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HomeMy WebLinkAbout19630223_special2/11/63 47 MANAGER AND FINANCE DIRECTOR AUTHORIZED TO GO TO NEW YORK IN ATTEMPT TO SECURE 9 MORE FAVORABLE RATING FOR SCHOOL DISTRICT. Finance Director alen reports tat a and Mr. Hyde have been asked by School officials to accampany them on a trip to the New York in an effort to secure a more favorable rating for the School District in preparation for forthcoming bond sale. VanValkenburg's motion,'authorizing expenditures for this trip, was seconded by MacMillan and carried. The agenda's having been covered, Tupa moved for adjournment, Motion seconded by MacMillan and carried, AMPurnment at 9:45 P.M, - Village Clerk MINUTES OF THE SPECIAL MEETING OF THE EDINA VILLAGE COUNCIL, HELD SATURDAY, FEBRUARY 23, 1963, AT 1:00 P.M., IN THE EDINA VILLAGE HALL Special "Meeting was convened at 1:00 P.M., Saturday, February 23, 1963, in the Village Hall, pursuant to action taken by the Council February 110 the only matter before the Council being consideration and action on the proposed Uniform Gas Franchise. Qj Members answering Rollcall were MacMillan, Rixe, Tupa, VanValkenbuxg and r-1 Bredesen. Mayor Bredesen opened the meeting by Mating he could not be at the meeting of the Suburban Gas Agency, held February 21, and asking Council If those who did attend had any additional questions to put before the Minneapolis Gas Company. Members MacMillan and VanValkenburg reported on meeting, MacMillan saying it had answered some things about which he had been in doubt. Saying he had not had time to pursue further the matter of reproduction costs and methods of determining depreciation, beyond previous discussions on these matters, Mr. Bredesen told Council he finds; from a personal standpoint, that he is now paying no more, proportionately, than he did twenty years ago for his gas service; and perhaps less, in proportion to increase in costs of other services --and for that reason is wondering whether the Council is not unduly concerned about this formula; that, assuming the Gas Company is operated by prudent, honest businessmen, he believes there is no reason to believe they would increase the cost of-gas beyond cost increases of other items. Also, that while 20 -years is a long time, the three -year re- opening clause requested by some of the Council would probably result in a higher cost than that now contemplated, because of the higher financing cost to the Gas Company; and that he feels this Council should approve the franchise-as developed by the Suburban Gas Agency, Trustee Rixe, saying it is well known that he has taken a negative stand on the proposed franchise, asked for this opportunity to correct some misunder- standings; that, in the first place, he would like to go on record as not being in favor of state regulation; that, secondly, he has tried to talk with many people concerning the matter of this franchise --- anybody and every- body he felt could be helpful - -and has tried to eliminate pre - conceived prejudices on both sides and to make up his own mind, He added he has probably been at an advantage in some respects, coming into this picture fairly late, because he has not been influenced by the heartaches and frustrations which have gone into preparing this contract. Mr. Rixe stated that Reproduction Cost is the item which concerns him most; that, on the basis of Original Cost versus Reproduction Cost, the gas consumer could pay some $15,000,000 excess over the next 20 years. He asked for one thing -- that the consumer be given some kind of protection for the extremes that none of those now considering this franchise can measure. He added that if the consumer could have some kind of limit of affect on reproduction cost, or some kind of protection that rates will not become unreasonable, he would feel better about the contract. Mr. Rixe said that in his opinion there is no doubt but that the franchise contains some damaging features for the consumer, and for that reason is not acceptable. He added he feels that much has been accomplished by unanimity of efforts of suburbs working together for common cause, and hopes that his remarks have in no way detracted from, nor jeopardized this accomplishment. 2/23/6 3 Trustee Tupa stated he feels the Suburban Gas Agency has done an excellent job, but feels the same as Mr. Rixe - -that suburban gas users have no protection; that this is no reflection on present Gas Company Management, but that "tommorow, none of us may be here." He added he, too, feels this Council should not approve the franchise. Trustee MacMillan, saying that he has put considerable time and study into the proposed franchise, added he does not propose to be a rate expert, but does feel that this must be a contract that is good for both parties involved; that it is a good contract for the people of Edina because it does offer more protection than the Edina users now have, and is good for the utility because it offers protection for the utility; that he is aware that it is a compromise, but belie.Ves it should be approved. VanValkenburg moved that franchise be accepted by adoption of Ordinance No. 221A, being the following Ordinance: ORDINANCE NO. 221A AN ORDINANCE GRANTING TO THE MINNEAPOLIS GAS COMPANY, A CORPORATION ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARES ITS SUCCESSORS AND ASSIGNS, PERMISSION TO USE THE STREETS AND PUBLIC PLACES IN THE VILLAGE OF EDINA FOR THE CONSTRUCTION, MAINTENANCE AND OPERATION OF A SYSTEM OF MAINS, PIPELINES AND OTHER FACILITIES FOR THE MANU- FACTURE, DISTRIBUTION AND SALE OF GAS, SUBJECT t TO CERTAIN TERMS AND CONDITIONS, AND PRESCRIB- ING THE RATES TO BE CHARGED THEREFOR, AND RE- PEALING, ALL ORDINANCES, OR PARTS OF ORDINANCES, INCONSISTENT HEREWITH. Whereas, the Minneapolis Gas Company, a corporation organized under the laws of the State of Delaware, owns property used and useful in the manufacture, distribution and sale of gas in the Village of Edina and is operating said property in said Village; and Whereas, the Village Council of the Village of Edina on the 14th day of October, 1946, adopted an ordinance granting a franchise to the Minneapolis Gas Company, its successors and assigns, for the manufacture, distribution and sale of gas in said Village for a period of twenty (20) years, which said franchise was amended April 23, 1951; and Whereas, meetings have been held between representatives of the Minneapolis Gas Company and the Village Council of the Village of Edina relative to a re- vision of the franchise previously granted; and Whereas, the Minneapolis Gas Company, as and for consideration and com- pensation for the rights and privileges herein granted, has agreed to surrender its present franchise ordinance and has agreed, during the term hereof, to continuously supply gas service to the inhabitants of the Village, as provided in this franchise ordinance, and has agreed to perform contractual obligations set forth in said franchise ordinance, and has agreed to pay to the Suburban Rate Authority for the use and benefit of the Village the amount provided in Section 18; and Whereas, the Village Council of the Village of Edina in cooperation with other municipalities of the suburban area, has determined that it is desirable and to the advantage of the consumers of gas in the Village of Edina that a new franchise should be granted by said Village to said Company upon the terms and conditions expressed herein and that the previous franchise hereinabove referred to should be repealed and all rights and privileges of the Company thereunder surrendered and cancelled except as hereinafter provided. NOI•12 THEREFORE, THE VILLAGE COUNCIL OF THE VILLAGE OF EDINA DO ORDAIN AS FOLLOWS: Section 1. In this ordinance the terms " Municipality", " Municipal Council" and "Municipal Clerk" shall mean respectively, the Village of Edina, the Council of the Village of Edina and the Clerk of the Village of Edina. If at any time the powers of the Municipality, the Municipal Council or the Municipal Clerk shall be transferred to any other authority, board, officer or officers, then, and in such case such authority, board, officer or officers shall have the rights, powers and duties herein referred to or prescribed for the Municipality, the Municipal Council and the Municipal Clerk respectively. 2/23/63 _ !2, 7 The term-"Company" shall mean the Minneapolis Gas Company, its successors and assigns, and the words "streets and public places" shall mean the streets, avenues, alleys, parkways,-roads, squares, parks, bridges, viaducts and public places in the Municipality. The term "gas" as used herein shall be held to include manufactured If the right or privilege to manufacture, purchase, transport, mix, distribute or sell gas in anne)ed territory, shall be owned or controlled by the Company at the date of annexation, said right or privilege shall, from and after the.date of annexation and during the balance of the term hereof, be exercised and controlled by the provisions of this ordinance. The Company agrees to manage its plant and operations in a reasonably efficient and economical manner, The Company also agrees to use due diligence in the matter of the issuance of long -term debt to assure reasonable cost of such debt, provided, however, that this should not be construed as requiring competitive bids on new debt issues. Section 3. The Company shall charge, demand, collect and receive just and reasonable rates, charges and compensation as hereinafter provided. The altering, amending or revising of any rates made by the Company to obtain compliance with this ordinance shall be by the Suburban Rate Authority. The said Suburban Rate Authority exists for the purpose of reviewing gas rates made by the Company and undertaking appropriate action thereon as in this ordinance authorized. Nothing in this ordinance shall prevent the power herein given to the Suburban Rate Authority to alter, amend or revise Company rates from being hereafter delegated, by law, to some other governmental authority. gas, natural gas, reformed natural gas, a mixture of natural gas and manufactured gas, or other form of gaseous energy, The term "one thousand cubic feet" of gas where used in this ordi- nance is 1,000 cubic feet of gas measured at temperature and pressure existing at the point of metering, or, when corrected, at 60° F and 1405 pounds per square inch, absolute. The term "suburban area" shall include the cities of Bloomington, Columbia Heights, Crystal, Fridley, Hopkins, Robbinsdale, St.Louis Park and Wayzata; the villages of Brooklyn Center, Brooklyn Park, Deephaven, Edina, Excelsior, Golden Valley, Greenwood, Hilltop, Maple Grove, Minnetonka, Morningside, New Hope, Osseo, Plymouth, Richfield, St, Anthony, Shorewood and Woodland; the township of Eden Prairie; and the area of Fort Snelling. Other municipalities or area adjacent to or near the eity of Minneapolis or the "suburban area" may be included in the "suburban area" for rate - making purposes, subject to the provisions of Section 12. The term "Suburban Rate Authority" shall mean an organization � consisting of one member appointed by the Municipal Council of each Municipality in the suburban area adopting this ordinance and existing CAD for the purpose of administering the rate provisions of this ordinance. It is empowered to employ consultants and others and shall adopt such rules, regulations and bylaws as will enable it properly to perform the functions herein provided for. Section 2. There is hereby granted to Minneapolis Gas Company, its successors and assigns, for a period extending to January 1, 1983, from and after the acceptance of this ordinance by the Company, and waiver of rights by said Company required by Section 27 hereof, and subject to the terms, conditions and limitations herein stated, the right to manufacture, import, transport, sell and distribute gas for heating, illuminating and other purposes within the limits of the Municipality as the boundaries thereof now exist or as they may be extended in the future, and for that purpose to establish the necessary facilities and equipment and to main- tain a manufacturing plant, gas mains, service pipes and any other appurtenances necessary to the manufacture, sale and distribution of gas in and along the streets and public places of said Municipality, and to do all things which are reasonable, necessary or customary in the accomplish- ment of this objective, subject; however, to the further provisions of this franchise. Provided, however, that before said Company shall establish any plant in said Municipality for the manufacture of gas, the approval of the Municipal Council of the location thereof, in the exercise of a reasonable discretion by said Council, shall be first obtained by said Company. If the right or privilege to manufacture, purchase, transport, mix, distribute or sell gas in anne)ed territory, shall be owned or controlled by the Company at the date of annexation, said right or privilege shall, from and after the.date of annexation and during the balance of the term hereof, be exercised and controlled by the provisions of this ordinance. The Company agrees to manage its plant and operations in a reasonably efficient and economical manner, The Company also agrees to use due diligence in the matter of the issuance of long -term debt to assure reasonable cost of such debt, provided, however, that this should not be construed as requiring competitive bids on new debt issues. Section 3. The Company shall charge, demand, collect and receive just and reasonable rates, charges and compensation as hereinafter provided. The altering, amending or revising of any rates made by the Company to obtain compliance with this ordinance shall be by the Suburban Rate Authority. The said Suburban Rate Authority exists for the purpose of reviewing gas rates made by the Company and undertaking appropriate action thereon as in this ordinance authorized. Nothing in this ordinance shall prevent the power herein given to the Suburban Rate Authority to alter, amend or revise Company rates from being hereafter delegated, by law, to some other governmental authority. 2/23/63 From and after the effective date of this ordinance, the Company shall charge, demand, collect and receive not to exceed the following rates for gas supplied to each customer at one location in the entire suburban area, includ- ing the Municipality, for each month, except as said rates shall be changed or modified as hereinafter provided, viz: First 300 cu ft or less $2.00 Next 3,700 cu ft 1.43 per M Next 269000 cu ft 1.10 per M Next 1303000 cu ft 1.00 per M Next 140000 cu ft 1.00 per M All over 300000 cu ft .90 per M The rates above specified are called "Block Rates ". The rates permitted by this ordinance, except as to natural gas furnished industrial customers, are for natural gas having a monthly average total gross heating value of not less than 950 British Thermal Units per cubic foot, and shall continue, subject to adjustment as herein provided. Bills shall be rendered at rates permitted by this ordinance; provided, however, that when a bill is not paid within ten (10) days after a bill is delivered or mailed to a customer, the Company may charge, demand, collect and receive the amount thereof plus ten per cent (100). The Company may re- quire any consumer of gas to deposit with it a reasonable amount as security fbr a_ayment of gas used or to be used by said consumer. The Company shall pay interest on the deposit at'the rate of six per cent (6a) per annum. (a). The said rates shall remain in force and effect and be adjusted from time to time, as hereinafter provided. In order to avoid undue discrimi- nation between customers the Company may, at the time specified in this section and subject to review in the same manner as is provided in said ordinance, adjust the Block Rates either by changing the number and size of the blocks or by changing the price variation between the blocks, or both, or by changing the rate form, by submitting at the time of filing the adjusted Block Rates material and data supporting the desirability for such change or changes and the reasonablemess thereof. Provided, the Company shall make a rate structure study at least once in each five years hereafter. Provided, further, that the Block Rates for any other type of gas furnished in a place of natural gas may be revised by agreement between the Suburban Rate Authority and the Company. Nothing herein shall prevent the Company from establishing from time to time during the term hereof lower rates than the rates hereby permitted, and, in addition to the rate schedules contained in this section, from establish- ing, changing or discontinuing load building, inducement or competitive rates, provided that such rates shall be reasonable for consumers within different classes of service and that a lesser rate to one class of consumers shall not impose an undue burden of cost upon consumers in other classes. The Company shall have the right to contract for the sale of gas for industrial use on an interruptible basis, requiring the customer to have standby equipment for use upon notice by the Company. The Company's rules, regulations, schedules or contracts for curtailing interruptible gas service shall be uniform as applied to each class of interruptible customers. (b) The Block Rates specified in this section shall remain in force and effect until January 31, 1963. In the month of January, 1963, and thereafter in the month of January of each year during the remaining period covered by this ordinance, the Company shall decrease the Block Rates, and may increase the same, sufficient to permit and enable the Company to realize Actual Net Earnings equal to the Allowable Annual Return, as provided for in Section 4, for each calendar year of said remaining period. Increases or decreases in the Block Rates to be made at or about the end of each of the above mentioned calendar years shall be based upon forecasts for the ensuing calendar year of the rates required to permit and enable the Company to realize Actual Net Earnings during said calendar year sufficient to produce the Allowable Annual Return plus past unabsorbed deficiencies therein, or less past unabsorbed overages therein, as the case may be, which may occur after January 1, 1963, under the terms of this ordinance. The Company shall file with the Suburban Rate Authority, on or before January 10 of each year, the aforesaid forecasts, together with the Block Rates which are proposed to be effective on bills rendered after January 31 of that year. Ll 1 1 2/23/63 9 Provided, however, in order to minimize or prevent excessive fluctuations in the Block Rates, the Company may additionally once during a calendar year, but not prior to July 15 thereof, adjust the Block Rates in the same manner as provided above for the adjustment of said Block Rates at or about the end of each calendar year. In making increases or decreases in the Block Rates hereunder,, fractions of one -half (1/2) cent or more shall be counted as one cent and fractions of less than one -half (1/2) cent shall be disregarded so far as the current period is concerned. (e). The Company agrees that when no change in an existing rate is proposed at the time of a rate filing,, the said Suburban Rate Authority shall have the power to alter, amend or revise the said existing rate in the manner provided in Subsection 3(d), if the said existing rate is not in accordance with the provisions of this ordinance. The right of the Company for court review in such instance shall also be the same as provided in Subsection 3(d). (f). The Company shall not charge, demand, collect or receive a greater or less or different compensation for any service or similar service rendered, or to be rendered, than the rates and charges appli- cable to such service in effect at the time for consumers in the same class, nor shall the company refund or remit in any manner or by any device any portion of the rates or charges so specified. The Company shall not offer, extend to, or accept from any person or corporation any form of contract or agreement for service that is not regularly and uni- formly applicable to all persons and corporations receiving the same. or like service. The Company shall not extend, afford or use any rule or regulation, or any privilege or facility that is not regularly and uniformly applicable to all persons and corporations receiving service under the same or like conditions, except as provided in-Subsection 3(a) hereof. (c). The Company agrees not to make any change in rates permitted or required by this ordinance either by altering the classification thereof, or otherwise, until after twenty (20) days' notice of any such change has been given to the Suburban Rate Authority. Such notice shall be deemed to have been given when a written statement of any change, or changes in such rates, signed by the Company, shall be filed with the Suburban Rate Authority. The Company shall furnish such information, reports and statements relating to any such changes which may be required by the Suburban Rate Authority. Any change in rates made pursuant to the terms of this ordinance shall be made effective as soon as practicable after the expiration of each calendar year, subject to the proviso in Subsection 3(b). Provided, that before any rate established by the Company for any new class of consumers shall be come effective, the Company shall give ten (10) days' similar notice to the Suburban Rate Authority of the establishment of said r+ rate, which may be altered, amended or revised within ten (10) days there- after as in this section provided. The filing of any notice with the Suburban Rate Authority, as required by this ordinance, shall be deemed notice to this municipality. (d). The Company agrees that any change in rates made by the Company, not in accordance with this ordinance, may be altered, amended or revised, so as to conform to the provisions of this ordinance and according to the terms thereof, by an engineer, auditor or accountant of the Suburban Rate Authority duly appointed for such purpose. The engineer, auditor or accountant so appointed shall be qualified and.experienced in public utility regulatory matters and an employee of the said Suburban Rate Authority. Any such alteration, amendment or revision shall be made by order, stating the reasons therefor, duly served on the Company within twenty (20) days after notice of such proposed rates sha11 be given by the Company, as in this ordinance provided. The Company shall have the right to a prompt hearing and review of such alteration, amendment or revision'in the courts of the State of Minnesota, if proper application is made therefor within thirty (30) days after notice of such alteration, amendment or revision, and if such hearing and review is applied for, then until such alteration, amend - meet or revision shall be finally sustained or altered by such courts, the rate made by the Company shall remain in effect for the period as provided in this ordinance. At the time of making the application for review the Company shall file with the Clerk of Court a corporate undettaking requir- ing it to refund, rebate or comply with such other relief as said courts may order. At the hearing provided for herein on the issue or issues raised by the aforesaid order the court shall consider all evidence which may be relevant and proper. (e). The Company agrees that when no change in an existing rate is proposed at the time of a rate filing,, the said Suburban Rate Authority shall have the power to alter, amend or revise the said existing rate in the manner provided in Subsection 3(d), if the said existing rate is not in accordance with the provisions of this ordinance. The right of the Company for court review in such instance shall also be the same as provided in Subsection 3(d). (f). The Company shall not charge, demand, collect or receive a greater or less or different compensation for any service or similar service rendered, or to be rendered, than the rates and charges appli- cable to such service in effect at the time for consumers in the same class, nor shall the company refund or remit in any manner or by any device any portion of the rates or charges so specified. The Company shall not offer, extend to, or accept from any person or corporation any form of contract or agreement for service that is not regularly and uni- formly applicable to all persons and corporations receiving the same. or like service. The Company shall not extend, afford or use any rule or regulation, or any privilege or facility that is not regularly and uniformly applicable to all persons and corporations receiving service under the same or like conditions, except as provided in-Subsection 3(a) hereof. 33 Section 4.. It is the purpose of this ordinance to insure that the consumer shall pay only a fair, just and reasonable rate and that such rate will permit the Company to make a reasonable return on the capital investment in the business, as hereinafter defined in this Section, under an economical and efficient manage- ment of the same. .i 2/23/63 (a). As used in this ordinance, "allowable annual return" shall mean the amount computed by application of the "allowable rate of return" to the "allow- able rate base" as defined in accordance with the provisions of Subsections (b), (c), (d), (e), (f) and (g). (b). The "allowable rate of return" shall be 6 -1/2% during calendar years when the Company's average cost of long -term debt capital at the beginning of the current year is not less than 3 -1/2% nor greater than 4 -1/2 %. Long -term debt shall consist of all debt due over one year after date of issue. The average cost of long -term debt shall be the weighted average effective cost of the outstanding long -term debt at the beginning of the current year. The effective cost of each debt issue shall be computed by dividing the product of the interest rate and principal amount issued by the net proceeds of the issue. The net proceeds of an issue shall consist of the principal amount plus any premiums received, less any discounts and issuance expense, and less call premiums when any refunding of an issue results in a lower effective cost of debt. Whenever there is a decrease in the Company's average cost of long - ' term debt capital below 3 -1/2% or an increase above 4 -1/2 %, the "allowable rate of return" of 6 -1/2% shall be decreased or increased by 50% of such de- crease or increase. Thereafter, any contra move in the average cost of long- term debt capital will require the reverse adjustment in the "allowable rate of return ". No change in the "allowable rate of return" shall be made unless the decrease or increase in the average cost of long -term debt capital shall equal at least 1 /10 of one percentage point, and in no event shall the decrease or increase in the "allowable rate of return" be other than in multin_les of 1/20 of one percentage point. (c). The "allowable rate base" shall be the sum of the "fair value of the suburban area utility plant" used and useful in the public service as pro- vided in Subsections (d), (e) and (f) and working capital as provided in Section 5, less average contributions in aid of construction and average cash advances for construction, as reflected on the Company's books. W. The "fair value of the suburban area utility plant" shall be the sum of 50% of the average original plant cost including the current year net additions, less depreciation per books, computed on a monthly basis, and 50% of the "reproduction costs new" plant as defined in Subsections (e) and (f), less depreciation. Depreciation of the "reproduction cost new" plant shall be computed by the use of the ratio of the book depreciation reserve to the original plant gross cost, plus three (3) percentage points. The 50% weighting of the "reproduction cost new" plant shall be used as long as the Company's ratio of debt capital does not exceed 60% at the beginning of the current year. If it exceeds 60% the 50% weighting of the "reproduction cost new" plant will be decreased by one percentage point for every one per- centage point increase in the debt capital ratio above 60 %. In such event the 50% weighting of the original plant cost will be increased by each per- centage point that the weighting of "reproduction cost new" plant is decreased. (e). "Reproduction cost new" shall consist of the sum of the following amounts: (1) The original cost at the beginning of the preceding calendar year of all plant classified as Intangible Plant, Land and Land Rights, and General Plant, excluding Structures and Improvements. (2) The original cost at the beginning of the preceding calendar year of all other plant trended to reflect the Handy - Whitman Index of Public Utility Construction Costs (North Central Division) as of July 1 prior to the current calendar year. Each plant account shall be trended by use of the following indexes: Plant_ account Index All Manufactured Gas Production Plant Total Construction and Equipment excluding Land and Land Rights (Manufactured Gas) Distribution Plant Structures and Improvements Mains - Steel Mains - Cast Iron Pumping and Regulating Equipment Structures and Improvements Mains - Steel Mains - Cast Iron Mechanical Equipment exclsuive of Gas Holders 1 1 1 2/23/63 Plant Account (Cont'd) Services Meters Meter Installations House Regulators House Regulator Installations Other Property on Customers' Premises Index (Cont'd) Services Meters Meter Installations House Regulators House Regulator Installations Structures and Improvements General Plant Structures and Improvements Structures and Improvements Any new Plant Account which may hereafter be established shall be trended in accordance with the appropriate Handy - Whitman Index. (3) The original cost of the gross plant additions, less retire- ments, installed in the preceding calenddr-year. (4) The original cost of the gross plant additions, less retire- ments, installed during the current calendar year averaged on a monthly basis. M. At the end of each five -year interval the construction cost trends experienced by the Company since the adoption of this ordinance shall be compared with the appropriate Handy - Whitman Index. If, after such comparison, " the difference between the Handy - Whitman costs and the Company's experience is.15 %, or less, of the total "reproduction cost new" plant, the Handy- Whitman Index costs will be used for the succeeding five years. If the difference exceeds 15 %, the parties agree to adjust the Handy- Whitman costs to reflect Company experience. In the event the Handy - Whitman Index of Public Utility Construction Costs (North Central Division), or its successor, is no longer available, another similar Index mutually agreeable to the Company and the Suburban Rate Authority will be used. (g) As used in this ordinance, "Actual Net Earnings" of the Company shall consist of the balance remaining after deducting from the gross revenues of the Company from the manufacture, purchase, mixture, transpor- tation, distribution and sale of gas sold in the said suburban area during the calendar year of 1963, and each calendar year thereafter, the following operating and maintenance costs and expenses connected with the manufacture, purchase, mixture, transportation, distribution and sale of gas sold in the said suburban area during such calendar periods. (1) Production Expenses, including cost of purchased gas; (2) Distribution and Utilization Expenses; (3) Customers' Accounting and Collecting Expenses; (4) Sales Promotion Expenses; (5) An item to cover "Administrative and General Expenses? which which shall be the just, fair and reasonable cost to the Company of all of the sub - accounts that are included in such Administrative and General Expenses, but the aggregate of "Administrative Salaries" and "General Incidental Expenses" classified as in the present practice of the Company in these accounts shall not exceed in any calendar year three per cent (3 %) of the annual gross revenue, including contributions, gratuities and donations not to exceed three - tenths of one per cent (3/10 of 1 %) of the annual gross revenue. (6) All taxes and governmental impositions of every nature actually paid by the Company directly to governmental tax collecting agencies or accrued in accordance with general acceptable accounting principles. Any tax other than an ad valorem tax which may hereafter be lawfully authorized and thereafter separately imposed by any munici- pality shall be added only to the bills of the customers within such municipality. (7) An annual allowance, beginning January 1, 1963, for depreciation of depreciable property owned by the Company and used and useful in rendering gas service in the suburban area for each calendar year during the term of tli� ordinance of an amount designed to recover the original cost of such depreciable property over the estimated average service -life of each group of property on a straight - line basis, computed by application of the annual depreciation rates, now used by the Company in recording depreciation on the books of the Company to the original cost of depreciable property included in each r� 2/23/62 eel of the major property classifications and properly chargeable to depre- ciation expenses. Provided, however, such annual depreciation rates may be revised periodically so as to reflect all factors bearang on the amount designed -to recover the original cost of such depreciable property over its 'estimated average service -life; (8) All other actual and proper classes of maintenance and operating expenses of the Company; (9) An item to cover taxes, depreciation and return off any plant not included in the suburban area Allowable Rate Base, but which is used and useful in rendering public service therein. A credit item (deduction from expenses) to cover taxes, depreciation and return on any plant included in the suburban area allowable rate base, but which is properly allocable to rendering service outside the suburban area, subject, however, to the provisions of Section 1. (10) Annual allowance for amortization of extraordinary property losses resulting from change in type of gas, unusual obsolescence or unforseen property damage. Appropriate items may be amortized or accrued according to accepted accounting practice and, except as otherwise provided in this ordinance for specific items, the actual experience of the Company shall be the determining factor in support of the amounts and rates of amortization or accrual for such items, as such experience gives a definite guide. All expense items, whether charged directly and entirely in a calendar year or amortized or accrued over a longer period, all revenue items and all balance sheet items shall be, at all times, recorded by the Company in sub- stantial accordance with the Uniform System of Accounts for Gas Utilities of the National Association of Railroad and Utility Commissioners, except as otherwise provided in this ordinance and except that installment and "carrying charges will be credited to gross merchandise sales. The allocation of the Company's operating expenses and Plant within and without the suburban area shall be made by the Company in accordance with a formula that reasonably reflects the costs as they occur for rendering service within and without the said area. Any change in such formula made in any rate filing will be specifically referred to in a separate communication filed with the Suburban Rate Authority at the time of the rate filing. When there is a balance in the account for cumulative overage in excess of the allowable return, such balance shall be credited with interest com- puted at the current prime interest rate. Net refunds (after taxes) from any supplier shall be credited to such account. Overages in such account may be used, by mutual agreement, in such manner as will minimize or prevent violent fluctuations in rates, notwithstanding the provisions of Subsection 3(b). Section 5. The Company shall be entitled to fair and adequate working capital in an amount determined as follows: As used in this ordinance, "working capital" shall mean an amount appli- cable to the suburban area for the calendar year of 1963, and for each calendar year thereafter, equal to the annual average funds invested by the Company during such calendar years in materials and supplies on hand, merchandise accounts receivable, prepayments and deferred charges properly chargeable to operations, plus a cash fund equal to ten (10) days' average daily operating expenses and taxes, plus one - eighth (1/8) of the annual operating expenses and taxes, less credits for the annual average of accrued taxes and purchased gas accounts payable. The working capital computed in accordance with the foregoing formula shall be included in the allowable rate base as provided in Subsection 4(c). Section 6. The Company shall file with the Suburban Rate Authority printed schedules which shall be kept open for public inspection, showing all rates, charges,, compensation, forms of contracts or agreements made, established or enforced or to be enforced with customers in the suburban area, together with all rules and regulations relating to rates, charges or services rendered or to be rendered and all privileges allowed and facilities afforded by the Company to its customers in the suburban area. The Suburban Rate Authority shall have the right at any reasonable time to inspect, examine and audit the accounts, books, records, reports, contracts, documents and papers of the Company. The said Suburban Rate Authority may appoint or designate the person or persons to make such inspection, examination or audit. 2/23/63 Section 7. The Company shall at all times keep, maintain and preserve for the suburban area proper and accurate engineering$ accounting, financial and statistical records, relating to the construction, cost, maintenance and operation of its property which at all times shall show correctly and in detail all its financial trans- actions, including all of its receipts and disbursements and the particulars thereof, and all data needful for the preparation of the statements and reports hereinafter provided for. The Company shall, each month, prepare and file with the Suburban Rate Authority the following; Section 9. In determining "allowable annual return ", "Allowable rate of return" and "allowable rate base" under Section 4 hereof, the books and records of the ,Company, and its predecessors, made and kept prior to the passage of this ordinance, shall be used insofar as necessary,in applying said Section 4. Section 10. The books of account shall contain an account that may be designated as "Reserve for Depreciation. of Utility Plant ", or similar term, which shall show at all times as nearly as may be the unexpended or unused balance of accumulated charges to operating expenses on account of depre- ciation, replacements, renewals or retirements. When any property is abandoned or removed, withdrawn, retired from, or is not used and useful in the public service for any cause, the actual original cost shall, be credited to the appropriate capital account, and such amount plus the cost incidental to said abandonment, removal, withdrawal or retirement shall be charged to said reserve, subject, however, to the provisions of the follow- ing paragraph. The salvage value received and any other amounts recovered from said property shall be 'credited to said reserve. When a substantial segment of the Company's utility property is required to be abandoned and retired from service because of change of type of gas, or .unusual obsolescence, or unforeseen property damage and such property is not fully covered by the depreciation reserve or other reserves or by insurance., then the unrecovered balance of such property shall be credited to the depreciation reserve or other appropriate reserve and be charged to a deferred charge account designated as "Extraordinary Property Losses ". Charges to said deferred charge account shall be amortized by charges to operating expenses as provided for in Section 4. 3 93 (a) ,A detailed statement of all assets and liabilities of the Company as of the close of the preceding month. (b) A detailed statement showing source and application of revenues of the Company from the sale of gas and of-by- products and from all other sources for the preceding month and year, up to and including the preceding month; also all expenditures of the Company during said year; all dividends and interest paid; the cost of all materials used in the manufacture of gas, all operating expenses, taxes and salaries; the cost of all repairs and of all property, real or personal, by it purchased, acquired, constructed or installed; said statements shall be so prepared as to show the net income of the Company from its regular business and from all other sources and the use or disposition of said income. CYa The Company shall also, from time to time, furnish monthly operating and financial reports and such other information, reports and statements regarding its property and business, and the conduct thereof, as the Suburban Rate Authority may require. All information, reports and state- ments furnished to the Suburban Rate Authority by the Company shall be certified by the President, Secretary or other proper officer of the Company. Section 8, The provisions of this ordinance relative to allowable annual return, allowable rate of return, allowable rate base and accruing annual depreciation rates fixed under the provisions hereof and other requirements shall be constrred as conditions hereof, but no such pro- visions, nor any matter, fact or thing herein contained shall be construed as an admission either by the Municipality or the Company in connection with any proceeding for the acquisition of the Company's property, or any part thereof, under eminent domain or condemnation proceedings, or in connection with any proceeding for the valuation of the Company's property, or any part thereof, during or after the termination hereof, or in connection with any proceeding for the fixing of rates after the termination hereof$ to any of which proceedings the Municipality shall be a party. Section 9. In determining "allowable annual return ", "Allowable rate of return" and "allowable rate base" under Section 4 hereof, the books and records of the ,Company, and its predecessors, made and kept prior to the passage of this ordinance, shall be used insofar as necessary,in applying said Section 4. Section 10. The books of account shall contain an account that may be designated as "Reserve for Depreciation. of Utility Plant ", or similar term, which shall show at all times as nearly as may be the unexpended or unused balance of accumulated charges to operating expenses on account of depre- ciation, replacements, renewals or retirements. When any property is abandoned or removed, withdrawn, retired from, or is not used and useful in the public service for any cause, the actual original cost shall, be credited to the appropriate capital account, and such amount plus the cost incidental to said abandonment, removal, withdrawal or retirement shall be charged to said reserve, subject, however, to the provisions of the follow- ing paragraph. The salvage value received and any other amounts recovered from said property shall be 'credited to said reserve. When a substantial segment of the Company's utility property is required to be abandoned and retired from service because of change of type of gas, or .unusual obsolescence, or unforeseen property damage and such property is not fully covered by the depreciation reserve or other reserves or by insurance., then the unrecovered balance of such property shall be credited to the depreciation reserve or other appropriate reserve and be charged to a deferred charge account designated as "Extraordinary Property Losses ". Charges to said deferred charge account shall be amortized by charges to operating expenses as provided for in Section 4. 3 93 34 2/23/63 If the original cost is not shown by the books and records of the Company or its predecessors, such amount shall be estimated and a record shall be made by the Company showing the facts upon which said estimate was based, the manner in which it was determined and the person by whom it was made, and said estimated amount, together with removal costs and salvage value, or other amounts received or recovered from said property, shall be accounted for in the manner as hereinabove provided. Section 11. The Company shall at all times keep, maintain and preserve all the books, records and accounts of the Minneapolis Gas Light Company, a corporation organized under the laws of the State of Minnesota, and the Minneapolis Gas Light Company, a corporation organized under the laws of the State of Delaware, the predecessors of the Company, and such books, records and accounts shall at all reasonable times be open to inspection and exami- nation by the Suburban Rate Authority, as provided in Section 6, in respect to the books, records and accounts of the Company. The Company shall set up, keep and maintain at all times at its general offices, accurate books of account, showing among other things as nearly as may be the actual original cost of the property owned by the Company within the suburban area. For this purpose, the books and records of the predecessor companies (Minneapolis Gas Light Company of Minnesota and Minneapolis Gas Light Company of Delaware) may be used without prejudice to the Suburban Rate Authority in any proceeding where the actual original cost may be an issue. All property added shall be entered on the books at its actual original cost. Section 12. The Company agrees to lay such of its mains and pipes as come within its requirements for service as soon as reasonably possible to do so. The Company shall give reasonable notice to the municipal engineer of plans to lay mains in any part of the Municipality. The laying of such mains shall not unduly interfere with established municipal planning. Extensions of service beyond the borders of the suburban area as herein defined shall not collectively cast any undue burden on the customers in said suburban area. Section 13. The council of the Municipality shall have the right to make such reasonable rules and regulations as may be necessary to provide adequate and proper service. The Municipality shall have the power to provide for the inspection, examination and ascertainment of the accuracy of any and all gas meters used or intended to be used for measuring and ascertain- ing the quantity of gas supplied by the Company and to inspect, examine and ascertain the accuracy of recording pressure gauges and of all apparatus for testing and proving the accuracy of gas meters. Section 14. The Company shall not open or disturb the surface of any street or public place for any purpose without first having obtained a permit so tor do from the proper municipal officials, for which permit the Municipality may impose a reasonable fee to be paid by the Company. The mains, services and other property placed in the streets and public places pursuant to such permit shall be located in the streets or portion of the streets and public places as shall be designated by the Municipality. The Company shall, upon completion of any work requiring the opening of any street or public place, restore the same, including the paving and its foundations, to as good con- dition as formerly, and shall exercise reasonable care to maintain the same for two (2) years thereafter in good condition. Said work shall be performed with due diligence and if the Company shall fail promptly to perform and complete the work, to remove all dirt and rubbish and to put the street or public place in good condition, the Municipality shall have the right to put the street or public place in good condition at the expense of the Company; and the Company shall, upon demand, pay to the Municipality the cost of such work done for or performed by the Municipality, together with ten per cent (10%) additional as liquidated damages. Nothwithstanding the foregoing pro- visions of this section, the Company may open and disturb the surface of any street without a permit where an emergency exists requiring the immediate repair of a gas main or gas service. The Company in such event will request a permit not later than the second working day thereafter. Section 15. Whenever the Municipality shall grade, regrade or change the line of any street or public place or construct or reconstruct any sewer or water system therein and shall, in the proper exercise of its police power, and with due regard to seasonable working conditions, order the Company to relocate permanently its mains, services and other property located in said street or public place, the Company shall relocate its facilities at its own expense. In construing this paragraph, the obligation of the Company to re- locate its facilities shall be as applicable to water systems as it is to sewer systems. The Municipality shall give the Company reasonable notice of plans to grade, regrade or change the line of any street or public place or to construct or reconstruct any sewer or water system therein. 2/23/63 35 The Company may be 'required to relocate its facilities at its own expense where grade changes are made by the Municipality for improved drainage or improved traffic conditions, provided, however, if a subse- quent relocation or relocations shall be ordered within ten years from and after the first relocation the Municipality shall reimburse the Company for such non - betterment relocation expense which the Company may incur on a time and material basis. Provided, however, nothing in this ordinance contained shall deprive the Company bf its rights under Section 161.46, Minnesota.Statutes. Nothing contained in this section shall require the Company to remove and replace its mains or to cut and reconnect its service pipe running from the main to the customer's premises at its own expense where the removal and replacement or cutting and reconnecting is made for the pur- pose of a more expeditious operation for the construction or reconstruction of said sewer or water system; nor shall anything contained herein relieve any person, persons or corporations from liability arising out of the failure to exercise reasonable care to avoid injuring the Company's facilities while performing any work connected with grading, regrading or changing the line of any street or public place or with the construction or reconstruction of any sewer or water system. Where the Municipality orders the Company to relocate any of its facilities, the Company shall p-roceed with such relocation. If such Q'J relocation is dose without an agreement first being made as to who shall pay for the relocation cost, such relocation of the facilities by the Company shall not be construed as a waiver of its right to be reimbursed for the relocation cost. If the Company claims that it should be reimbursed for such relocation costs, it shall notify the Municipality within ten (10) days after receipt of such order, Section 16. The Municipality shall give the Company reasonable written notice of plans for street improvements where paving or resurfacing of a permanent nature is involved, which notice shall contain the nature and character of the improvements, the streets upon which the improvements are to be made, the extent of the improvements and the time when the Municipality is going to start the work, and, if more than one street is Involved, the order in which this work is to proceed, Paving or resurfacing of a permanent nature refers only to Portland cement concrete or high type bituminous concrete. The notice shall be given to the Company a sufficient length of time, considering seasonable working conditions, in advance of the actual commencement of the work to permit the Company to make any additions, alterations or repairs to its facilities deemed necessary by it. In cases where streets are at final width and grade, and the Munici- pality has installed underground sewer or water mains and service connections to the property line abutting the streets prior to a permanent paving or resurfacing of such streets, and the Company's main is located under such street, the Company may be required to install gas service connections prior to such paving or resurfacing, whenever it is apparent that gas service will be required during the five years following the paving or resurfacing. Section 17. All mains, services, governors and other property and facilities shall be so located, constructed, installed and maintained as not to endanger or unnecessarily interfere with the usual and customary trade, traffic and travel upon the streets and public places of the Municipality, The Company shall keep and maintain all of its property in good condition, order and repair, so that the same shall not menace or endanger the life or property of any person. The Municipality shall have the right to inspect and examine at any reasonable time the property owned or used, in part or in whole, by the Company for the purpose of manufacturing, distributing, furnish- ing or selling gas in the suburban area. to Section 18, The Company agrees to pay /the Suburban Rate Authority, effective January 1, 1963, not less than $3x0,000.00 per year to be allowed as an operating expense to the Company and which shall be used to secure compliance with this ordinance, and for such other purposes relating to the Company's purchased gas costs and gas supply as the Suburban Rate Authority shall deem necessary. The amount of such annual payment shall be subject to possible revision by the Suburban Rate Authority and the Company, not oftener than once in five (5) years, if mutually agreed to. 2/23/63 Section 19. The Company shall at all times provide and furnish an adequate, safe and continuous supply of gas to the Municipality and its inhabitants, subject, however, to the further provisions of this section. The Company sells and distributes gas throughout its entire distribution system. The natural gas distributed by the Company is furnished by the pipeline system owned and operated by Northern Natural Gas Company, a "natural gas company" under the Federal Natural Gas Act, which subjects said Northern Natural Gas Company to the jurisdiction of the Federal Power Commission. The Company shall not be liable to the Municipality or its inhabitants, nor shall the Municipality, or any inhabitant who is a customer of the Company, be liable to the Company hereunder by reason of the failure of the Company to deliver, or of the Municipality or a customer to receive, natural gas as a result of acts of God, or the public enemy, inability of pipeline supplier to furnish an adequate supply due to an emergency, an'order or decision of a public regulatory body or other acts beyond the control of the party affected. Whenever any of the occurrences named above take place, the Company shall have the right and authority and it shall be its duty to adopt reasonable rules and regulations in connection with limiting, curtailing or allocating extensions of service or supply of gas to any customer or prospective customer, and withholding the supplying of gas to new customers, provided that such rules and regulations shall be uniform.as applied to each class of customers; classi- fications of customers shall be reasonable and shall be nondiscriminatory as between municipalities in the suburban area. If service is temporarily suspended because of any of the reasons set forth above, occurring through no fault or negligent act on the part of the Company, such suspension shall not be made the basis of any action or proceeding to terminate this franchise. The quality of the gas sold in the suburban area shall be the same as that sold to the Company's customers in the City of Minneapolis. The pressure at which gas is supplied and the method and manner of testing the heating value, quality, purity and pressure of the gas supplied, shall be in accordance with accepted national standards. Section 20. The Company shall indemnify, keen and hold the Municipality free and harmless from liability on account of injury or damage to persons or property growing out of the negligent construction, maintenance, repair and operation of its property, and in the event that suit shall be brought against the Municipality either independently or jointly with the Company on account thereof, the Company, upon notice to it by the Municipality, shall defend the Municipality in any suit at the cost of the Company, and in event of a final judgment being "obtained against the Municipality, either independently or jointly with the Company,•the Company shall pay such judgment with all costs and hold the Municipality harmless therefrom. Section 21. Nothing herein shall be construed to limit the right of the Municipality to acquire the property of the Company under any act of the legis- lature now or hereafter existing, nor under any provisions of law now existing or hereafter adopted. In the event the Municipality should desire to acquire the property of the Company by the exercise of eminent domain, as herein set forth, the Company agrees that its value for the purpose of such acquisition shall not include any amount for the value of any right, privilege, franchise or grant from the State of Minnesota or the Municipality, for good will, or for future profits, and that in determining said value no regard shall be had to the-amounts of stocks, bonds and other obligations of the Company. Section 22. The rights and privileges hereby granted are not exclusive and the Municipality expressly reserves the right to grant like rights and privileges to other persons or corporations. Section 23. If the Company shall be in default in the performance of any of the material terms and conditions of this ordinance and shall continue in default for more than ninety (90) days after receiving notice from the Munici- pality_,- of such default, the Municipal Council may, by ordinance duly passed and adopted, terminate all rights granted under this ordinance to the Company. The said notice of default shall be in writing and shall specify the provisions of this ordinance in the performance of which it is claimed that the Company is in default. Such notice shall be served in the manner provided by the laws of Minnesota for the service of a summons and complaint in a civil action. The reasonableness of any ordinance so passed declaring a forfeiture of the rights and privileges granted by this franchise ordinance shall be subject to review by a court of competent jurisdiction. 1 1 2/23/63 37 Section 24. Any change of the form of government of the Municipality as authorized by the State of Minnesota shall not affect the validity of this franchise. Any municipal corporation succeeding the Municipality shall, without the consent of the Company, succeed to all the rights and obligations of the Municipality provided in this franchise. Section 29. If this ordinance is not adopted by March 1, 1963, by municipalities in which 66 -2/30 of the customers of the Company in the suburban area are located, the Municipal Council may revoke the same, The Company agrees to file with the Municipal Clerk on or before-Maich 15, 19632 a sworn statement showing the total number of customers in the suburban area and the total number of customers in municipalities in which the ordinance has been adopted. If this ordinance is revoked the provisions of this ordinance shall be without prejudice to either party in any subsequent proceeding. Section 30. Three years after January 1, 1963, either the Company or the Suburban Rate Authority may request a review of the question of whether the rate formula contained in Sections 4 and 5 accomplishes the purpose expressed in the first sentence of Section 4. Such review may be initiated by making a written request therefor to the other party during the month of January, 1966, Thereupon, the Suburban Rate Authority and the Company shall review and discuss such question with each other, thoroughly and in good faith, for a period not to exceed six months, Any change in said rate formula shall be prospective in operation only and shall be made by amendment to Sections 4 or 5. Any such amendment to be effective must be adopted before December 1, 1966, by municipalities in which 66 -2/30 of the customers of the Company in the suburban area are located and accepted in writing by the Company in the form provided in Section 27 prior to January 1, 1967. In the absence of any such amendment, so adopted and accepted, the rate formula contained in Sections 4 and 5 shall be and remain in effect during the balance of the term of this franchise. Section 31. If any section paragraph, subdivision, clause or pro- vision of this ordinance shall be adjudged invalid or unconstitutional, the same shall not affect the validity of this ordinance as a whole, or any part or provision, other than the part so decided to be invalid or unconstitutional. Section 25. Except as herein otherwise specifically provided, whenever notice is to be given to the Company, such notice in writing, addressed to the President, Vice President, Secretary or Treasurer of the Company and delivered at the Minneapolis office of the Company shall be service of such notice; and whenever notice is to be given to the Munici- pality, such notice, in writing, addressed to the Municipal Clerk and delivered at his office, shall be service of such notice; and whenever notice is to be given to the Suburban Rate Authority, such notice, in writing, addressed to such Suburban Rate Authority and delivered to its office or to one of the members of its governing body, shall be service of such notice. Section 26. An ordinance entitled "Granting to Minneapolis Gas Light Company, its successors and assigns, the right to manufacture, import, transport, sell and distribute gas for heating, illuminating and other purposes in the Village of Edina and to use the streets, avenues and alleys thereof for that purpose ", passed on the 14th day of October, 1946, and the amendments thereto passed on the 23rd day of April, 1951, are hereby repealed. Section 27. This ordinance shall be null and void unless the Company shall, after the publication thereof and prior to April 10 1963, file with the Municipal Clerk a written acceptance of the same and an agreement on its part, signed and acknowledged in its behalf under its corporate seal by its duly authorized officers, to surrender all rights and privileges under the ordinance described in Section 26, and to comply with, abide by, keep and perform all of the terms, conditions and requirements herein contained upon its part to be complied with or performed, and that the Company will not contest the validity of this ordinance or of any rate or rates which are in accordance with the terms hereof, except as herein expressly provided. Section 28. The expense of the publication of this ordinance shall be paid by the Company. Section 29. If this ordinance is not adopted by March 1, 1963, by municipalities in which 66 -2/30 of the customers of the Company in the suburban area are located, the Municipal Council may revoke the same, The Company agrees to file with the Municipal Clerk on or before-Maich 15, 19632 a sworn statement showing the total number of customers in the suburban area and the total number of customers in municipalities in which the ordinance has been adopted. If this ordinance is revoked the provisions of this ordinance shall be without prejudice to either party in any subsequent proceeding. Section 30. Three years after January 1, 1963, either the Company or the Suburban Rate Authority may request a review of the question of whether the rate formula contained in Sections 4 and 5 accomplishes the purpose expressed in the first sentence of Section 4. Such review may be initiated by making a written request therefor to the other party during the month of January, 1966, Thereupon, the Suburban Rate Authority and the Company shall review and discuss such question with each other, thoroughly and in good faith, for a period not to exceed six months, Any change in said rate formula shall be prospective in operation only and shall be made by amendment to Sections 4 or 5. Any such amendment to be effective must be adopted before December 1, 1966, by municipalities in which 66 -2/30 of the customers of the Company in the suburban area are located and accepted in writing by the Company in the form provided in Section 27 prior to January 1, 1967. In the absence of any such amendment, so adopted and accepted, the rate formula contained in Sections 4 and 5 shall be and remain in effect during the balance of the term of this franchise. Section 31. If any section paragraph, subdivision, clause or pro- vision of this ordinance shall be adjudged invalid or unconstitutional, the same shall not affect the validity of this ordinance as a whole, or any part or provision, other than the part so decided to be invalid or unconstitutional. 38 � 2/23/63 Section 32. This ordinance shall take effect and be in force from and after January 1, 1963, and after its publication and its acceptance by the Company subject to the provisions of Section 29. Motion for acceptance of franchise by .adoption of Ordinance No. 221A was seconded by MacMillan, and on Rollcall there were thr yes and two nays, as follows: MacMillan, aye; Rixe, nay; Tupa, nay; VanVaIkefiburg , a e; and Bredesen, aye; and the Ordinance was adopted. ATTEST: X1____1r_____ , n A� A question was raised as to whether the Ordinance would require another reading by the Council at a subsequent meeting, in view of the Council's rules of order which state that a "Second Reading" be held before an ordinance enactment unless such requirement be waived by 2/3 vote of the Council. Village Attorney Hassel - quist stated that the requirement for two readings does not mean that the ordi- nance must be enacted twice, but rather that the ordinance must have been read at a previous Council Meeting before its enactment in order to provide opportunity for its full consideration.by the Council. He noted that the ordinance had been considered at several prior council meetings, and was reviewed in complete detail and in public hearing at the meeting of February 11, 1963, which in his opinion constituted a First Reading of the ordinance. Mr. Hasselquist therefore ruled that the ordinance required no further readings and would become effective with its publication as provided by Minnesota Law. VanValkenburg then offered the following Resolution and moved its adoption: RESOLUTION AUTHORIZING JOINT AND COOPERATIVE AGREEMENT RELATING TO ESTABLISHMENT OF SUBURBAN RATE AUTHORITY BE IT RESOLVED, Ey t e Village Council of the Village of Edina, Minnesota: 1. It is hereby determined to be necessary and expedient to the public health, safety, prosperity, convenience and general welfare of the Village of Edina and its citizens and residents to enter into a joint and cooperative agree- ment with other suburban municipal corporations for the formation of the Suburban Rate Authority to facilitate study, consideration, administration and negotiations relative to the rates, services and other matters concerning the distribution of natural gas in this municipality under a proposed uniform Suburban Franchise for the Minneapolis Gas Company, 2. The said agreement, a copy of which is attached hereto and made a part hereof, is hereby approved and adopted, and the Mayor and Village Clerk and all other appropriate officials of this municipality are hereby authorized and directed to execute said agreement on behalf of this municipality and to take the steps outlined in said agreement necessary to effectuate it, and the Village Clerk is hereby authorized and directed to send a certified copy of this reso- lution and a duly executed copy of said agreement to the Village Manager of the Village of Richfield, Minnesota. Motion for adoption of the Resolution was se there were three ayes andt?o nays, as follow nay; VanValkenburg, aye; and Bredesen, aye• ATTEST: Village Clerk , by MacMillan, and on Rollcall Millan, aye, Rixe, nay; Tupa, Resolut•o was adopted. Mavor 1 ! /" There being no other business to come before this meeting, the meeting was adjourned, at 1 :45 P.M. .scC/ Village Cler JOINT AND COOPERATIVE AGREEMENT The parties to this agreement are governmental units of the State of Minnesota. This agreement is made pursuant to Minnesota Statutes, Section 471.59. I. GENERAL PURPOSE The general purpose of this agreement is to provide an organ- ization to enforce the rate provisions of franchises which the par- ties to this agreement have granted to the Minneapolis Gas Company. II. DEFINITION OF TERMS For the purposes of this agreement, the terms defined in this section shall have the meanings given them. Subd. 1. "Authority" means a gas rate regulatory authority created pursuant to this agreement, and contemplated in the standard suburban franchises granted to the Minneapolis Gas Company by the parties to this agreement. Subd. 2. "Board" means the Board of Directors of the authority, consisting of one director from each governmental unit which is a member of the authority. Subd. 3. "Council" means the governing body of the govern- mental unit. Subd. 4. "Gas Company" means the Minneapolis Gas Company. Subd. 5. "Member" means a governmental unit which enters into this agreement. Subd. 6. "Governmental Unit" means any city, village or town. Subd. 7, "Rate Engineer'- means a person designated by the Board to act on behalf of the authority and its members to alter, amend or revise the rakes of the gas company as provided in such standard suburban franchises, for gas sold in member governmental units. He shall be an engineer, auditor or accountant qualified and A. experiencedin public utility regulatory matters. III. MEMBERSHIP The membership of the authority shall consist of as many of the following named governmental units as shall elect, through resol- ution adopted by their respective governing bodies, to become members: City of City of City of City of City of City of City of City of Bloomington Columbia Heights Crystal Fridley Hopkins Robbinsdale St. Louis Park Wayzata Village of Brooklyn Center Village of Brooklyn Park Village of Deephaven Village of Eden Prairie Village of Edina Village of Excelsior Village of Golden Valley Village of Greenwood Village of Hilltop Village of Maple Grove Village of Minnetonka Village of Morningside Village of New Hope Village of Osseo Village of Plymouth Village of Richfield Village of St. Anthony Village of Shorewood Village of Woodland .Each of the foregoing governmental units shall automatically be eligible to become members of the authority, until A peril', 1, 1963. Thereafter, the above - mentioned governmental.units, and any other governmental units adopting such standard suburban franchises, may be added upon favorable vote of the then existing members, sub- ject to such terms and conditions as shall then be specified. A majority of two - thirds of the eligible votes of the then existing members shall be necessary in order to give consent to the admission of any member after -'A.pria 1, 1963. Membership by any governmental -2- 1 f unit after April, 1, 1963, may be effected by attaching an addendum to this agreement, properly executed by the officers of the then s existing members of the authority and by the appropriate officers of the governmental unit involved. No change in governmental boundaries, structure or organiza- tional status shall affect the eligibility of any governmental unit listed above to be represented by a member of the authority, IV. GOVERNING BODY The governing body of the authority shall be its Board. Each member shall be entitled to one director. Each director shall be entitled to one vote for each.$500,000, or fraction thereof, of firm revenue paid to the Minneapolis Gas Company during the preceding calendar year by gas customers located in the governmental unit. A director shall be appointed by the governing body of each member, for a term of one calendar year and until his successor is selected and t R qualified. Board members shall serve without compensation from the authority, but this shall not prevent a governmental unit from pro- viding compensation to its Board member for serving on the Board if such compensation is authorized by such governmental unit and by law. A majority of the votes of the members of the authority shall con- stitute a quorum. A vacancy on the Board shall be filled by the governing body of the member whose position on the Board is vacant. A director shall not be eligible to vote on behalf of his governmental unit during the time that such governmental unit is in default on any contribution as to the rate authority, payable under the provisions of this agreement, During the existence of such default, the vote or votes of such governmental unit shall not be counted as eligible votes for the purposes of this agreement. If a governmental unit remains in default for a period of more than one year on any contribution to -3- I? the rate authority required under the terms of this agreement, the membership of such governmental unit automatically shall be termin- ated. V. MEETINGS - ELECTION OF OFFICERS Subdo to Any governmental unit named in Article III desiring to enter into this agreement may do so by the duly authorized execu- tion of a copy of this agreement by its proper officers. Thereupon, the clerk of the member shall.file a duly executed copy of the agree- meat, together with a certified copy of said resolution, with the Village Manager of the Village of Richfield. The resolution author- izing the execution of the agreement shall also designate the first representative for the member on the Board. The agreement shall be- come effective as of the time when it has been authorized by govern- mental units in which 66 -2/3/ of the customers of the Suburban Divi- sion of the Minneapolis Gas Company are located, and when executed copies from such governmental units, together with certified copies of authorizing resolutions, have been duly filed as set out herein, Within thirty.(30) days after the effective date of this agreement, the Mayor of the Village of Richfield shall call the first meeting of the Board of Directors, which shall be held not later than fifteen (15) days thereafter, Subdo 2, At the first meeting of the Board, and in January of each year thereafter, the Board shall elect from its directors a chairman, vice - chairman, secretary and treasurers At the organiza- tional meeting, or as soon thereafter as it may reasonably be done, the Board shall adopt rules and regulations governing its procedures, including the time, place and frequency of its regular meetings. Such rules and regulations may be amended from time to time. 1# 0 VI. POWERS AND DUTIES OF THE BOARD Subde to The powers and duties of the Board shall include the powers set forth in this section. 7 Subdo Z. It shall designate and employ a person to act as rate engineer on behalf of the authority and its members, who shall be empowered to alter, amend or revise the rates of the gas company in the manner provided by the standard franchises which members have granted to the gas company. Subdo 30 It may make such contracts as the Board deems necessary to make effective any power to be exercised by the authority, pursuant to the provisions of this agreement. Subdo 4. It may provide for the prosecution, defense or other participation in actions or proceedings at law in which it may have an interest, and may employ counsel for that purpose. Subdo 5. It may employ such other persons as it deems necessary to accomplish its duties and powers. Any employee may be on a full- time, part -time, or consulting basis, as the Board determines. Subdo 6e It may conduct such.-research and investigation and take such action as it deems necessary on any matter related to or affecting gas costs, rates, supplies and gas franchises, and advise the members concerning such matters, with a view toward obtaining com- pliance with the gas franchises which have been granted by the members to the gas company, and with a view toward protecting the members and their residents against excessive gas rates. Subdo 7e It shall be entitled to obtain from the gas company, and from any other source, such information relating to gas rates and gas costs as any of its members is entitled to obtain. Subde 80 It may collect moneys from the gas company,to finance the authority in the manner and to the extent provided by franchise; -5- and it may accept voluntary contributions from its members if the members determined that unusual circumstances warrant providing the authority with additional financial support, but the Board shall not have any taxing power. It may accumulate reserve funds and may in- vest and reinvest its funds not needed for current operating expenses.. in the manner and subject to the limitations applicable by laws to villages. It shall not at any time incur obligations in excess of funds then available to the authority. Subdo 9. It may contract for space, material and supplies either with a member or elsewhere. Subdo 10. It shall make a financial accounting and report to the members at least once each year and its books and records shall be available for and open to examination by its members at all reasonable times. Subdo 11. It shall not have authority to amend the franchise of any of its members. Subdo 12. It may exercise any other power necessary and in- cidental to the implementation of its powers and duties which it, or its rate engineer, is given under the provisions of this agreement. VII. FINANCIAL MATTERS Subdo 1. Authority funds may be expended by the Board in ac- cordance with the procedures established by law for the expenditure of funds by villages. Orders, checks and drafts shall be signed by the chairman and treasurer. Other legal instruments shall be executed on behalf of the authority by authority of its Board by the chairman jand secretary. During the absence or disability of the chairman, the vice- chairman shall serve and perform as chairman. Subdo 20 The activities of the authority shall be financed by contributions from the gas company, as provided in such standard EM r N franchises, and by contributions from members of the authority if it is determined that such contributions are necessary. Such determina- tion shall be made by the Board not later than August 1 of each year in order to obligate members to make contributions during the ensuing calendar year. The total annual contribution by members for the en- suing year shall be established by the Board of Directors according to anticipated expenditures and only if the anticipated expenditures are in excess of the anticipated funds otherwise available to 'che authority. Such contributions by members shall not exceed one -half of one percent of the firm revenue derived from the sale of gas in the then member governmental units during the most recent year for which statistics are available at the time the budget is established. The contributions each year by the member governmental units shall be in proportion to the firm revenue from the sale of gas in each member governmental unit by the gas company during the most recent year for which statistics are available at the time contributions are established. Said contributions shall be made by the member governmental units to the authority as follows: _One -half on or before February 1 of each year and one -half on or before August 1 of each year. The determination to assess member governmental units for con- tributions shall be made only upon a favorable two - thirds vote of all votes of the then existing members. VIII. RATE ENGINEER The rate engineer shall have the duty and power to investigate 'che books and records of the gas company to determine whether there has been compliance with the standard franchises of its members and to order in writing the alteration, amendment or revision of the rates of the gas company when he determines that such rates do not comply with such franchises, and he shall exercise such further duties as -7- 0 r are required by the provisions of such franchises or as he may be ordered by the Board in the discharge of its powers and duties. IX. NAME The name of the authority shall be the "SUBURBAN RATE AUTHORITY ". X. DURATION The authority shall continue for a term of three years after the effective date of this agreement, and thereafter from year to year unless the number of members shall become less than seven. None of the members shall withdraw from the agreement for the first three years; thereafter, withdrawal of a member at the end of any year may be accomplished by any member's filing written notice thereof with the secretary of the authority by June 15, giving notice of withdrawal at the end of the year; and membership shall continue until the ef- fective date of the notice of withdrawal. In no event shall the authority continue in existence after January 1, 1983, except for the purposes of dissolution. If a governmental unit withdraws from the authority before the dissolution of the authority or if, by reason of default in contribu- tions required to be made to the authority, the membership of the governmental -unit is automatically terminated, such governmental unit shall have no claim to the assets of the authority. XI. DISSOLUTION Upon dissolution of the authority, all property of the authority shall be sold and the proceeds thereof, together with surplus moneys on hand, shall_ be distributed to the then members of the authority. i Such distribution of authority assets shall be in proportion to the firm revenue from the sale of gas in each governmental unit by the gas company during the most recent year for which statistics are -8- { C Y available at the time that the dissolution ds ordered by the board. Such dissolution .shall be ordered by the board within six months after the occurrence of the event or-events which, under the terms of this agreement, require such dissolution - IN WITNESS WHEREOF, the undersigned governmental unit has caused this agreement to be signed and delivered on its behalf. IN THE PRESENCE OF: VILLAGE OF EDINA ` (Name overnmental Unit) By t s �-- By Its �Ti l l arro M�nb or v Dated: February 23, 1963 11262-1 Its Village Clerk Filed in the office of this day of ,.1962, -9- �:. - � -x, 2 �:.