ORDINANCE NO. __________



The city of Duluth does ordain:

     Section 1. There is hereby granted to Aquila, Inc., d/b/a Aquila Networks, a Delaware corporation, its successors and assigns (hereinafter company), for the period of 25 years after the effective date hereof, a nonexclusive natural gas franchise, including the right to transport, distribute and sell natural gas for heating and other purposes within that area of the city of Duluth (hereinafter the city) which is contiguous to the city of Proctor, Minnesota, known as Bayview Heights, and more particularly described as follows:

           beginning on Interstate Highway 35 at the westerly intersection of the corporate city limits, and going easterly on Interstate Highway 35 to the intersection of Skyline Parkway; then northeasterly along Skyline Parkway to the intersection of Getchell Road; then northerly along Getchell Road to the Corporate city limits; then westerly along the city limits to the intersection of Boundary Avenue, which is the corporate city limits; then southerly along the city limits to the intersection of Interstate Highway 35 (hereinafter the service area);

and for that purpose to establish the necessary facilities and equipment, and to install and maintain gas mains and service lines and other appurtenances necessary to the transport, distribution and sale of gas, in and along the streets, alleys, avenues, bridges, public rights-of-way and other public places within said service area, and for the distribution of natural gas from or through said service area to points beyond the limits thereof and to do all things which are reasonable, necessary or customary in the accomplishment of this objective, subject to the further provisions of this ordinance.

     Section 2. All mains, pipes, lines and other appurtenances and appliances constructed or maintained by the company, its successors and assigns, shall be constructed and maintained in a safe and secure manner and so as not to interfere with the public uses of the streets, alleys, avenues, bridges, public rights-of-way and other public places, and shall at all times be subject to the reasonable regulation and control of the city council and the provisions of the Duluth City Code, and all other applicable laws, rules, regulations and government orders.

     This ordinance is granted subject to all conditions, limitations and immunities now provided for, or as hereafter amended, and applicable to the operations of a public utility, by state or federal law. The rates to be charged by company for service within the present or future limits of the service area and the rules and regulations regarding the character, quality and standards of service to be furnished by company shall be under the jurisdiction and control of such regulatory body or bodies as may, from time to time, be vested by law with authority and jurisdiction over the rates, regulations and quality and standards of service to be supplied by company.

     If an energy supplier is unable to furnish an adequate supply of energy due to severe natural disaster, war, an emergency or an order or decision of a public regulatory body, then the company shall have the right and authority to adopt reasonable rules and regulations limiting, curtailing, or allocating extensions of service or supply of energy to any customers or prospective customers and withholding the supply of energy to new customers, provided that such rules and regulations shall be uniform as applied to each class of customers or prospective customers, and shall be nondiscriminatory as between communities receiving service from the company.

     Any pavements, sidewalks or curbing taken up and any and all excavations made shall be done in such a manner as to cause only such inconvenience to the inhabitants of the service area and to the general public as is reasonably necessary; and repairs and replacements shall be made promptly by company, leaving such properties in as good as condition as existed immediately prior to excavation.

     Company agrees that for the term of this franchise, it will use its best efforts to maintain facilities and equipment sufficient to meet the current and future energy requirements of the service area, its inhabitants and industries. While maintaining its facilities and equipment, company shall obtain permits as required by ordinance, except that in emergency situations, company shall take immediate unilateral actions as it determines are necessary to protect the public health, safety and welfare; in which case, company shall notify the city as soon as reasonably possible.

     If the city elects to change the grade of or otherwise alter any street, alley, avenue, bridge, public right-of-way or other public place for a public purpose, company, upon reasonable notice from the city, shall remove and relocate its facilities or equipment situated in the public rights-of-way, if such removal is necessary to prevent interference and not merely for the convenience of the city, at the cost and expense of company.

     The city shall give company written notice of vacating of a public right-of-way. Vacating of a public right-of-way shall not deprive the company of its right to operate and maintain existing facilities, until the reasonable cost of relocating the same are first paid to the company.

     Section 3. The city shall in no way be liable or responsible for any incident or damage that may occur in the construction, operation and maintenance by the company of its mains, pipes, lines and other appurtenances and appliances hereunder; and the company, its successors and assigns, shall indemnify the city and hold it harmless against any and all liabilities, loss, cost, damage or expense which may accrue to the city by reason of any act or omission of the company in the construction, operation, and maintenance of its mains, pipes, lines and other appurtenances and appliances hereunder, or by the ownership by the company of such facilities, or by the company’s carrying on the business of utilizing this franchise; provided, however, that the company need not save harmless the city from claims, demands, losses and expenses arising only and completely out of the negligence of the city, its employees or agents.

     Section 4. This ordinance shall not be considered as granting to the company, its successors and assigns, any exclusive privilege of constructing, operating or maintaining mains, pipes, lines and other appurtenances and appliances in the streets, alleys, avenues, bridges, public rights-of-way and other public places of the city for gas transport, distribution and sale.

     Section 5. The company agrees to pay the city in consideration of the rights to be exercised under this franchise an annual fee equal to 1-1/2 percent of its gross receipts from sales of gas within the service area; such annual franchise fee covering the preceding calendar year shall be paid on February 1 of the succeeding year, with the filing of the annual report required by Section 84 of the City Charter.

     Gross receipts as used herein are revenues received from the sale, distribution or transportation of natural gas, after adjustment for the net write-off of uncollectible accounts and corrections of bills theretofore rendered. The money received by the city shall be deposited in Fund 100-030-1324-4072.

     Section 6. The rights of the company hereunder are in all respects subject to, and the company shall keep, perform, and observe all the terms, provisions and limitations of the Home Rule Charter of the city of Duluth, and in particular those of Chapter XI of said Charter, except Section 86 and Section 88, paragraphs 3(a) and (b) of said Charter to the extent pre-empted by state law, which said Charter and Chapter XI thereof are hereby expressly referred to and made a part hereof, as fully as though the same were incorporated in this ordinance, and all rights reserved by the city by said Charter shall be exercised in the manner and be subject to the limitations prescribed by such Charter; provided, however, that if any provisions of said Charter are amended or repealed during the term of this franchise, such changes shall be deemed applicable to the company upon its filing of a written consent thereto with the city clerk, and provided further, that if any of the provisions of the Charter are made inapplicable to or declared unenforceable against public gas utilities because of state legislation or judicial decision, such provisions shall no longer be deemed to be a part of this agreement. The company reserves the right, during the term of this agreement, to the extent permitted or not in conflict with state or federal law, to seek amendments to said Charter, to seek state legislation preempting the application of the provisions of such Charter to public gas utilities and to engage in or support judicial action aimed at having the provisions of such Charter declared unenforceable against public gas utilities.

     It shall not be a breach or default under this franchise if either party fails to perform its obligations hereunder due to force majeure. Force majeure shall include, but not be limited to, the following:

     (a)  Physical events that could not be reasonably guarded against or anticipated such as severe acts of God, unforeseeable and/or severe landslides, lightning, earthquakes, fires, floods, washouts, explosions, accident or necessity of repairs to machinery, equipment or distribution or transmission lines;

     (b)  Acts of others such as strikes, work-force stoppages, riots, sabotage, insurrections or wars;

     (c)  Governmental actions such as necessity for compliance with any court order, law, statute, ordinance, executive order or regulation promulgated by a governmental authority having jurisdiction;

and any other causes, whether of the kind herein enumerated or otherwise not reasonably within the control of the affected party to anticipate, prevent or overcome. Each party shall make reasonable efforts to avoid force majeure and to resolve such event as promptly as reasonably possible once it occurs in order to resume performance; provided, however, that this provision shall not obligate a party to settle any labor strike.

     Section 7. Pursuant to Section 82 of the City Charter, this ordinance shall be published verbatim in the official paper of the city of Duluth once a week for four successive weeks after its passage and shall take effect 30 days from and after its last publication; provided, however, that this ordinance shall not become effective unless the company has filed a written acceptance of the terms and conditions of such ordinance with the city clerk prior to such effective date.

STATEMENT OF PURPOSE:  Aquila, Inc., and its predecessors have operated a gas distribution system in the Bayview Heights area of Duluth for the last 23 years under a franchise granted by Ordinance 8624 (File No. 82-0015), and for 22 years before that under a franchise granted by Ordinance No. 7234, which expired on May 21, 1982. The service area is that part of the city west of Skyline Parkway and Getchell Road adjacent to the city of Proctor, comprising about 2-1/2 square miles, in which there are situated 700 gas customers.

This service area was, 45 years ago, and still is, beyond the convenient reach of the city’s gas distribution system. Aquila serves the city of Proctor and the Bayview Heights area of Duluth is a logical and convenient extension of its Proctor service area.

This ordinance will grant Aquila, Inc., a 25 year, nonexclusive franchise to distribute and sell gas within the defined service area and imposes an annual franchise fee of 1-1/2 percent of gross receipts from such sales.