PALMER LAKE, COLORADO ORDINANCE NO. 2-2002

ORDINANCE NO. 2 OF 2002

AN ORDINANCE GRANTING PEOPLES NATURAL GAS, A DIVISION OF UTILICORP UNITED INC., A DELAWARE CORPORATION, ITS SUCCESSORS AND ASSIGNS, A NATURAL GAS FRANCHISE FOR A PERIOD OF TWENTY YEARS AND THE AUTHORITY TO CONSTRUCT, OPERATE, MAINTAIN, AND EXTEND A NATURAL GAS DISTRIBUTION PLANT AND SYSTEM, AND GRANTING THE RIGHT TO USE THE STREETS, ALLEYS, AND OTHER PUBLIC PLACES WITHIN THE PRESENT OR FUTURE CORPORATE LIMITS OF THE TOWN OF PALMER LAKE, COLORADO

WHEREAS, the current franchise agreement with Peoples Natural Gas expires by its term March 8, 2002; and

WHEREAS, it is the desire of the Town of Palmer Lake to enter into another franchise agreement with Peoples Natural Gas and to pass an ordinance of the Town of Palmer Lake, Colorado, hereinafter referred to as "Town," granting to Peoples Natural Gas, a division of UtiliCorp United Inc., its lessees, successors, and assigns, hereinafter referred to as "Company" or "Grantee," a franchise authority for a period of twenty (20) years to erect, maintain, and operate a gas distribution system and any and all necessary mains, pipes, services, and other appurtenances thereto in, upon, over, across, and along the streets, alleys, bridges, and public places of the Town of Palmer Lake, Colorado, and to such additional areas as the Town may add by annexation of otherwise, and for the transmission, distribution, and sale of natural and/or mixed gas for lighting, heating, industrial and all other uses and purposes in said Town of Palmer Lake and for the purpose of transmitting, transporting, and conveying such gas into, through or beyond the immediate limits of said Town to other towns, cities, and customers, and prescribing the terms and conditions under which the Company is to operate, and repealing Ordinance 2 of 1987, effective March 8, 2002, and amending Chapter 5.60 of the Palmer Lake Municipal Code.

NOW THEREFORE, BE IT ORDAINED BY THE BOARD OF TRUSTEE OF THE TOWN OF PALMER LAKE, COLORADO:

Section 1. Section 5.60.010 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.010 Franchise Granted. The Town of Palmer Lake, Colorado, (hereinafter referred to as "Grantor") hereby grants a non-exclusive franchise to Peoples Natural Gas, a division of UtiliCorp United Inc., a Delaware corporation, (hereinafter referred to as "Grantee"), its lessees, successors and assigns. This repeals the franchise previously granted by Ordinance No. 2 of 1987, as amended by Ordinance No. 10 of 1987. Grantee is hereby granted the right, privilege, franchise, permission and authority to construct, maintain, operate and extend in the present and future streets, alleys, avenues, bridge, public rights-of-way and public places as are now within the present or future limits of said Grantor, a natural gas distribution system for the purpose of supplying natural gas or processed gas for all purposes to the inhabitants of said Grantor and consumers in the vicinity thereof, and for the distribution of natural gas from or through said Grantor to point beyond the limits thereof Grantor further grants Grantee the right, permission and authority to lay, install, maintain, and operate over, across and along all of the streets, avenues, alleys, bridges, public rights-of-way and public places of Granter all mains, services, pipes, conduits and appliances necessary or convenient for transmitting, transporting, distributing and supplying natural gas for all purposes for which it may be used, and to do all other things necessary and proper in providing natural gas service to the inhabitants of Grantor and in carrying on such business.

Section 2. Section 5.60.020 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.020 Term. The rights and privileges granted by this Ordinance shall remain in effect for a period of twenty (20) years from the effective date of this Ordinance.

Section 3. Section 5.60.030 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.030 Franchise Fees. In exchange for the franchise granted herein, Grantee shall collect from its residential and commercial customers, but not from the Town of Palmer Lake, Colorado, located within the corporate limits of Grantor, and pay to Grantor an amount equal to four percent (4%) of gross receipts derived from the sale, distribution or transportation of natural gas delivered within the present or future limits of Grantor and from revenues of related businesses or use of its utility facilities. 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 amount paid by Grantee shall be in lieu of, and Grantee shall be exempt from, all other occupation, license, excise, or right-of-way permit fees or taxes.

(A) Any consideration hereunder shall be reported and paid to Grantor by Grantee on a quarterly basis. Such payment shall be made not more than thirty (30) days following the close of the period for which payment is due. Initial and final payments shall be prorated for the portions of the periods at the beginning and end of the term of this Ordinance.

(B) Grantee shall list the local franchise fee collected from customers as a separate item on bills for utility service issued to customers. If at any time the Colorado Public Utilities Commission or other authority having proper jurisdiction prohibits such recovery, then Grantee will no longer be obligated to collect and pay the franchise fee herein contemplated.

(C) Grantor shall have access to and the right to examine during normal business hours those of Grantee's books, receipts, files, records and documents that are necessary to verify the correctness of payments due hereunder. If it is determined that a mistake was made in the payment of any franchise fee required hereunder, such mistake shall be corrected promptly upon discovery, such that any under-payment by Grantee shall be paid within 30 days of the recalculation and any over-payment by Grantee shall be discounted from the next payment(s) due.

Section 4. Section 5.60.040 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.040 Governing Rules and Regulations. 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 the laws of the State of Colorado. The rates to be charged by Grantee for service within the present or future corporate limits of Grantor and the rules and regulations regarding the character, quality and standards of service to be furnished by Grantee 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 Grantee. Provided however, should any judicial, regulatory or legislative body, having proper jurisdiction, take any action that precludes Grantee from recovering from its customers any cost associated with services provided hereunder, then Grantee and Grantor shall renegotiate the terms of this Ordinance in accordance with the action taken, so as to allow Grantee to be made whole economically. In determining the rights and duties of the Grantee, the terms of this franchise ordinance shall take precedence over any conflicting terms or requirements contained in any other ordinance enacted by Grantor.

Section 5. Section 5.60.050 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.060 Construction. 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 Grantor and to the general public as is reasonably necessary; and repairs and replacements shall be made promptly by Grantee, leaving such properties in as good as condition as existed immediately prior to excavation.

Section 6. Section 5.60.060 of the Palmer Lake Municipal Code is amended to read as follows:

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

Section 7. Section 5.60.070 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.070 Extension of Company Facilities. Upon receipt and acceptance of a valid application for service, Grantee shall, subject to its own economic feasibility criteria, make reasonable extensions of its distribution facilities to serve customers located within the current or future corporate limits of Grantor. No obligation shall extend to, or be binding upon,, Grantee to extend its facilities if Grantee is, for any reason, unable to obtain and deliver an adequate energy supply.

Section 8. Section 5.60.080 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.080 Relocation of Company Facilities. If Grantor elects to change the grade or of otherwise alter any street. alley, avenue, bridge, public right-of-way or public place for a public purpose, Grantee, upon reasonable notice from Grantor, shall remove and relocate its facilities or equipment situated in the public right-of way, if such removal is necessary to prevent interference and not merely for the convenience of the Grantor, at the cost and expense of Grantee. If Grantor orders or requests Grantee to relocate its facilities or equipment primarily for non-public purposes or the primary benefit of a commercial or private project, or as a result of the initial request of a commercial or private developer or other non-public entity, and such removal is necessary to prevent interference and not merely for the convenience of the Grantor or other right-of-way user, Grantee shall receive payment for the cost of such relocation as a precondition to relocating its facilities or equipment. Grantor shall consider reasonable alternatives in designing its public works projects so as not arbitrarily to cause Grantee unreasonable additional expense in exercising its authority under this section. Grantor shall also provide a reasonable alternative location for Grantee's facilities.

Section 9. Section 5.60.090 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.090 Confidential Information. Grantor acknowledges that certain information it might request pursuant to this franchise may be of a proprietary and confidential nature. If Grantee requests that any information provided by Grantee to Grantor be kept confidential due to such proprietary or commercial value, Grantor and its employees, agents, and representatives shall maintain the confidentiality of such information. If Grantor is requested or required by legal or administrative process to disclose any such confidential information, Grantor shall promptly notify Grantee of such request or requirement so that Grantee may seek an appropriate protective order or other relief Grantor shall use all reasonable efforts to ensure that the confidentiality of Grantee's confidential information is maintained.

Section 10. Section 5.60.100 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.100 Force Majeure. It shall not be a breach or default under this franchise if either party falls to perform its obligations hereunder due to Force Majeure. Force Majeure shall include, but not be limited to, the following: 1) physical events such as acts of God, landslides, lightning, earthquakes, fires, freezing, storms floods, washouts, explosions, breakage or accident or necessity of repairs to machinery, equipment or distribution or transmission lines; 2) acts of others such as strikes, work-force stoppages, riots, sabotage, insurrections or wars; 3) 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 prevent or overcome. Each party shall make reasonable efforts to avoid Force Majeure and to resolve such events 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 11. Section 5.60.110 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.110 Hold Harmless. Grantee, during the term of this Ordinance, agrees to save harmless Grantor from and against all claims, demands, losses and expenses arising directly out of the negligence of Grantee, its employees or agents, in the constructing, operating, and maintaining of distribution and transmission facilities or appliances of Grantee, including court costs and reasonable attorneys fees incurred in defending against any claims arising against Grantor due to negligence of Grantee, its employees or agents; provided, however, that Grantee need not save harmless Grantor from claims, demands, losses and expenses arising out of the negligence of Grantor, its employees or agents.

(A) The Grantor will provide notice to the Grantee of the pendency of any claim or action against the Grantor arising out of the exercise by the Grantee of its franchise rights. The Grantee will be permitted, at its own expense, to appear and defend or to assist in defense of such claim, and at Grantor's request, Grantee shall have the right to defend in the name of Grantor and to employ counsel for such purpose.

(B) If the Grantee fails to perform any of the terms or conditions of this Ordinance, the Grantor shall notify the Grantee. In the notice, the Grantor shall specify the time, not to exceed three (3) months, in which the Grantee must remedy the violations. If after such time corrective actions have not been successfully taken, the Grantor shall determine whether any or all rights and privileges granted to the Grantee under this franchise shall be forfeited.

(C) Upon forfeiture the Grantee shall continue to provide service to Grantor and its inhabitants until Grantor makes alternative arrangements for such service. If the Grantee fails to provide continued service, it shall be liable for all actual arid consequential damages to Grantor and its inhabitants.

Section 12. Section 5.60.120 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.120 Severability. If any clause, sentence or section of this ordinance is deemed invalid, the remaining provisions shall not be affected.

Section 13. Section 5.60.130 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.130 Non-Waiver. Any waiver of any obligation or default under this franchise shall not be construed as a waiver of any fixture defaults, whether of like or different character.

Section 14. Section 5.60.140 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.140 Repeal Conflicting Ordinances. All ordinances or parts of ordinances in conflict herewith are hereby repealed.

Section 15. Section 5.60.150 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.150 Effective Date and Acceptance. This ordinance shall become effective upon its final passage and approval by Grantor, in accordance with applicable laws and regulations, and upon acceptance by Grantee by written instrument within sixty (60) days of passage by the governing body, and filed with the Town Clerk of the Town of Palmer Lake, Colorado. If Grantee does not, within sixty (60) days following passage of this ordinance express in writing its objections to any terms or provisions contained therein, or reject this ordinance in its entirety. Grantee shall be deemed to have accepted this ordinance and all of its terms and conditions.

(A) Once during each calendar year of the franchise term, the Town Board of Grantor, upon giving thirty (30) days notice to the Grantee of its intention to do so, may review and change the franchise fee or other consideration Grantor may be entitled to receive as a part of the franchise by the Grantee under this ordinance. The Town Board of Grantor may change the franchise fee payments or change the other consideration to be received by the Town under the terms of this franchise agreement to the equivalent of any franchise fee or increased consideration paid by the Grantee to any city and town in the State of Colorado, in which the Grantee supplies gas service under franchise. If the Town Board of Grantor decides the franchise fee or other term shall be so changed, it shall provide for such change by ordinance; provided, however, that any changed franchise fee then allowed to be surcharged by the Grantee and such changed franchise fee is not higher than the highest franchise fee paid by the Grantee to any municipality within the State of Colorado.

(B) The Grantee shall not sell or transfer nor lease or permit the use of any rights under this franchise agreement to another, by stock exchange or otherwise, excepting only corporate reorganization of Grantee not involving a third party, unless the Grantor shall approve in writing such sale, transfer, merger, stock exchange, lease, permit or other change in ownership or use of the rights herein created. Approval of the sale, transfer, merger, stock exchange, lease, permit or other change in ownership or use of said right shall not be unreasonably withheld.

(C) If the Grantee at any time during the term of this franchise agreement, proposes to sell or dispose of any of its real property lying within the Town of Palmer Lake, Colorado, or used in whole or in party for service to Grantor, the Grantor shall have the right of first refusal, to purchase such property. The Grantee shall give written notice of its intent to sell and the property shall be offered to the Grantor for the price and terms contained in any bona fide offer from a third party which is acceptable to the Grantee. The Grantor shall have thirty (30) days after notice of receipt by the Grantee of such bona fide offer in which to exercise the right of first refusal and shall exercise such right by giving written acceptance of the Grantee's offer within the thirty (30) day period. This provision shall not restrict the rights of the Grantor to purchase or condemn the Grantee's facilities reserved under Section ______

(D) The right of Grantor to construct, purchase or condemn any public utility works or ways, as provided by the Colorado Constitution and Statutes, is hereby expressly reserved. Grantor shall have the right to purchase or condemn all or part of the Grantee's facilities within or without the City limits, and to the extent authorized by law portions of power purchase contracts serving the Grantor's metropolitan area. Grantor shall have the option to purchase or condemn these facilities and/or contracts at any time during the term of this ordinance, upon ninety (90) days written notice to the Grantee or within ninety (90) days of the termination date of this ordinance.

(E) Upon the exercise of Grantor's rights under Section 17, the parties shall negotiate in good faith to determine a mutually acceptable purchase price. No value shall be given to the franchise or to public rights-of-way or utility easements.

(F) At any time during the term of this franchise agreement, the Grantor through its Town Board, or the Grantee may propose amendments to this franchise agreement by giving thirty (30) days written notice to the other of the propose amendment(s) desired, and both parties thereafter, through their designated representatives, will within a reasonable time negotiate in good faith in an effort to agree upon mutually satisfactory amendment(s). The word "amendment" as used in this section does not include a change in franchise fee or other franchise term authorized in Section ______

(G) The Grantee, at the request of the Grantor, agrees to provide at Grantee's expense, copies of all Public Utility Commission filings that affect the Grantor and its inhabitants relationship with Grantee.

Section 16. Section 5.60. 160 of the Palmer Lake Municipal Code is amended to read as follows:

5.60.160 Notices. Any notices required to be given hereunder shall be sent to the following:

If to Grantee:

Vice President
Community Relations
UtiliCorp United Inc.
20 West 9th Street
Kansas City, MO 64105

If to Grantor:

Town Clerk
P.O. Box 208
Palmer Lake, CO 80133

Section 17. Severability. It is hereby declared to be the intention of the Board of Trustees of the Town of Palmer Lake, Colorado that the sentences, clauses and phrases of this ordinance are severable, and if any sentence, clause or phrase of this ordinance be declared unconstitutional or invalid by the valid judgment or decree of Court of competent jurisdiction, such unconstitutionality or invalidity shall not affect any of the remaining sentences, clauses or phrases of this ordinance since the same would have been enacted by the Board of Trustees without the incorporation of any unconstitutional or invalid sentence, clause or phrase.

Section 18. Publication. The Town Clerk shall certify to the passage of this ordinance and cause notice of its contents and passage to be published or posted. This ordinance shall become effective thirty (30) days after the date of publication.

PASSED AND ADOPTED THIS ____ DAY OF _________________________, 2002

MAYOR

ATTEST:

DELLA GINS, TOWN CLERK

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