valve will have a blue seal placed on them. At the time a customer requests the service be turned on, HUC personnel will install the electric meter and unlock the natural gas meter valve. It is the customer's responsibility to turn on the natural gas meter valve and to light the pilot lights on all natural gas appliances, where appropriate. In the event the customer is unable to perform these tasks, it is the customer's responsibility to contact a plumbing or heating contractor to complete this work. Upon the request of a customer, utility services may be temporarily terminated and billing suspended for a specified period of time due to illness, vacation, and/or seasonal use. Temporary terminations are charged to the customer at the rate of $40 to disconnect and $40 to reconnect. A. Termination for Renters Electric and natural gas meters will be read and the final bill calculated when a renter informs HUC they no longer wish to retain HUC services. B. Termination for Residential/Commercial Owners Electric and natural gas will be shut off when the property owner requests HUC to disconnect services. For continuous service, the new owner must call HUC at a minimum of 24 hours in advance of the requested disconnect date, and make the necessary arrangements to have the electric/natural gas services transferred into their name. This eliminates terminating services at that address. C. Termination for Electrical Work If a homeowner needs an electric meter disconnected to do any electrical work, HUC will disconnect/reconnect the meter at no charge to the customer. Once the work is completed, HUC will need a copy of the State Board of Electricity Certificate of Inspection, before HUC will reconnect the electric meter. Definition of Your Bill Your bill provides: • Account number • Due date • Payment due • Pre -authorized payment to be drawn from your bank on due date (from checking/saving account) • Budget amount due if on the budget plan • Name/mailing address • Service address • Electric and fuel cost adjustments, if any • PIN # • Reading dates • Days used • Previous and current readings • Usage • Previous balance • Payments made and date paid • Electric and/or gas meter charges • Amount charged to each meter • Sales tax/Local tax • Any miscellaneous/trip charges • Account balance • Perforated top stub to remit with payment for timely and proper posting • If applicable, a message on the bottom of the statement indicating past due amount Meters are read approximately every 30 days. Estimated readings may also be taken if access to the meter is not possible or the meter has stopped working. EXEMPT SECTION 3 — HOURS AND CONDITIONS OF EMPLOYMENT Staff Personnel will establish work schedules, subject to the General Manager's approval. The regular work week is five 8-hour working days with two consecutive days off. The normal work week is Monday through Friday, except as otherwise established by Staff Personnel based on the customers' and Department's needs. The Utilities office hours are 7:30 a.m. to 4:00 p.m. Monday through Friday. NON-EXEMPT SECTION 3 — HOURS AND CONDITIONS OF EMPLOYMENT See Union Contract. EXEMPT FLEXTIME PROGRAM HUC's flextime program allows exempt employees to vary their scheduled work hours to conform with the operations of the Utilities. Flextime is approved by the employee's Manager or Director. EXEMPT REST PERIODS Employees may take one 15-minute paid rest period during each four-hour work period. One rest period is taken in the morning and the other rest period is taken in the afternoon. Rest periods shall not be cumulative and shall not be utilized to compensate for other absences. NON-EXEMPT REST PERIODS Employees may take one 15-minute paid rest period during each four-hour work period. Rest periods are taken during the second and third hours and between the sixth and seventh hours of the workday. During the summer, the afternoon rest period shall be taken when the Manager or Director deems it appropriate. Rest periods shall not be cumulative and shall not be utilized to compensate for other absences. EXEMPT MEAL PERIODS Employees receive an unpaid meal period either one-half hour or one -hour long for a shift lasting at least six hours. Meal periods shall not be cumulative and shall not be utilized to compensate for other absences. NON-EXEMPT MEAL PERIODS Employees receive an unpaid meal period of one-half hour for a shift lasting at least six hours. Meal periods may not be cumulative and may not be utilized to compensate for other absences. EXEMPT ATTENDANCE/TARDINESS Employees are expected to work or use approved leave for all their scheduled hours. Unsatisfactory attendance including reporting late, quitting early or excessive absenteeism shall be cause for disciplinary action. An employee anticipating being late for any reason, must contact his/her Director, Manager or Supervisor as far in advance as possible. Employees are also required to report to their Director, Manager or Supervisor if they are ill and unable to continue working. If an employee is ill and cannot report to work, the employee must notify his/her Director, Manager or Supervisor before the scheduled start of the workday. NON-EXEMPT ATTENDANCE/TARDINESS Employees are expected to work or use approved leave for all their scheduled hours. Unsatisfactory attendance including reporting late, quitting early or excessive absenteeism shall be cause for disciplinary action. An employee anticipating being late for any reason, must contact his/her Director or Manager as far in advance as possible. Employees are also required to report to the Director or Manager if they are ill and unable to continue working. If an employee is ill and cannot report to work, the employee must notify his/her Director or Manager before the scheduled start of the workday. NON-EXEMPT USE OF FACILITIES DURING OFF -DUTY HOURS Employees are not allowed on -site during off -duty hours without prior approval of a Director or Manager. EXEMPT INCLEMENT WEATHER If inclement weather causes an employee to arrive late or leave the job early, the employee must use vacation time, floating holiday, compensatory time or time without pay for the portion of the scheduled shift the employee did not work. If the General Manager determines it is necessary to close HUC offices due to weather, all employees will be paid their regular pay. Essential employees will be required to remain on -duty, however, they will be given comparable time off at a later date. If an essential employee living within the limits of the City of Hutchinson cannot get to the job site due to inclement weather, a HUC vehicle or snowplow will be dispatched to pick up the essential employee. NON-EXEMPT INCLEMENT WEATHER If inclement weather causes an employee to arrive late or leave the job early, the employee must use vacation time, floating holiday, compensatory time or time without pay for the portion of the scheduled shift the employee did not work. If the General Manager determines it is necessary to close HUC offices due to weather, all employees will be paid their regular pay. Essential employees will be required to remain on -duty, however, they will be given comparable time off at a later date. If an essential employee living within the limits of the City of Hutchinson cannot get to the job site due to inclement weather, a HUC vehicle or snowplow will be dispatched to pick up the essential employee. HUTCHINSON UTILITIES COMMISSION�� Board Action Form �'Ylkll'M1'k� Agenda Item: Approval of First Amendment to United Natural Gas/Lafayette Natural Gas Firm Trans Presenter: John Webster Agenda Item Type: Time Requested (Minutes): New Business Attachments: Yes BACKGROUND/EXPLANATION OF AGENDA ITEM: United Natural Gas (UNG) wishes to increase their firm natural gas transportation capacity on the Hutchinson Utilities' natural gas pipeline. Due to the character of their customer load, UNG requires additional capacity primarily in the months of October thru March. In the months of October and November Hutchinson Utilities will allow UNG's throughput to reach the maximum level of either 200 Mcfh and/or 4,000 Mcfd. All capacity utilized above the contracted level of 1,200 Dth/day shall be invoiced at the capacity rate in affect at that time. In light of the increased throughput, Hutchinson Utilities is required to up size the custody transfer metering at the Lafayette Interconnect Station. The custody transfer metering upgrade is a budget item in the 2018 capital budget for the Natural Gas Division. Projected total expense to be approximately $25,000. Budgeted $90,000. BOARD ACTION REQUESTED: Approval of First Amendment to United Natural Gas/Lafayette Natural Gas Firm Transportation Capacity Agreement. Fiscal Impact: + $6,900 Mimimum Annually Included in current budget: Budget Change: PROJECT SECTION: Total Project Cost: Approx $25,000 Remaining Cost: Approx $25,000 Hutchinson FIRST AMENDMENT TO UNITEDNATURAL Utilities GAS/LAFAYETTE NATURAL Commission FIRM TRANSPORTATION CAPAC AGREEMENT iMinnesota 3 «# 1 n THIS AMENDMENT (THE "AMENDMENT") ENT") IS MADE AND ENTERED INTO TIS ., TH DAY CH JULY, 2018, TO BE EFFECTIVE S OF THE 1 ST DAY OF AUGUST, 2018, Y AND BETWEEN UNITED NATURAL GAS L,L.C. ("U G") WITH OFFICES LOCATED AT 705 Em 4TH STREET, PO Box 46 1 WINTHROP, I ESCTA® 55396 AND HUTCHINSON UTILITIES COMMISSION ("HUCI A MINNESOTA MUNICIPAL UTILITY LOCATED AT 225 MICHIGANT SE, HUTCHINSON, MINNESOTA, 55350, PARTIES TO THE AGREEMENT DATE® JA UA Y 27TH,2016. 2® THE AGREEMENT IS AMENDED AS FOLLOWS: 1 ® CHARACTER R SERVICE A. FIRM NATURAL GAS TRANSPORTATION PROVIDE TO UNG FIRM NATURAL GAS TRANSPORTATION CAPACITY AS FOLLOWS: D . rv, SEPTEMBER• ' B. ` DECEMBE-MARCH,.1.000 COMMENCING ON AUGUST 1, 2018 RATES, TERMS AND CONDITIONS UNLESS CURTAILED OR INTERRUPTED PURSUANT TO THE TERMS OF THE AGREEMENT. ©ace ICE MAY NOT #a CURTAILED ORINTERRUPTED EXCEPT PURSU »» »■ THE TERMS OF AGREEMENT. 2 UNG I ALLOWED TO EXCEED THE CONTRACTED FOR CAPACITY LEVEL IN THE MONTHS OF OCTOBER AND EMBER ALL CAPACITY USED IN EXCESS CONTRACTED FOR CAPACITY SHw y BE BILLED AT T * THEMAXIMUM HOURLY FLOW ALLOWED DURING THE MONTHS 22 «»<2#»Rx»» 2 e« EMBER SHALL NOT EXCEED 200 ? d<» m y<»»Sr 4,000 S EVENT5. IN THE «THAT THE MAXIMUM HOURLY ORDAILY FLOW LEVELS ARE EXCEEDED IN OCTOBER OR d #?EMBER ALL INVOICED AT ©°» PER 2»2 6. EXCEPT AS SET FORT© IN THIS AMENDMENT, AGREEMENT ;F AND SHALL »,«»GLUE IN FULL. FORCE ANDEFFECT :« ACCORDANCE WITH2S TERMS AND CONDITIONS. IN THE EVENT HERE IS ± CONFLICT EARLIER AMENDMENT, THE TERMS OF THIS AMENDMENT mZ"1A*■x�l Vivilfflo THIS AMENDMENT SETS FORTH ALL TERMS AGREED UPON BETWEEN THE RT"C , AND NO PRIOR AL AMENDMENTS SHALL BE BINDING. THIS AMENDMENT SHALL NOT BE ALTERED, AMENDED OR MODIFIEDEXCEPT AS IN WRITING AND EXECUTED BY BOTH PARTIES. m TITLE: COMMISSION PRESIDENT DATE: WITNESS: DATE: lT 1 L.C.NATURAL , L.L NA M E; I( TITLE: 600 DATE: ITN ESS; -7 DATE: / HUTCHINSON UTILITIES COMMISSION�� Board Action Form �'Ylkll'M1'k� Agenda Item: Hutchinson Public Schools Presenter: Jared Martig Agenda Item Type: Time Requested (Minutes): New Business Attachments: BACKGROUND/EXPLANATION OF AGENDA ITEM: Hutchinson Public Schools has submitted a rebate for the lighting at the new high school. The new lights will save 189,163 kwh. The rebate amount is for $31,860.00 BOARD ACTION REQUESTED: Approve Payment of 31,860.00 for CIP savings. Fiscal Impact: Included in current budget: Yes Budget Change: PROJECT SECTION: Total Project Cost: Remaining Cost: HUTCHINSON UTILITIES COMMISSION�� Board Action Form �'Ylkll'M1'k� Agenda Item: Requisition #007671 Unit #1 - LM6000 Blade Replacement q p Presenter: Randy Blake Agenda Item Type: Time Requested (Minutes): 5 New Business Attachments: Yes BACKGROUND/EXPLANATION OF AGENDA ITEM: HUC's Unit 1 General Electric (GE) gas turbine is a model LM-6000 PA. The GE company periodically issues service bulletins to the owners of these units. GE uses fleet experience to determine the life cycle of the internal components of these generators. GE has issued a service bulletin (SB-310) which urges the owners of these units to change out the stages 3-5 HPC turbine blades at or before 1500 starts. HUC's unit has 1,220 starts to date. The GE sponsored turbine blade exchange program discount will end on December 31st 2018. Attempted to receive 3 quotes, only 2 responded back with valid quotes. The IHI INC. quote was for $78,863.00 and the MTU quote was for $73,407. Both of these companies are GE approved overhaul vendors and very capable of performing the work for HUC. This project is a 2018 Capital Project (344-18-1) budgeted item with a estimated cost of $150,000. So this work will come in under the budgeted amount. BOARD ACTION REQUESTED: Approve Requisition # 007671 to MTU Maintenance for the amount shown below. Fiscal Impact: $73,407 Included in current budget: Yes Budget Change: No PROJECT SECTION: Total Project Cost: Remaining Cost: IHI INC. Cheyenne Service Center (CSC) 3909 W. 5t' Street Cheyenne, WY 82007 Office: 307-220-1738 Fax: 307-634-5158 Date: April 17, 2018 Hutchinson Utilities Commission 225 Michigan St. SE Hutchinson, MN 55350 Mr. Randy Blake Subject: Gas Turbine Borescope Inspection Reference Number: Q181A-33, Rev 1 Workscope: IHI INC. appreciates the opportunity to quote the gas turbine (GT) borescope inspection for Hutchinson Utilities Commission on one (1) LM6000, ESN 185-111. Outage is this fall, 2018. Revision 1 (Option 2) is to add pricing for implementing Service Bulletin (Campaign) 310 High Pressure Compressor Rotor Stages 3 through 5 Blades Dovetail Coating Refurbishment. All pricing is 2018, end of October the pricing could change to 2019 in November. The borescope inspection will be performed during the same outage for replacing the HPC rotor blades. This proposal contains IHI INC. proprietary information. All IHI INC. proprietary information is provided in good faith to Customer with the consent not to use, alter, or disclose any information contained herein to any third parties. Page 1 of 6 Created 7/01/13, Rev 13 Hutchinson Utilities Commission Date: April 17, 2108 Reference No.: Q181A-33, Rev 1 IHI INC. Option 1 Pricing Breakdown: 1) Gas Turbine Borescope Inspection: • One (1) GT borescope inspection; 12-hr shift; one (1) day per WP 4015 00 • Inspect L&S pump finger screens per WP 4017 00 & WP 4020 00 • Two (2) fuel nozzles are removed/inspected per WP 151100 • P48 probe inspection per WP 1712 00 • Clutch "y" strainer inspected • Two (2) ignitors removed/inspected per WP 1516 00 • P48 probe per WP 1712 00 • Fixed price is based on working during the weekday, any work on a weekend or holiday cost will increase • Fixed price is for the borescope inspection only — any additional work will be charged Time & Material (T&M) • Fixed price includes shipping cost of borescope equipment • Customer will supply fuel nozzle gaskets • IHI INC. requires at least a two (2) week notice if awarded the work • IHI INC. will supply an engineer at no cost to the customer Fixed Total Cost: $ 5,775.00 USD This proposal contains IHI INC. proprietary information. All IHI INC. proprietary information is provided in good faith to the Customer with the consent not to use, alter, or disclose any information contained herein to any third parties. Page 2 of 6 Created 7/01/13, Rev 13 Hutchinson Utilities Commission Date: April 17, 2108 Reference No.: Q181A-33, Rev 1 IHI INC. Option 2 (Borescope Inspection & S/B 310) Pricing Breakdown: 1) Shipment of Tooling (round trip) for SB 310: • HPC hinge kit and/or HPC upper case lift fixture • Portable jack • Straps, shackles, etc.... • Borescope equipment Estimated Sub Total Cost: $ 4,000.00 USD 2) GT Borescope Inspection & Implement Service Bulletin 310: • Estimated outage will take a total of five (5) days; 12-hr shifts; dayshift only • One (1) GT borescope inspection; 12-hr shift; one (1) day per WP 4015 00 • Two (2) techs; 12-hr shifts; dayshift only; four (4) days • Replace HPC stage 3, 4, & 5 rotor blades per WP 2413 00 • Inspect L&S pump finger screens per WP 4017 00 & WP 4020 00 • Two (2) fuel nozzles are removed/inspected per WP 151100 • Customer will supply F/N gaskets • P48 probe inspection per WP 1712 00 • Clutch "y" strainer inspected • Two (2) ignitors removed/inspected per WP 1516 00 • P48 probe per WP 1712 00 • Implemented SB 310 on one (1) LM6000 gas turbine • Open & close HPC upper case per WP 241100 or WP 2411 01 • Cost is based on working during the weekday, any work on the weekend or holiday cost will increase • Any additional work will be charged as Time & Material (T&M) • IHI INC. will supply an engineer at no cost to the customer Estimated Sub Total Cost: $ 34,863.00 USD 3) Hardware (one (1) GT): • Locking lugs stage 3 P/N 2032M95G17 (x2) • Locking lugs stage 4 P/N 2032M95G13 (x2) • Locking lugs stage 5 P/N 2032M95G12 (x2) • Balance weights stage 3 P/N 9193M20P01 (0) • Balance weights stage 4 P/N 9396M16P01 (0) • Balance weights stage 5 P/N 9396M16P02 (0) • Any additional parts will be charged as Time & Material (T&M) Estimated Sub Total Cost: $ 6,000.00 USD This proposal contains IHI INC. proprietary information. All IHI INC. proprietary information is provided in good faith to the Customer with the consent not to use, alter, or disclose any information contained herein to any third parties. Page 3 of 6 Created 7/01/13, Rev 13 Hutchinson Utilities Commission Date: April 17, 2108 Reference No.: Q181A-33, Rev 1 IHI INC. Pricing Breakdown (Option 2 continued): 4) New DIP Stage 3, 4, & 5 HPC Rotor Blades (one (1) lit) P/N 682L929G02: • One (1) kit of rotable exchange (new) DIP HPC rotor blades Kit P/N 682L929G02 stage 3, 4, & 5 • GE Fleet Program discount applies (No. 2261) • Customer must sign over voucher (No. 2261) for discount — no voucher customer will be charged full price • All removed and/or unused HPC rotor blades stage 3, 4, & 5 become the property of IHI INC. • Cost includes shipment of HPC stage 3, 4, & 5 rotor blades • Any additional parts and shipping will be charged as Time & Material • New DIP HPC rotor blades are subject to availability through the OEM • Upon award of the work customer must provide GT ESN's, GT TSN, & GT fired starts • IHI INC. requires a minimum one (1) month notice prior to the outage date, if awarded the work to acquire the HPC rotor blade kits Estimated Sub Total Cost: $ 51,160.00 USD 5) Overhauled DIP Stage 3, 4, & 5 HPC Rotor Blades (one (1) lit) P/N 738L556G02: • One (1) kit of rotable exchange (overhauled) DIP HPC rotor blades Kit P/N 738L556G02 stage 3, 4, & 5 • Per GE they have stopped producing overhauled SIP blades P/N 738L556G01 • All removed and/or unused HPC rotor blades stage 3, 4, & 5 become the property of IHI INC. • Cost includes shipment of HPC stage 3, 4, & 5 rotor blades • Any additional parts and shipping will be charged as Time & Material • Overhauled DIP HPC rotor blades are subject to availability through the OEM • Upon award of the work customer must provide GT ESN's, GT TSN, & GT fired starts • IHI INC. requires a minimum one (1) month notice prior to the outage date, if awarded the work to acquire the HPC rotor blade kits Estimated Sub Total Cost: $ 34,000.00 USD New DIP Grand Total Fixed Pricing of Line Items 1, 2, 3, & 4: $ 96,023.00 USD Overhauled DIP Grand Total Fixed Pricing of Line Items 1, 2, 3, & 5: $ 78,863.00 USD This proposal contains IHI INC. proprietary information. All IHI INC. proprietary information is provided in good faith to the Customer with the consent not to use, alter, or disclose any information contained herein to any third parties. Page 4 of 6 Created 7/01/13, Rev 13 Hutchinson Utilities Commission Date: April 17, 2108 Reference No.: Q181A-33, Rev 1 IHI INC. Notes: 1. Referencing GE Service Letter SL6000-09-01 for the gas turbine / package; customers -owned lifting equipment should be periodic tested / inspected. Customer should provide a valid certificate of test / inspection prior to use. 2. Customer agrees not to reveal verbally, written, or make copies of any portion of this proposal to a third party. Proposal is strictly for Customer(s) own organization and not intended for Customer subsidiaries companies. 3. Field service technician travel and living expenses is included in the labor quote. 4. All pricing is quoted in United States dollars (USD). 5. This proposal is fixed for the GT borescope inspection only, final invoice will be calculated as incurred, using the rates list in Inspection & Material Rates for any extra work and/or parts and for Option 2 work. 6. Customer is responsible for all additional taxes and/or fees incurred as a result of services provided. 7. IHI only supplies & installs OEM approved hardware. 8. Field service work performed is based on assistance from customer technician(s). 9. High Pressure Compressor rotor blades (S/B 310) stage 3, 4, & 5 are rotable exchange, all removed and/or extra HPC rotor blades from the new or overhauled kit become the property of IHI INC to be returned to GE within forty-five (45) days of shipment from GE. 10. IHI will not warranty or be held responsible for Customer supplied parts, only the workmanship. 11. Terms & Conditions must be in place between IHI INC. and Customer prior to any work. 12. This proposal is valid for thirty (30) days. 13. Warranty is offered on workmanship / services for twelve (12) months, or 8,000 operating hours, whichever comes first, from the date of the completion of the services. 14. Part(s) warranty, whichever comes first, is twelve (12) months or 8,000 operating hours from date of installation or 18 months from date of shipment stored in manufacture original packaging. 15. Our estimated and/or fixed price quotes are based on customer operating the gas turbine within the recommend OEM specification. Any abnormalities to the gas turbine caused by the customer will result in our pricing to be void. IHI INC. reserves the right to change fixed pricing to Time & Material rates. 16. IHI INC. subcontractor for all field service and Cheyenne Service Center labor is Reed Service of Wyoming Inc. and/or Reed Service Inc. This proposal contains IHI INC. proprietary information. All IHI INC. proprietary information is provided in good faith to the Customer with the consent not to use, alter, or disclose any information contained herein to any third parties. Page 5 of 6 Created 7/01/13, Rev 13 Hutchinson Utilities Commission Date: April 17, 2108 IHI INC. 2018 Labor & Material Rates Field Service Travel ST & OT $149.00 per hour Field Service Labor ST $176.00 per hour Of IHI Depot Labor ST $100.00 per hour Of IHI Level 2 Repair Facility ST $I 10.00 per hour Of Service Engineer ST $209.00 per hour Of Mapping ST $209.00 per hour Of OEM New Parts Overhauled Serviceable Parts Vendor Component Repair Shipping & Other Expenses Travel & Living Expenses Per Diem Mileage IHI cost plus (+) 15% GE List minus (-) 35% IHI cost plus (+) 18% IHI cost plus (+) 15% IHI cost plus (+) 15% $65.50 per tech / per day 0.70 per mile $264.00 per hour $115.00 per hour $165.00 per hour $314.00 per hour $314.00 per hour Straight time workweek is Monday — Friday, eight -hour day. Any work after an eight -hour weekday, weekend, or holiday constitutes overtime. Purchase Order / Pavment Terms: Reference No.: Q181A-33, Rev 1 IHI INC. 1. Purchase Order will be made out to: IHI INC., Cheyenne Service Center 3909 W. 5"' Street Cheyenne, WY 82007. Office No. 307- 220-1738 / Fax No. 307-634-5158. 2. Purchase Order must reference the terms & conditions that are in place between IHI INC. and Customer. 3. Payment terms are net thirty (30) days from invoice date. Late payment fee of 2% per month will be levied thirty (30) days past due date. IHI INC. truly appreciates the opportunity to provide a quote for this work and look forward to working with you to discuss and/or provide pricing for any additional work that might arise. Regards, Y"70 ?d"i"wa Yuya "Hugh' Ishikawa IHI INC. Sales Manager (C) 307-365-8181 Email yuuya ishikawa@ihi.co.jp This proposal contains IHI INC. proprietary information. All IHI INC. proprietary information is provided in good faith to the Customer with the consent not to use, alter, or disclose any information contained herein to any third parties. Page 6 of 6 Created 7/01/13, Rev 13 "AW "Aah-terairce IBE1'11ri IBi'arderb"i'g, Airi"AW A6&i,(,,j r",,(.-)nqmry Proposal for Hutchinson Utilities Commission Subject: LM6000PC — Stage 3-5 HPC Blade Exchange Date: April 19, 2018 Ref.: 19-04-2018-H UT-PZ- ROO Attention: Mr. Randy Blake Production Manager Hutchinson Utility Commission 225 Michigan Street Hutchinson, MN 55350 Phone: 320-234-0551 Cell: 320-582-1565 Email: rblake@hutchinson.mn.us VilIJ Main , �r�u :: illin ;r"',1,(J el, biar� Are 11I IJ,hrru ng1n(, ,Curl11)aI' MTU Maintenance Berlin -Brandenburg GmbH Dr.-Ernst-Zimmermann-Str. 2 14974 Ludwigsfelde Germany Your contact person: Paul Zembrodt Phone: +1 (859) 331-0932 Mobile: +1 (859) 801-6859 E-Mail: paul.zembrodt@mtuusa.com MTU Maintenance Berlin -Brandenburg (MTU-BB) is pleased to submit the following proposal to perform the Supply & Exchange of the HPC Stages 3 through 5 Blades (SB-310) on (1) LM6000PA Gas Turbine En- gine. The MTU presented price assumes that the as -removed 3-5 HPC Blades are considered as "Ex- change Components" and are returned to MTU when the Project is completed. The LM6000PA unit is lo- cated at the Hutchinson Utilities Commission facility in Hutchinson, MN, USA. The Outage is expected to take place in the fall of 2018. MTU-BB is one of the leading maintenance providers for General Electric's LMTM series of aero derivative industrial gas turbines (IGTs) worldwide. MTU's maintenance experts have built a background of more than 30 years of experience in this market segment. The Ludwigsfelde location is the Center of Excellence for the maintenance, repair and overhaul (MRO) of industrial gas turbines within MTU's network of companies. Customers benefit from MTU Maintenance's worldwide service network and MTU's expertise in the design, development, production and repair of the aircraft engines from which LM series are derivatives of. Depot Services • Overhaul and repair of General Electric LM2500TM, LM2500PIusTM, LM5000Tm and LM6000TM indus- trial gas turbines • Full Level IV — GE approved capabilities to the largest possible extend • Full capabilities for disassembly, reassembly, cleaning, inspection and special testing of parts and components as per OEM requirements and stringent quality standards of MTU • Piece part repair capabilities — unrepresented in the industry (80% of all repairs performed in house) • Extensive resources and assets for investigation, metallurgical examination and testing • Dedicated repair engineering, engineering support, customized work scopes • Lease & exchange pool program, lease engines • Spare parts support, worldwide shipping of spare parts, tooling, engines and modules • Customer training • Engineering hot line support (24 hours/ 365 days) Testing • Full test capabilities with liquid and natural gas fuel • Testing of LM2500Tm and LM6000TM under real load conditions by using a generator • Testing of LM5000TM on a aircraft engine test bed • Emission measuring capabilities for testing of IDLE gas turbines • Combustor mapping capabilities • Balancing of low-pressure compressor rotors, as necessary • Spectrum analysis for vibration measurement • Digital data recording of all relevant gas turbine performance parameters • Remote witnessing of tests through the Internet On Site Services • 24-hours / 365 days availability • Scheduled inspections, on -site maintenance and repairs 2of15 MTU Proposal: 19-04-2018-HUT- PZ-R00 VilIJ Min, �r�u :: illin ;r"',1,(J el, biar� Are 11I IJ,hrru ng1n(, ,Curl11)aI' • Customized preventive maintenance programs • MTU uses Cogsys Limited's Alert TM system • Replacement of modules, tooling management, spare parts provisioning and management • Remote monitoring and trend analysis • Vibration testing, trim balancing, laser -aided string alignment check, IDLE mapping • Maintenance and other services for the control unit • Customer training • MTU and its affiliates operate IGT service centers as Level II Shops in Thailand, Norway, USA, Brazil and Australia Local Service in North America • Level II Service Center in Dallas that houses all the field level tooling and manpower to support the North American customer base • Engine and modular change outs • Work package completions • Service Bulletin implementations (up to Level 11) • Borescope inspections and semi-annual inspections • All other field level maintenance as deemed necessary by customer Retrofitting Services • Upgrading of old generations of power plants, including the adaptation of adjoining systems • Upgrading of control systems to maintain security of supply • Installation of water injection systems for NOx control • Integration of anti -icing systems in existing filter housings • Fuel conversions • Measures to increase efficiency and power to optimize power plant operation • Complete relocation of power plants including overhaul of all systems, installation, modifications tai- lored to customer requirements, and commissioning • Sale of used facilities • Power plant maintenance Quality and HSE Procedures and Standards • Utilizing Quality Control Procedures and Standards as per airworthiness requirements, which belong to the most stringent in the industry • Integrated Management System for quality, industrial health & safety and environment protection • MTU processes and systems are certified and approved by several national airworthiness authorities such as the FAA of the United States, the European EASA and others • Certified according to ISO 9001, EN 9100, ISO 14001, OHSAS 18001 For more information about MTU's comprehensive range of products and services please visit our website at Jlmn L ZI ir[ AE/dE/, 3of15 MTU Proposal: 19-04-2018-HUT- PZ-R00 VIi J Main , :: ili 1 ;r"',1, (J el, biar� Are I 1 I IJ ,hr ru ng1n(, , ("' 0 1' 111) a I' Operation / Engine Data Model GE LM6000PA S/N 185-111 Fuel Gas Total Starts since last Major OH TBD Fired hours GG since New TBD NOTE: Customer must provide exact Starts and Run Hours of currently installed 3-5 HPC Blades. This in- formation will be presented to GE when the exchange is performed 2 Basis Work Scope of this Agreement If not otherwise agreed in writing, all work will be performed in accordance with General Electric Industrial Repair Manual per GEK 98492 Project is expected to be scheduled in the Fall of 2018. Outage period is expected to be 3-Days. Travel on Monday to Site (Weekday Travel Rate Applies). Workscope to be performed on single 12-hour Shifts during the Outage. Manpower scheduled as noted: (2) MTU Mechanical Technicians per Shift (12 hour days — Single Shifts) Maximum 3-days (1) Hutchinson Utilities Mechanical Support Personnel per Shift (as required during the Project) This Service Bulletin introduces the GE high pressure compressor (HPC) rotor stages 3 through 5 blades dovetail coating refurbishment program. As part of the SB-310 Implementation, it is necessary to return the blades removed from the engine as part of the GE exchange program. 3 Pricing 3.1 Kit — Exchange Program (1) Set of 3 through 5 HPC Blades Option 1 - Set of New Blades, Kit #682L929G02 (Exchange) $ 66,280.00 USD per Set Option 2 - Set of Overhauled Blades, Kit #738L556G01 (Exchange) $ 47,864.00 USD per Set Per GE, no required Voucher for SB-310. The parts discount expires on December 31, 2018. Consumable Hardware ............................. 1,875.00 USD 3.2 Field Service & Travel Estimated Field Service Labor ................ $ 15,360.00 USD for SB-310 Implementation (2) MTU Technicians at $2,560.00 per Tech per 12/hr Day x 3 Days: $15,360.00 USD Estimated Travel Expenses ..................... $ 6,768.00 USD Mobilization (Travel, Airfare & Accom.) (2) MTU Technicians at $1,320.00 per Tech per 8/hr Day x 2 Travel Days: $ 5,280.00 USD An estimated travel price of $4,488.00 reflects a 15% Preferred Customer Discount (2) Estimated Airfare at $420.00 per Technician (actual ticketed price plus 15% to be charged) Hotel & Accommodations per Tech ($143.00 per night hotel, plus $55 daily per -diem) x 4: $1,440.00 4of15 MTU Proposal: 19-04-2018-HUT- PZ-R00 VilIJ Main , �r�u :: illin ;r"',1,(J el, biar� Are 11I IJ,hrru ng1n(, ,Curl11)aI' 3.3 Optional LM6000PA Borescope Inspection (includes incremental T&L)...... $ 1,540.00 USD Optional Workscope to perform the below Service • Borescope Inspection & General Inspection of the Gas Turbine • Provide findings to Site Plant Manager in "At Site" Review • Provide Inspection Report with Site Workscope Report within 30-days of completion of Project • MTU to provide Borescope Inspection Tools 3.4 Optional LM6000PA Package Inspection (includes incremental T&L)...... $ 1,540.00 USD 3.5 Over and Above Work and Material For any additional work over and above the scope as specified in the work scope, "LM6000PC Project" the following commercial conditions shall apply: New CF6 Common Parts .............................. GE list plus 8% New LM Unique Parts ................................... GE list minus 5% Additional Depot Labor .................................. 105.00 USD per Hour for Berlin Depot Labor Outside Vendor Repairs ................................ List plus 15% Field Service Rates .................................. Per attached APPENDIX A Presented Hourly Rates for Site Services will be Discounted 15% from the Hourly Rates in Appendix A. Valid through December 30t" 2018. Material prices apply to GE Price List 2018, valid until October 31, 2018. Discounted Depot Labor Rate Applies through December 30t" 2018. 4 Material Availability MTU currently has multiple sets of SB-310 Kits available for the proposed Outage. Rotable Asset availabil- ity is subject on Prior Sale. 5 Commercial Terms & Conditions • If not otherwise stipulated by this quotation or if not otherwise agreed in writing by both parties, the MTU-BB standard T&C's shall apply in APPENDIX 2. • It will be assumed that the engine was operated in accordance with the GE specifications. • No incident, no major failure. • All replacement Parts & Components, Consumables, etc. will be provided by MTU and will meet the GE Repair Manual criteria. • It is customer's obligation to provide vouchers for material for Service Bulletin implementation when available. • Pricing covers all items as per the described scope of work. 5of15 MTU Proposal: 19-04-2018-HUT- PZ-R00 mTuMain �nmnc�sk'mn-1:::�mrmel, bu� An mTuA(,,,m :::nom( onmpmny G Validity Proposal shall be valid through the 31st of October 2018. Pau|Zambnodt Regional Sales Manager USA & Canada VIi J Main , :: ili 1 ;r"',nrle rbiar� Are I/II IJ,hrru ng1n(, ,(", u r 111)a I' APPENDIX A Field Service Rates United States Valid: October 1" 2017 until December 30`h 2018 The following domestic rates apply for Field Services performed by MTU Field Services, Inc. technicians in US Dollars (US$). FIELD SERVICE REPRESENTATIVE Straight Time 185.00 US / hour (up to 8 hours per day Monday to Friday) Overtime 270.00 US / hour (after 8 hours — Monday to Friday,- Weekend) Double Time 325.00 US / hour (after 12 hours — public holidays) SPECIAL SERVICES (Supervisor, Alignment Engineer, Trim Balance, Packaging -Engineer) Straight Time 252.00 US / hour (up to 8 hours per day Monday to Friday) Overtime 376.00 US / hour (after 8 hours — Monday to Friday,- Weekend) Double Time 440.00 US / hour (after 12 hours — public holidays) CONTROLS- / MAPPING ENGINEER Straight Time 270.00 US / hour (up to 8 hours per day Monday to Friday) Overtime 405.00 US / hour (after 8 hours — Monday to Friday,- Weekend) Double Time 469.00 US / hour (after 12 hours — public holidays) Night Shift (Rates + 20%) High Security Area (Rates + 25%) Offshore / Man Camps (Rates + 20%) TRAVEL / WAITING Travel and Living Expenses (T&L) At Actual + 15 % Handling Fee Travel time (Monday to Friday up to 8 hours per day) 165.00 US / hour (Monday to Friday 8 to 12 hours per day) 248.00 US / hour (After 12 hours and public holidays) 290.00 USD / hour Waiting time (Monday to Friday up to 8 hours per day) Straight Time (Weekends up to 8 hours per day) Overtime (Public holidays up to 8 hours per day) Double Time (Offshore, up to 12 hours) Plus 20% Acc. to customer request, if staff is required to remain on a standby status (unavailable for other jobs) 7of15 MTU Proposal: 19-04-2018-HUT- PZ-R00 Vil IJ I/I ln9.� �r�u :: ilia ;r"',nrle rbiar� Are I/II IJ,hrru ng1n(, ,(", u r 111)a I' FEES Shipping Costs for Tooling, Materials etc. Cost + 10 % Handling Fee Late return fee for tooling (starting one week after event) 675.00 US / per week & set PURCHASE MATERIAL Cost +25 % TERMS AND CONDITIONS All prices exclude duties and taxes. Duties and taxes are charged on invoice basis Payment: Net 30 days after date of invoice. For general terms and conditions refer to the mutually agreed to Wellhead Services "General Terms & Conditions of Equipment Repairs — Field Service does not include supervision of Purchaser's agents or other contractors. NOTES Straight Time Charges Straight time is billed for the first 8 hours of the day Monday — Friday. Any hours in excess of the standard 8-hour day will be billed at the overtime rate or Double Time rate. Overtime Charges An overtime rate will be charged to any service job for time worked over 8 hours up to 12 hours weekdays and every hour weekends Double Time Charges A Double Time rate will be charged to any service job for time after 12 hours and for any bank holidays. Minimum Charge A minimum charge of 8 hours plus per diem and T&L is charged for any service job. Waiting time When a MTU Representative has arrived on site and is requested or required by the customer to wait, a standby charge will be assessed as follows: a. A maximum of 8 hours per day for each week day b. A maximum of 8 hours overtime per day for weekend. c. A maximum of 8 hours double time per day for bank holidays. Travel and Living Expenses Travel and living Expenses will be billed at cost plus 15% with the following conditions applied: a. Transportation: Airfare will be coach class least cost routing. Rental Car charges, parking, gas, tolls, taxi fees will be billable. b. Lodging: Single rooms of reasonable quality will be utilized. Receipts to be provided. c. Meals and incidentals: A $50.00 daily Per Diem charge will be assessed per individual. d. Freight / Shipping: Any charges associated with the shipment of tooling, parts and equipment, including airline baggage handling. Taxes All applicable taxes, airport taxes, sales taxes, duties and other taxes and fees, will be billed to all service jobs. Miscellaneous Expense Expenses such as freight, passports, visas, inoculation and etc. required by our employee to fulfill the customer requirements will be charged at cost plus 10%. Holidays The following days are considered holidays for double time purposes: New Year Day Good Friday Independence Day Labor Day Christmas Eve Christmas Day Memorial Day Thanksgiving Day 8of15 MTU Proposal: 19-04-2018-HUT- PZ-R00 /II IJ Main , l �Yiu :: I11 "gale rihur( Are I/II IJ,hrru ng1n(, ,Cu r 111)a I' �... . APPENDIX B MTU Maintenance Berlin -Brandenburg GmbH ("MTU-BB") General Terms And Conditions (IGT) APPLICATION rev July 2015 These General Terms And Conditions (IGT) ("T&C") shall apply between MTU-BB and its customer ("Custom- er") to both (i) workmanship on industrial gas turbine engines, modules, components, parts and/or accessories (hereinafter called the "Items") performed by MTU-BB (hereinafter called the "Services"), and (ii) the sale by MTU-BB to Customer of new, used or exchanged industrial gas turbine engines, modules, components, parts and/or accessories (hereinafter called the "Goods"), including Goods installed during performance of Services. Each binding contractual arrangement between MTU-BB and Customer for the provision of Services and/or de- livery of Goods constitutes an "Agreement" which shall supersede any prior oral or written agreements, drafts, understandings or representations between MTU-BB and Customer. CONTRACT FORMATION 2.1 The binding terms of the Agreement between MTU-BB and Customer shall be based on and include only the terms and conditions of MTU-BB's written offer and these T&C (hereinafter "MTU's Offer"). If the acceptance by the Customer deviates from MTU's Offer (hereinafter "Customer's Counter -Offer"), a binding contract shall be concluded on the Customer's Counter -Offer only if MTU-BB expressly accepts the Customer's Counter -Offer in writing. Delivery or acceptance of any Items or Goods by MTU-BB or the Customer related to an MTU Offer shall constitute an acceptance by the Customer of MTU's Offer and shall not constitute an acceptance of the Customer's Counter -Offer. The Customer's terms and conditions (if any) attached to, enclosed with or referred to in any shipping documents, acknowledgement or acceptance of MTU-BR's Offer, specification or other doc- ument shall not govern or be incorporated into the Agreement and the Customer waives any right which it oth- erwise might have to rely on such terms and conditions. 2.2 MTU-BB shall retain (solely) all proprietary rights to all intellectual property (including, but not limited to, pa- tents, copyright, trade marks, design rights, database rights, know-how and trade secrets, moral rights and goodwill) ("IPR") which exists or may be created in connection with the Agreement between MTU-BB and the Customer including (but not limited to) all cost estimates, offers, drawings and any other documents made available to the Customer by MTU-BB, which Customer shall not reveal to any third parties and shall be re- turned to MTU-BB immediately (including all copies) on demand by MTU-BB and/or if the contract is not con- cluded and/or is terminated. 2.3 MTU-BB shall have the right to subcontract the Services necessary to perform the Agreement, in whole or in part, to any qualified affiliate of MTU Aero Engines AG (hereinafter "MTU Affiliate") and/or other qualified third parties holding all required licenses (e.g., airworthiness certification). 2.4 Customer hereby acknowledges and accepts that MTU-BB may report to the original equipment manufacturer of serviced Items ("OEM") basic technical information on work scopes by engine serial number reflecting Ser- vices performed under each Agreement. 3 SHIPMENT / EXPORT CONTROLS 3.1 Unless otherwise agreed between the parties, Customer shall deliver Items "DAP" MTU-BB's facility, Ludwigs- felde, Germany (Incoterms 2010). The Items shall be delivered to MTU-BB in safe condition as for example such that all liquids (if applicable) will be drained and all open ports be covered before shipment. 3.2 Unless otherwise agreed between the parties, MTU-BB will deliver Goods or redeliver serviced Items "FCA" MTU-BB's facility, Ludwigsfelde, Germany (Incoterms 2010). 3.3 MTU-BB's acceptance of Customer's order and MTU-BB's obligations under the Agreement for performance of Services and/or supply of Goods are subject to applicable export control regulations. At Customer's request and Customer's cost MTU-BB may apply for any necessary export permits or approvals but Customer acknowledges that MTU-BB has no control over and is not responsible for their issuance or renewal. Customer shall provide MTU-BB with all necessary documents/data to assist with such application. Any failure to obtain such permits and/or approvals shall not affect or release Customer from its obligations under these Terms and Conditions. FIELD SERVICES 9of15 /II IJ I/I ln9.�, l �Yiu :: I11 "gale rihur( Are I/II IJ,hrru ng1n(, ,Cu r 111)a I' 4.1 Any Services performed outside of MTU-BB's facility will be considered field service ("Field Service"). Unless otherwise agreed between the parties, Customer shall at it's own cost furnish, in a safe and well maintained condition, all necessary materials, equipment, tools and — as the case may be — labor necessary to accomplish Field Services. 4.2 Customer and MTU-BB will at all times co-operate to ensure that Field Services will be carried out efficiently and without delay. Customer shall grant MTU-BB access at all reasonable times to the respective site and shall cause its personnel to follow the reasonable requests of MTU-BB. In case parties agree MTU-BB to supervise certain Customer work, Customer shall perform such work strictly according to MTU-BB's instructions and only during presence of a MTU-BB Field Service technician. Communication between Customer and MTU-BB per- sonnel, including any communication on -site, shall be in English (and Customer shall arrange and bear the cost of an English translator if so required) and, in the event that instructions in different languages are contradicto- ry, the English language instructions shall prevail. 4.3 Customer shall at all times remain responsible for the safety of its own personnel and personnel of MTU-BB and all other third parties, and each of their materials and equipment whilst at Customer's premises and shall put in place and maintain comprehensive insurances in accordance with best business practices. 4.4 Customer shall comply with international industry safety standards, including (but not limited to) ISO 9000, 14001 and 18001, and take all necessary precautions to ensure the safety of MTU-BB's and its subcontractor's personnel at the site. This includes Customer's obligation to instruct each of MTU-BB's and its subcontractor's personnel about all relevant safety precautions and measures and explain the site's emergency and hazardous substance plans prior to commencement of Field Services. If in MTU-BB's reasonable opinion the safe perfor- mance of Field Services appears to be imperiled by local conditions, MTU-BB may suspend the performance of Field Services and evacuate its and its subcontractor's personnel from the site and Customer shall assist in said evacuation which shall be considered as excusable delay in the meaning of Clause 9. 4.5 The operation of Customer's equipment is the sole responsibility of Customer and Customer warrants and undertakes to put in place and maintain comprehensive insurances for such equipment in accordance with best business practices. If MTU-BB or its subcontractors operates Customer's equipment, Customer shall indemnify and hold fully harmless MTU-BB its officers, directors, employees, agents and authorized subcontractors (the "MTU-BB Indemnified Parties") from any liability incurred by or in connection with or imposed upon the MTU- BB Indemnified Parties including (but not limited to) injury to persons and/or death (save where caused by neg- ligence) and/or damage to property resulting from operation of such equipment by the MTU-BB Indemnified Parties. 4.6 The Field Services shall be deemed performed by MTU-BB upon completion of the agreed Field Services and delivery of a site exit report by MTU-BB. CHANGES MTU-BB may make minor changes and improvements to the Services which do not affect price, installation or interchangeability of major parts. Service bulletins will be incorporated in accordance with MTU-BB's then cur- rent service policy for repair and/or overhaul as supplemented or modified by any additional requirement timely requested to MTU-BB in writing by the Customer. Apart from such minor changes and improvements, requests for modification of an Agreement shall not be binding unless and until agreed to in writing between Customer and MTU-BB. PERFORMANCE OF SERVICES 6.1 Upon delivery of an Item to MTU-BB, MTU-BB shall complete the Services in the turnaround time ("TAT") stat- ed by MTU-BB. TAT shall start on the first full working day after all relevant technical documents are provided to MTU-BB and Items are inducted for Services and when Customer has complied with all other requirements of MTU-BB to enable it to proceed with the Services (as determined by MTU). In the event of any delay caused by the Customer, the TAT shall be extended and the Item may be removed from the repair process and put on hold, such on -hold time not counting for TAT. TAT shall end, when Items are made available for redelivery at MTU-BB's facility and clauses 3 and 9 shall apply. 6.2 If (i) it becomes necessary for the proper performance of any Agreement to carry out services substantially different from those specified in the Agreement, MTU-BB will notify Customer (as soon as is reasonably practi- cable) of the nature and extent of such services and seek Customer's authorization or (ii) there are any tech- nical requests from MTU-BB to the Customer which will affect the TAT, Customer shall respond in writing (to include telefax and email) to any such request within twenty four (24) hours. If no reply is received within that time Customer will be deemed to have accepted the changes and MTU-BB may proceed on this basis and the TAT will be increased by the aggregate of (i) the time needed by Customer to respond to any such request and (ii) the additional time that is needed by MTU-BB (in its sole discretion) to perform such different services. Where practicable MTU-BB will inform Customer about any impact on the agreed TAT resulting from such de- lay. 10 of 15 /II IJ Main , l �Yiu :: I11 "gale rihur( Are I/II IJ,hrru ng1n(, ,Cu r 111)a I' 6.3 The Services shall be deemed performed by MTU-BB upon written notification of completion of the agreed Services as determined by MTU in its discretion. For the purposes of payment of MTU-BB invoices, the Ser- vices shall be deemed accepted by the Customer upon the delivery of the Item or when the item is made avail- able for collection pursuant to Clause 3.2,unless the Customer gives written notice of complaints, including ob- jective evidence thereof, within a period of fourteen (14) days.. 6.4 MTU-BB may subcontract Services hereunder to any qualified party as determined by MTU-BB in its discretion. Any permitted subcontracting shall not release MTU-BB from its obligations under the Agreement. PRICES AND PAYMENT 7.1 Services and Goods provided by MTU-BB will be charged in accordance with MTU-BB's latest published price list plus VAT, if applicable, unless different rates and charges are agreed in writing between Customer and MTU-BB. VAT means any value added tax imposed under EC Directive 2006/112 or any equivalent goods, sales or services tax that replaces it. Where the Services constitute a taxable supply for VAT purposes the Customer shall, on receipt of a valid VAT invoice from MTU, pay to MTU such additional amounts in respect of VAT as are chargeable on the Services at the same time as payment is due for the provision of the Services. 7.2 The prices for Services are calculated on MTU-BB's cost factors as of the date the offer is made. In the event of variations in material prices, wages or other cost factors, MTU-BB reserves the right to adjust the prices ac- cordingly. 7.3 Unless expressly otherwise agreed in writing, Customer shall make payments on account in advance of com- mencement of Services or delivery of Goods and MTU-BB shall be entitled to cancel Customer's order and/or to put Services on hold if such advance payment is not received by MTU-BB and the TAT shall be extended accordingly. 7.4 Invoices shall be due and payable at the dates agreed upon. In the absence of any express agreements re- garding payment dates and currency, all payments shall be made in US Dollars and must be received in cleared funds within thirty (30) days from date of the invoice. Payments shall be made by bank transfer to the bank account indicated by MTU-BB, with no deductions, withholding or set-off allowed and with all charges (in- cluding, but not limited to, bank transfer charges) paid by Customer. 7.5 If Customer is in default of any payment obligations, MTU-BB, without prejudice to any of its other rights or remedies under the applicable law, reserves the right to charge interest without reminder at eight percentage points (8%) above the basic interest rate published by the European Central Bank per annum (prorated on a month by month basis) from the due date of payment until payment is received as well as to reimbursement of all reasonable expenses incurred by MTU-BB in connection with the recovery of any due payment. 7.6 In the event Customer disputes any invoice, Customer shall pay MTU-BB the undisputed portion of the invoice and notify MTU-BB of the reasons for disputing the invoice. Disputes on invoices will only be considered by MTU-BB if raised by the Customer to MTU-BB in writing within thirty (30) days from the invoice date. TAXES AND DUTIES MTU-BB shall pay all sales, use, excise or similar taxes, duties and fees levied on either party by authorities in the Federal Republic of Germany in connection with the Services performed or Goods delivered under the Agreement. Any taxes levied by any authority outside the Federal Republic of Germany on MTU-BB or the Customer in connection with Services performed or Goods delivered under the Agreement, including, but not limited to any export/import duties or any type of withholding tax levied in the country of delivery, shall be borne by the Customer and the Customer hereby indemnifies MTU-BB in respect of the same. EXCUSABLE DELAY 9.1 MTU-BB is not responsible for any failure or delay in performance resulting from events beyond MTU-BB's reasonable control that hinder or delay MTU-BB's performance. This may include, but is not limited to, events such as acts of government, court orders, civil unrest, sabotage, adverse weather conditions, labour troubles, shortage of materials and/or external services and/or service on hold, delay of single source OEM parts suppli- ers. MTU-BB will give timely notice to Customer of any such event and will endeavour to avoid or remove the cause and resume performance with minimum delay. Customer agrees that the agreed time for performance of Services (including TAT) and/or delivery of Goods will be extended accordingly and Customer shall have no claim against MTU-BB in respect of the same. In the event of any single delay (or multiple delays with the practical effect of one single delay) lasting 180 days, MTU shall be entitled to terminate the Agreement imme- diately. Upon such termination, the Customer shall arrange for the collection of the Item from MTU-BB at its own cost and in accordance with clause 3.2. MTU shall be entitled to raise an invoice(s) for any part of the Services it has carried out and for any costs it has incurred in connection with the Services which the Customer shall settle in accordance with clause 7.4. Any costs caused by Customer's failure to comply with its obliga- tions or to co-operate will be borne by Customer and MTU-BB shall invoice such costs, which shall be paid in 11 of 15 /II IJ Main , l �Yiu :: I11 "gale rihur( Are I/II IJ,hrru ng1n(, ,Cu r 111)a I' �... . accordance with clause 7.4.. 10 WARRANTY 10.1 MTU-BB warrants that Goods supplied or incorporated in Items are free from major defects in material and manufacture and Services have been performed to acceptable standards ("Warranty"). 10.2 The Warranty is limited to MTU-BB, at no cost to the Customer, (i) rectifying at its facilities, by repair or re- placement, such Goods or Items or (ii) re -performing Services, as are demonstrated to MTU-BB's reasonable satisfaction to be defective, provided that the defect has been claimed within twelve (12) months after delivery of the Goods, redelivery of Items or performance of Services. If MTU-BB decides in favor of replacing a defec- tive part, MTU-BB will replace it with a part the value of which corresponds approximately to the value the de- fective part would have had after proper repair. 10.3 Customer acknowledges and accepts that in case of Customer requesting MTU-BB to provide non -OEM au- thorized Goods and/or Services, the provision of such Goods and/or Services is not warranted by the OEM, and Customer will release the OEM from any and all liability associated with the use of such Goods and/or Services. Customer will accept this by signing the applicable OEM "Declaration of non -OEM Product Usage" prior to MTU-BB's execution of such non -OEM authorized Services or sale of such non -OEM Goods. This Clause 10.3 does not affect, reduce or suspend the liability and warranty obligations of MTU-BB provided in this Clause 10, save that Customer indemnifies MTU-BB for any losses, damages, costs or similar which may arise from non -OEM product usage where MTU-BB recommended OEM authorized Goods or Services. 10.4 The warranty hereunder only applies if the Customer provides written notice of the defect within thirty (30) days after its discovery accompanied by Customer's documentation of engine operation parameters as recorded by engine control data log during failure event. In the event of a warranty claim being accepted by MTU-BB the warranty period shall be extended by the time required to remedy the defect up to a maximum period of twelve (12) months. 10.5 If MTU-BB accepts a Warranty claim, Customer, at MTU-BB's sole discretion and at MTU-BB's cost, shall either deliver the Good or Item to MTU-BB or to a third party designated by MTU-BB, or shall permit, and take all reasonable steps to facilitate, MTU-BB to remedy the defect on site. Customer shall only ship defective Good or Item to MTU-BB after prior written approval by MTU-BB and clauses 3.1 and 3.2 shall apply. 10.6 Warranty shall be void, if one of the following circumstances caused, or attributed to, the defect or damage: • normal wear and tear; • improper handling or storage or installation; • non -adequate protection (determined by MTU-BB) against corrosion, physical damage, faulty assembly, chemical, electrical or other harmful effects; • modifications of Items or incorporation or attachment of parts by or on behalf of Customer not meeting OEM's specifications and procedures; • non-compliance with the operating, maintenance and inspection instructions of the OEM; • abuse of the delivered Goods or Items, or use for other than the agreed purpose(s); • operation of Goods or Items in military applications unless specifically and expressly agreed between Cus- tomer and MTU-BB; or • excessive stress including but not limited to operation under unusual or damaging conditions which were not made known to MTU-BB in writing prior to the Agreement being concluded. 10.7 If the Customer makes a warranty claim and as a result of investigation by MTU-BB it is established by MTU- BB that MTU-BB is not liable for the defects claimed, the costs of investigation as well as any other costs and expenses incurred by MTU-BB, its personnel, agents and/or subcontractors in connection with such claim shall be borne by the Customer and due and payable upon receipt of the respective MTU-BB invoice and clause 7.4 shall apply. 10.8 The foregoing warranties are exclusive and are given and accepted in lieu of (i) any and all other warranties of SATISFACTORY QUALITY and fitness for a particular purpose; and (ii) any obligation, liability, right, claim or remedy in contract, tort or strict liability, whether or not arising from MTU-BB's negligence, actual or accused. The remedies of Customer shall be limited to those provided in THIS WARRANTY AND any and all other rem- edies, including without limitation, CLAIMS FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSS OF PROFITS OR REVENUE, LOSS OF USE OF AN ENGINE OR ENGINE PARTS OR OTHER EQUIPMENT, COST OF CAPITAL, COST OF SUBSTITUTE EQUIPMENT, FACILITIES OR SERVICES, OR DOWNTIME COSTS SHALL TO THE FULLEST EXTENT PERMITTED UNDER THE APPLICABLE LAW BE EXCLUDED. No agreement varying or extending the foregoing warranty, remedies or this limitation will be binding upon MTU-BB unless AGREED in A written Document signed by two duly authorised DIRECTORS of MTU-BB. 10.9 MTU-BB may agree (at its sole and absolute discretion) to the transfer by novation of MTU-BB warranties by Customer to a third party subject to Customer requesting MTU-BB's agreement to such a transfer and disclos- 12 of 15 /II IJ Main , l �Yiu :: I11 "gale rihur( Are I/II IJ,hrru ng1n(, ,Cu r 111)a I' ing full details of new Item owner or operator. 11 LIABILITY AND INDEMNIFICATION 11.1 Subject to the liability limitation set forth in Clause 11.2, MTU-BB shall be liable to the Customer, its directors, officers and employees (the "Customer Indemnified Parties") for Damages (as hereinafter defined) and MTU- BB shall indemnify and hold harmless the Customer Indemnified Parties from any Damages arising out of the Services performed or Goods delivered by MTU-BB Indemnified Parties under the Agreement only to the ex- tent that such Damages are caused by the Negligence (as hereinafter defined) of the MTU-BB Indemnified Parties. 11.2 In case of Negligence, the liability or indemnity obligation of MTU-BB Indemnified Parties to the Customer Indemnified Parties for Damages, shall be limited to US Dollars two million ($2,000,000) per occurrence or in the aggregate per year, provided however, that in no event shall MTU-BB be liable to, or indemnify, the Cus- tomer Indemnified Parties for any indirect, special, incidental or consequential loss and/or expense (including but not limited to loss of profit or revenue; loss of use; cost of capital; cost of substitute equipment, facilities or services; and downtime costs) suffered by the Customer Indemnified Parties or any third party. 11.3 THE FOREGOING LIMITED LIABILITY AND INDEMNITY OBLIGATIONS OF MTU-BB INDEMNIFIED PAR- TIES ARE EXCLUSIVE AND ARE GIVEN AND ACCEPTED IN LIEU OF ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY BY CUSTOMER INDEMNIFIED PARTIES UNDER ANY CAUSE OF ACTION, WHETHER IN CONTRACT, WARRANTY, TORT, STRICT LIABILITY, PRODUCT LIABILITY OR OTHER- WISE, WHETHER OR NOT ARISING FROM MTU-BB INDEMNIFIED PARTIES' NEGLIGENCE, ACTUAL OR IMPUTED, PROVIDED THAT THE FOREGOING LIMITATION SHALL NOT LIMIT CUSTOMER'S CONTRAC- TUAL CLAIMS FOR BREACH OF WARRANTY UNDER CLAUSE 10. THE LIABILITY OF MTU-BB INDEMNI- FIED PARTIES TO CUSTOMER INDEMNIFIED PARTIES SHALL BE LIMITED TO THAT PROVIDED IN CLAUSE 11 OF THIS T&C TO THE EXCLUSION OF ANY AND ALL OTHER REMEDIES TO THE FULLEST EXTENT PERMISSIBLE UNDER THE APPLICABLE LAW. 11.4 Except for the MTU-BB Indemnified Parties' liability outlined above, Customer shall indemnify and hold harm- less the MTU-BB Indemnified Parties from any Damages — including third party claims — arising from or related to, in any way, any purchase order under these T&C, the Agreement and the Goods or Services provided. 11.5 Customer will use its best efforts to mitigate any damage and/or loss incurred and will notify MTU-BB of such losses promptly. 11.6 Customer shall take out appropriate and comprehensive general liability insurance coverage and provide evi- dence of such insurance coverage promptly upon MTU-BB's request. The insurances certificates shall name the MTU-BB Indemnified Parties as co -assured. 11.7 For the purposes of this Clause 11, "Damages" means any and all liabilities, costs, damages, expenses, suits or judgments (including reasonable attorneys' fees) for the death of or bodily injury to any person and for the loss of, damage to or destruction of any property in any manner, provided, however, that the limitations on re- coverable damages contained in Clauses 11.1 and 11.2 shall remain in effect for the purposes stated therein; and "Negligence" means any form of negligence including without limitation slight, simple, ordinary, inadvertent and gross negligence. 12 LIENS / RETENTION OF TITLE 12.1 With regard to all outstanding claims of MTU-BB, MTU-BB shall have a right of retention and a contractual lien on the Items which come into MTU-BB's possession in connection with the performance of Services. These rights may also be asserted in connection with claims arising from previously performed Services, previously effected deliveries and other claims arising from any business relationship between the parties. This shall also apply in the event that an Item is brought to MTU-BB at a later date and MTU-BB, at this time, has claims against the Customer arising from any such relationship. 12.2 Even after delivery, title to Goods (incorporated into Items or not) shall remain with MTU-BB and shall not pass to Customer until the Customer has paid all MTU-BB invoices including VAT (if applicable) in full. 12.3 Until such time as title to the Goods is transferred to Customer, the Customer shall not pledge or in any way charge by way of security for any indebtedness any of the Goods which are the property of MTU-BB. Customer shall be solely responsible for insuring and keeping insured the Goods to one hundred twenty percent (120%) of the new price against all risks to the reasonable satisfaction of MTU-BB until the date title to the Goods is transferred to Customer, and Customer shall whenever requested by MTU-BB provide promptly a copy of the insurance certificate. 13 TERMINATION MTU-BB may, in its sole discretion, suspend or terminate any Services already commenced and refuse to commence any further Services or may terminate a Agreement at any time with immediate effect by written no- 13 of 15 /II IJ I/I ln9.�, l �Yiu :: I11 "gale rihur( Are I/II IJ,hrru ng1n(, ,Cu r 111)a I' tice to Customer if (i) Customer commences winding -up, becomes insolvent, commits any act of bankruptcy or if a receiver, trustee or custodian is appointed over the Customer or a substantial part of Customer's property, or (ii) Customer is in default of its obligations under a purchase order and/or otherwise under the Agreement and such default remains outstanding for a period of fourteen (14) calendar days after issuance of a default no- tification by MTU-BB. Upon termination MTU-BB will have no further obligation to Customer under the Agree- ment and Customer will reimburse MTU-BB's termination costs, including a reasonable allowance for profit and shall pay for all work undertaken by MTU-BB plus interest in accordance with clause 7. 14 ASSIGNMENT Customer may not assign its rights and/or obligations under the Agreement without the prior written consent of MTU-BB. MTU-BB may assign its rights at its discretion. 15 APPLICABLE LAW, JURISDICTION 15.1 This Agreement and any dispute or claim arising out of or in connection with it or its subject matter (including non -contractual disputes or claims) shall be governed by and construed in accordance with the laws of Eng- land and Wales. The U.N. Convention on Contracts for the International Sale of Goods of 4 April 1980 and its conflicts of law principles are expressly excluded. 15.2 Any and all disputes arising out of or under the Agreement between the parties shall be finally settled through arbitration in accordance with the Arbitration Act 1996 and any other laws amending, supplementing or replac- ing the same. In addition to the rules of the Arbitration Act 1996, the parties agree that the arbitration shall be conducted ac- cording to the IBA (International Bar Association) Rules of Evidence in International Arbitration. The arbitral tribunal shall be constituted by a sole arbitrator, failing which three (3) arbitrators as provided here- in. Arbitral proceedings will be commenced when one party serves on the other party notice in writing requiring the other party to appoint an arbitrator or to agree to the appointment of a nominated sole arbitrator. The other party shall within thirty (30) days following notification of arbitration either agree to the appointment of the sole arbitrator or appoint their own arbitrator. The first party shall then within fourteen (14) days either agree to the appointment of the other party's arbitrator as sole arbitrator or appoint their own arbitrator. Two (2) arbitrators so chosen shall then appoint a third arbitrator as chairman. Should one (1) party delay agreement to the ap- pointment of a sole arbitrator or appointment of its arbitrator, or if an arbitrator is or becomes for any reason unable to act, or if the two (2) arbitrators cannot agree within thirty (30) days as to the choice of a chairman, the President or Vice -President, for the time being, of the Chartered Institute of Arbitrators shall be asked to ap- point such arbitrator. Arbitrators nominated or appointed should have experience of the nature of the matter(s) in dispute. The place of arbitration (seat and hearings) shall be London, England and conducted in English. The cost and expenses arising in conjunction with the arbitration proceedings, including without limitation the fees for the a r- bitrators and reasonable fees for attorney(s) retained by the parties shall be borne by the losing party or in case the award stipulates that a party prevails or loses only partially then such cost and expenses shall be al- located among the parties in the same ratio. The arbitral award shall be final and binding and each party hereto waives any right of appeal in respect of such award to any court or other judicial authority. The existence as well as all aspects of the arbitration pro- ceedings shall be kept strictly confidential by the parties and the arbitral tribunal. 16 FINAL PROVISIONS 16.1 In the event that any of the provisions contained herein and/or any contracts concluded on the basis of these provisions prove to be invalid or unenforceable, the validity of the remaining terms and conditions shall remain unaffected. 16.2 No failure delay or partial exercise by either party to exercise any right or remedy provided under this Agree- ment or by law shall constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict the further exercise of that or any other right or remedy. 16.3 Nothing in these T&C is intended to, nor shall be deemed to, establish any partnership or joint venture between the parties, nor constitute one party the agent of the other, nor authorize either party to enter into any commit- ments on behalf of the other. 16.4 Customer shall provide MTU-BB with all documents and perform such acts as may be required by MTU-BB to give full effect to these T&C. Each party shall, and shall use all reasonable endeavors' to procure, that any necessary third party shall promptly exercise and deliver such documents and perform such acts as may rea- sonably be required for the purpose of giving full effect to these T&C. 16.5 These T&C constitutes the entire agreement between the parties and supersedes and extinguishes all previous agreements, promises, assurances, warranties, representations and understandings, whether oral or in writing. 14 of 15 /I I J Main , l i �Yiu :: Ill 1 "gale 1, L) Are I/II IJ,hrru ng1n(, ,(", u r 111)a I' The parties each agree that they have not relied upon, and shall have no remedy in respect of, any statement, representation, assurance or warranty that is not set out in these T&C. 16.6 Any amendment and/or supplement to these T&C shall be agreed in writing and signed by both parties. 16.7 An agreement to which these T&C relate may be executed in counterparts, each of which shall constitute a duplicate original, but all counterparts shall together constitute the one agreement. Delivery may be made by email in PDF (or equivalent) format. No counterparts shall be effective until all parties have executed and de- livered their counterpart. 16.8 Except as expressly provided elsewhere in these T&C, no person other than a party to these T&C (or their successor or permitted assignees) shall have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of these T&C. 16.9 The Customer undertakes to keep strictly confidential and not to disclose at any time, to any other person the contents of these T&C and any information contained herein, or concerning the business, affairs, customers, suppliers of MTU-BB without the prior written consent of MTU-BB except as required by law. In particular, costs, estimates, offers drawings and technical know-how and all IPR (defined herein) shall be kept strictly con- fidential. In the event that any disclosure is required by law the Customer shall notify MTU-BB not less than twenty four (24) hours prior to making any such disclosure. The Customer may disclose details of these T&C to its legal, technical and financial advisors if those advisors are subject to binding obligations of confidentiality which are no less restrictive than those contained in these T&C. 15 of 15 %rom z HUTCHINSON UT'IIILIIT'IIIE'S Note PURCHASE REQUISITION HUTCHINSON UTILITIES COMMISSION 225 MICHIGAN ST SE HUTCHINSON, MN 55350 Phone:320-587-4746 Fax:320-587-4721 MTU MAINTENANCE BERLIN-BRANDENBURG- 2434 GOODWIN LANE SUITE C NEW BRAUNFELS, TX 78130 Description: Date Requisition No. 08/07/2018 007671 Required by: Requested by: RBlake Item Part No. Description Qty Unit Due Date Unit Price Ext. Amount No. OVERHAULED BLADES -KIT# 738L556G01 - SET OF OVERHAULED BLADES, KIT # 1 738L556G01- EXCHANGE 1.00 EA 10/11/2018 $47,864.000 $47,864.00 MFG. PART: CONSUMABLE HARDWARE - CONSUMABLE HARDWARE TO PERFORM SERVICE 2 BULLETIN SB-310 1.00 EA 10/11/2018 $1,875.000 $1,875.00 MFG. PART: FIELD SERVICE LABOR - FIELD SERVICE LABOR- $2,560.00 PER TECH PER 12 HR DAY 3 FOR 3 DAYS 1.00 EA 10/11/2018 $15,360.000 $15,360.00 MFG. PART: TRAVEL EXPENSES - 2 TECHNICIANS AT TRAVEL COST $4,488.00-2 AIRFARES-$840.00- 4 HOTEL-$1440.00 1.00 EA 10/11/2018 $6,768.000 $6,768.00 MFG. PART: BORESCOPE INSPECTION - BORESCOPE INSPECTION OF LM-6000 GAS TURBINE - 5 SERIAL# 185-111INCLUDES INCREMENTAL 1.00 EA 10/11/2018 $1,540.000 $1,540.00 T&L AND DETAILED REPORT MFG. PART: Total: 73,407.00 Date Printed: 08/07/2018 Requisitioned By: RBlake Page: 1/1 HUTCHINSON UTILITIES COMMISSION�� Board Action Form �'Ylkll'M1'k� Agenda Item: Exception Agreement HUC and McLeod Cooperative Power Association Presenter: Dave/Jeremy Agenda Item Type: Time Requested (Minutes): 5 New Business Attachments: Yes BACKGROUND/EXPLANATION OF AGENDA ITEM: L&P Supply located at 1470 South Grade Rd SW was annexed into the City in 2002 and became part of HUC's service territory. Although there is no documentation, there was an agreement between HUC, McLeod Cooperative Power, and the property owner that would allow McLeod Cooperative Power Association to continue to serve the property due to the design of the electric heating system in the building. Today, Verizon has an agreement to install a cell tower on the property and since it is located within the City, there is a question of who should serve the tower. We have had conversations with all parties involved and agree that the current property and cell tower will be served by MCPA. However the property will remain in HUC's electric service territory. Attached is an Exception Agreement between HUC and MCPA. The Agreement is with the current property owner and the current use of the property including the cell tower. Any changes to the current property owner or use of the property will void the agreement and allow HUC to serve the property. BOARD ACTION REQUESTED: Approve Exception Agreement between HUC and MCPA Fiscal Impact: None Included in current budget: Budget Change: PROJECT SECTION: Total Project Cost: Remaining Cost: EXCEPTION AGREEMENT BETWEEN THE HUTCHINSON UTILITIES COMMISSION AND MCLEOD COOPERATIVE POWER ASSOCIATION THIS AGREEMENT, made this day of _, 2018, by and between the HUTCHINSON UTILITIES COMMISSION, a municipal corporation organized under the laws of State of Minnesota, by its Hutchinson Utilities Commission (hereinafter referred to as "HUC"), individually or collectively referred to as a "Party" or "Parties". and the MCLEOD COOPERATIVE POWER ASSOCIATION, a corporation organized under the laws of State of Minnesota (hereinafter referred to as "the Cooperative") WHEREAS, HUC and the Cooperative each have electric service areas assigned by the Minnesota Public Utilities Commission in which the Parties have exclusive rights to provide electric service to customers within their respective territories; AND WHEREAS, the Cooperative is currently serving a commercial customer, L&P Supply, 1470 South Grade Road SW, Hutchinson, Minnesota ("Customer") within HUC's service territory; AND OIK WHEREAS, the Customer requests to continue their electric service with the cooperative, and WHEREAS, the Customer has an agreement with Verizon to allow a cell tower on the 18MMEMMIN, WHEREAS, the Parties have come to a mutual agreement that will allow the Cooperative to provide electric service by exception to the current property and the Verizon Cell Tower placed on the Customer's premises within the exception area. NOW, THEREFORE, in consideration of the promises exchanged herein, the Parties agree as 1. Scope of Agreement: The scope of this agreement is limited to commercial electric service within the exception area specifically identified on Attachment 1 : 2. Reservation of Rights: Except as specifically set forth herein, this Agreement does not modify or limit the legal rights of any Party. 3. No Precedent: The Parties recognize that this agreement is the result of negotiations between the Parties and does not represent any binding or legal precedent on any party in any other matter. 4. Agreement Drafted Jointly: The Parties agree that none of the Parties shall be deemed Z:1 solely responsible for drafting all or any portion of this Agreement, and in the event of a dispute, responsibilities for any ambiguities arising from any provision of this Agreement shall be shared equally among the Parties. 5. Effective Date: The effective date of this Agreement is the date upon which the Agreement has been signed by a duly appointed representative of both Parties. 6. End Date: The Exception Agreement is with the current property owner and the current use of the property as it is today. HUC reserves the right to service the property upon change in ownership and/or change in the use of the property. 7. Notice: Any notice permitted or required by this Agreement shall be made in writing and personally served or mailed (postage prepaid, return receipt requested) and shall be effective upon the date of personal service, or if by mail, upon the date of receipt. IN WITNESS WHEREOF, the Parties hereto have caused the Agreement to be executed as of Z:� the day and year first above written and the Parties agree to take such additional steps and actions including execution of such instrument and other documents as are reasonably necessary to effectuate the expressions hereby. HUTCHINSON UTILITIES COMMISSION Title: Date: MCLEOD COOPERATIVE POWER ASSOCIATION m Title: Date: N Received t ' day G' mdy Schultz By LGL/G� Deputy Ft—i-d Iromhnum W. CITY ADMINISTRATOR HUTCHINSON HUTCHINSON CITY CENTER 111 HASSAN STREET SE HUTCHINSON, MN 55350 2522 State of Minnesota) County of McLeod ) City of Hutchinson ) IIIII I II I IIIII II II III IIII I III OFFICE OF COUNTY RECORDER McLEOD COUNTY MINNESOTA DOCUMENT NUMBER A-319485 CERTIFIED FILED ANDIOR RECORDED ON April 9, 2002, AT 11:00:00 AM CARMEN OSTLIE MULDER,-COUNTY RECORDER Fees: EQUIPMENT FUND $3.00 SURCHARGE 4.50 SURCHARGEERER .50 GENERAL ABSTRACT 12.00 Total $20.00 CERTIFIED COPY I, the undersigned, being the duly qualified and acting City Administrator of the City of Hutchinson, Minnesota, do hereby certify that I have carefully compared the attached copy of Resolution @ 11873 with the original on file in the Office of the City Administrator, and the same is a full true and complete copy thereof. WITNESS my hand officially as such City Administrator and the Corporate Seal of the City this 4th day of Auri 1 , 2002. -'a"CA,ew - Gary D. Plo City Administrator -S AL' �.. D w t,0 00 01 0 o- OA-309-6 Hutchinson Resolution No. 11873 BEFORE THE DIRECTOR OF THE OFFICE OF STRATEGIC AND LONG RANGE PLANNING OF THE STATE OF MINNESOTA IN THE MATTER OF THE ORDERLY ANNEXATION ) AGREEMENT BETWEEN THE CITY OF ) ORDER HUTCHINSON AND THE TOWN OF LYNN ) PURSUANT TO MINNESOTA STATUTES 414 ) ----------------------------------------------------- WHEREAS, a joint resolution for orderly annexation was adopted by the City of Hutchinson and the Town of Lynn; and WHEREAS, a resolution was received from the City of Hutchinson indicating their desire that certain property be annexed to the City of Hutchinson pursuant to M.S. 414.0325, Subd. 1; and WHEREAS, M.S. 414.0325, M.S. 414.11, and M.S. 414.12 states that in certain circumstances the Director of the Office of Strategic and Long Range Planning may review and comment, but shall within 30 days order the annexation of land pursuant to said subdivisions; and WHEREAS, on March 15, 2002, the Director of the Office of Strategic and Long Range Planning has reviewed and accepted the resolution for orderly annexation; IT IS HEREBY ORDERED: That the following described property is hereby annexed in accordance with the terms of the resolution to the City of Hutchinson, Minnesota, the same as if it had originally been made a part thereof: The East Three Hundred Sixty-one and Five Tenths (361.50) feet of the North Three Hundred Sixty-one and Five Tenths (361.50) feet of the Northwest Quarter of the A-319485 -2- Northeast Quarter of Section Eleven (11) in Township One Hundred Sixteen (116) North of Range thirty (30) West. IT IS FURTHER ORDERED: That the tax rate of the City of Hutchinson on the property herein ordered annexed shall be increased in substantially equal proportions over a period of five years to equality with the tax rate of the property already within the city. Dated this 15'h day of March, 2002. For the Director of the Office of Strategic & Long Range Planning 658 Cedar Street - Room 300 St. Paul, Minnesota 55155 1.��a. Vyl •�01 ��1� Christine M. Scotillo Executive Director Municipal Boundary Adjustments A-319485 OA-309-6 Hutchinson MEMORANDUM In ordering the annexation contained in Docket No. OA-309-6, the Director of Strategic and Long Range Planning finds and makes the following comment: Planning in the area designated for orderly annexation must be provided for by one of three provisions set forth in Minnesota Statutes Section 414.0325, Subd. 5. The joint resolution does not make reference to which of the three statutory provisions the parties have agreed on to govern planning in the designated area. The parties are encouraged to consider this comment in light of any further amendments that may be otherwise necessary to this agreement for orderly annexation. &W A-319485 RESOLUTION NO. 11873 RESOLUTION GRANTING APPROVAL OF ORDERLY ANNEXATION TO THE CITY OF HUTCHINSON OF 3 ACRES LOCATED IN LYNN TOWNSHIP OWNERS BRIAN AND BRADLEY LOKENSGARD (L & P SUPPLY) BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF HUTCHINSON, MN: WHEREAS, certain territory described below has been designated for orderly annexation to the City of Hutchinson is urban in character, or about to become so; and WHEREAS, the following described property is totally within the Orderly Annexation Agreement and abuts property within the City of Hutchinson; Legal Description: The East Three Hundred Sixty-one and Five Tenths (361.50) feet of the North Three Hundred Sixty-one and Five Tenths (361.50) feet of the Northwest Quarter of the Northeast Quarter of Section Eleven (11) in Township One Hundred Sixteen (116) North of Range Thirty (30) West. WHEREAS, the property is highway business and shall receive a "tax break" consisting of a staged, graduated increase in mill rates from the township rate to the city rate over a five (5) year period. AND, WHEREAS, The orderly annexation agreement between the Township of Lynn and the City of Hutchinson states no consideration by the Minnesota Municipal Board is necessary, the board may review and comment, but shall, within 30 days, order the annexation in accordance with the terms of this joint resolution. NOW, THEREFORE BE IT RESOLVED, that the City of Hutchinson requests the property described be annexed by order of the Minnesota Municipal Board within 30 days. Adopted by the City Council for the City of Hutchinson this 9th day of October, 2001. ATTEST: Gary D. PioQ ME(q!p_D. Torg City Administrator Mayor o1-3►qu�5 ms moa soaps • HUTCHINSON UTILITIES COMMISSION�� Board Action Form �'Ylkll'M1'k� Agenda Item: Approve HDR Change Request #2 Presenter: Jeremy Carter Agenda Item Type: Time Requested (Minutes): 5 New Business Attachments: Yes BACKGROUND/EXPLANATION OF AGENDA ITEM: As part of the project to add new units 6 & 7 this year HDR was hired as the engineering firm to oversee the air permitting and the technical aspects of the project. The original contract amount approved was for $382,110. HDR is requesting a second change order request of an additional $182,000 to complete the project along with the final commissioning of the new units in June of 2019. Listed in the attached submittal request are the general circumstances surrounding the project and the additional time needed to complete this project. If the commission approves this change request it will bring the total contract price for HDR engineering services to $827,610 or about 5% of the overall estimated project costs. Within this project there is a 5% contingency built in of $751,948 so this second change request will be covered by contingency dollars and still keep the project currently within budget. BOARD ACTION REQUESTED: Approve HDR Change Request Fiscal Impact: $182,000 Included in current budget: Yes Budget Change: PROJECT SECTION: Total Project Cost: Remaining Cost: « . »: %.<# r. Mr. Jeremy Carter General Manager 225 Michigan Street SE Hutchinson,:MN5535 RE- Engineering Services Engine Generator Sets ?f?Procurement and %««lace Cost of Services Change Request 2 ?°«» have discussed, we areexp more effort than anm»z «w.». design development, document preparation, contractor development, «and administration »?< < for the subject project. testing, and commissioning. Currently, our engineering services authorization is $645,610.00. At this time we respectfully equest an increase of $182,000.00 to our currentauthorization. During yourreview da:ay»«?»z« hesitate to contact»®m° information« Sincerely, Inc. HDR Engineering, James W. Booty,PE Project Manager CC: R. Blake C. L«d<! M. ZuehIs P. Garcia era. , 710Xenia Avenue South Suite BBoMinneapolis, MN;451a;BBB (B76e>5400