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AN ORDINANCE REPLACING ORDINANCE NO. 10473, FILE NO. 16-061-O, AND GRANTING MINNESOTA POWER , A DIVISION OF ALLETE, INC., A FRANCHISE TO CONSTRUCT AND MAINTAIN AN ELECTRIC DISTRIBUTION SYSTEM WITHIN THE CITY.
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CITY PROPOSAL:
The city of Duluth does ordain:
Section 1. Ordinance No. 10473, on file in the office of the city clerk as File No. 16-061-O, titled “AN ORDINANCE REPLACING ORDINANCE NO. 9223, FILE NO. 94-0042, AND GRANTING MINNESOTA POWER, A DIVISION OF ALLETE, INC., A FRANCHISE TO CONSTRUCT AND MAINTAIN AN ELECTRIC DISTRIBUTION SYSTEM WITHIN THE CITY”, is hereby repealed in its entirety.
Section 2. Definitions. For purposes of this Ordinance, the following capitalized terms listed in alphabetical order shall have the following meanings:
City. The city of Duluth, Saint Louis County, state of Minnesota and the corporate limits thereof on the Effective Date and as they may be adjusted from time to time hereafter.
City Utility System. Facilities used for providing public utility service owned or operated by the City or agency thereof, including sewer, storm sewer, water service, street lighting and traffic signals.
Commission. The Minnesota Public Utilities Commission, or any successor agency or agencies, including an agency of the federal government, which preempts all or part of the authority to regulate electric retail rates now vested in the Minnesota Public Utilities Commission.
Company. Minnesota Power, an operating division of ALLETE, Inc., its successors and assigns including all successors or assignees that own or operate any part or parts of the Electric Facilities subject to this Franchise.
Company Service Area. Those areas within the city to which Minnesota Power has been assigned the right to provide electric service, as in effect on the Effective Date or as may be hereafter revised.
Council. The city council of the city of Duluth as from time to time constituted.
Effective Date. The effective date of this Ordinance.
Electric Facilities. Electric transmission and distribution substations, towers, poles, lines, guys, anchors, conduits, fixtures, and necessary appurtenances owned or operated by Minnesota Power for the purpose of providing electric energy for public or private use.
Extension Rules. The rules adopted from time to time by the Company governing its extension of Electrical Facilities.
Franchise. The grant of rights made by the City to Minnesota Power in this Ordinance, subject to its terms and conditions.
Gross Revenues. All sums received by Minnesota Power from the sale of electricity to its retail customers within the limits of the city. Gross Revenues for the purposes of calculating the franchise fee imposed by Section 10 shall be subject to adjustment only as provided in Section 10.3.
Notice. A writing served by any party or parties on any other party or parties at the following addresses:
If to the City: City of Duluth
411 West First Street
Duluth, MN 55802
Attn: Finance Office and Attorney’s Office
If to Minnesota Power: Minnesota Power
30 West Superior Street
Duluth, MN 55802
Attn: Vice President - Customer Experience
Any party may change its respective address for the purpose of this Ordinance by written notice to the other parties.
Person. A natural person or any partnership, joint venture, corporation, cooperative, limited liability company or any public corporation, political subdivision or agency of the state or any other legal entity that may be created by law.
Public Ground. All real property owned by or dedicated to the city with respect to which the city holds the legal right or title to grant or withhold easement, leasehold or occupancy rights or servitudes.
Public Way. Any street, alley and other public rights-of-way within the city.
Utility. Transmitting, furnishing, transporting, distributing, delivering, selling, receiving, importing, manufacturing, or causing to be produced, transmitted, furnished, transported, delivered, sold, received, imported, or manufactured, electric energy, natural gas, mixed gas, heat, light, power, and services provided through a cable communication system.
Utility Service Provider. Any Person who performs any one or more of the activities of a Utility to or for the public or to or for any one or more persons within the corporate limits of the city and may, as contemplated herein, be the ultimate user or consumer of the Utility service provided.
Section 3. The franchise.
3.1. There is hereby granted to Minnesota Power, a division of ALLETE, Inc., its successors and assigns, for a period of three (3) years commencing January 1, 2027, a franchise right to enter upon and construct, operate and maintain upon the streets, highways and Public Grounds of the city, poles, wires, cable, cross arms, braces, lamps, conduits and other usual appurtenances and appliances for transmitting and distributing electricity for light, heat, and power purposes.
3.2. Minnesota Power shall furnish twenty-four (24) hours continuous electrical service from its electrical system to all consumers in the city including said City and shall furnish such service to all desiring the same pursuant to Minnesota Power’s Electric Rate Book and Service Regulations, as periodically amended.
3.3. Minnesota Power is committed to cooperate with the City in support of the City’s efforts to achieve mutual energy goals.
3.4. This ordinance shall not be considered as granting to Minnesota Power
any exclusive franchise to provide energy for light, heat, and power purposes, or granting Minnesota Power exclusive privilege of erecting poles and stringing wires in the streets or public grounds of said City.
3.5. The term of this franchise will automatically extend for successive one (1) year periods unless written notice of termination is provided by either party to the other at least ninety (90) days before the end of the then-current term.
Section 4. Locations; construction; other regulations.
4.1. General. Electric Facilities shall be located, constructed and maintained by the Company: (i) in as safe and secure a condition or manner as reasonably possible, (ii) so as not to interfere with the safety and convenience of ordinary travel along and over Public Ways, and (iii) so as not to disrupt or interfere with the normal use or operation of any Public Ways, Public Ground or the City Utility System. Electric Facilities may only be located on Public Ground as determined by the City in its sole discretion. Minnesota Power’s construction, reconstruction, operation, repair, maintenance, location and relocation of Electric Facilities shall be subject to the terms of this Ordinance and such other regulations of the City consistent with authority granted the City to manage its Public Ways and Public Grounds under state law, to the extent not inconsistent with a specific term of this Ordinance.
4.2. Construction; Maintenance; Repairs. Whenever Minnesota Power desires to open or disturb any Public Way or Public Ground for the purpose of constructing, maintaining, or repairing Electric Facilities, it shall give the City reasonable advance Notice, but not less than ten (10) business days, by filing a written Notice with the City and contacting the Director of Property and Facilities Management. In any case, Minnesota Power shall not commence such work before obtaining any applicable permit for which the City may impose a reasonable fee, or other appropriate written consent from the City. Minnesota Power shall not, during the progress of the work, endanger or unnecessarily obstruct the passage of traffic or the normal and customary use of the Public Ways and Public Ground. During the progress of such work, Minnesota Power shall keep the affected Public Ways or Public Ground guarded in order to avoid accidents to persons or property. All work performed by Minnesota Power shall comply with all applicable federal, state, and local laws, rules, and regulations.
4.3. Emergencies. The requirements for obtaining permits from the City pursuant to Section 4.2 shall not apply if (i) an emergency exists requiring the immediate repair of Electric Facilities and (ii) Minnesota Power gives telephone notice to the city before, if reasonably possible, commencement of the emergency repair. Within two (2) business days after commencing the repair, Minnesota Power shall apply for any required permits and pay any required fees.
4.4. Restoration. Following the completion of any work, Minnesota Power shall promptly and diligently restore the affected Public Ways and/or Public Ground to as good a condition as before the work commenced. If Minnesota Power fails to promptly restore such Public Ways and/or Public Ground within ten (10) days of Notice by the city, the City may engage an independent contractor at the expense of Minnesota Power to perform the restoration of the Public Ways and/or Public Ground as required under this Section. Minnesota Power shall pay the City upon demand the cost to the City of effecting such restoration including the City’s administrative expenses and overhead.
4.5. Avoidance of Damage. Minnesota Power must take reasonable measures to prevent the Electric Facilities from causing damage to persons or property. Minnesota Power must take reasonable measures to protect the Electric Facilities from damage that could be inflicted on the Electric Facilities by persons, property, or the elements. Minnesota Power must take protective measures when the City performs work near the Electric Facilities, if given reasonable Notice by the City of such work prior to its commencement.
4.6. Field Locations. Minnesota Power shall provide field locations for all its underground Electric Facilities when requested by the City within a reasonable period of time. The period of time will be deemed reasonable if it meets the requirements of the one call excavation notice system as now provided in Minnesota Statutes, chapter 216D (commonly known as of the Effective Date as the “Gopher State One Call” system).
4.7. Shared Use of Poles; Street Lights. If the City desires to place facilities on Minnesota Power’s poles, the City shall enter into a License Agreement for Pole Attachment Rental with the Company containing terms and conditions substantially similar to those contained in other such Agreements that Minnesota Power has with other governmental entities.
4.8. Tree Trimming. Subject to such procedures, regulation and supervision as the Council may establish, Minnesota Power may, at its cost, trim all trees and shrubs in the Public Ways located within the Company Service Area to the extent Minnesota Power finds it necessary to avoid interference with the proper construction, operation, repair and maintenance of any of the Company’s Electric Facilities installed or maintained hereunder.
4.9. Notice of City Improvements. The City will give Minnesota Power reasonable advance Notice of plans for improvements to Public Ways and Public Ground in Minnesota Power Service Area where the City has reason to believe that Minnesota Power’s Electric Facilities may affect or be affected by such improvements. The Notice will contain: (i) the nature and character of the improvements, (ii) the Public Ways and/or Public Ground upon which the improvements are to be made, (iii) the extent of the improvements, (iv) the time when the City will start the work, and (v) if more than one Public Way or parcel of Public Ground is involved, the order in which the work is to proceed.
4.10. Acquisition. The City shall have the right to purchase or otherwise acquire Minnesota Power’s Electric Facilities or the Company Service Area, or portion(s) thereof, at any time by way of eminent domain under Minnesota Statutes, Chapter 117 or under Minnesota Statutes, Chapter 216B, in either case, as such statutes or amendments to such are in effect on the date the City commences such purchase or acquisition. In that event, the pleading commencing the acquisition proceeding by the City shall be noticed to Minnesota Power for it to make any adjustments to its long-range planning for facilities and service for the area affected by the proceeding. Any damages to Minnesota Power as a result of such proceeding shall be determined as of the commencement of such proceeding. Minnesota Power shall continue to operate the Electric Facilities at the City's sufferance only until such acquisition is completed. The expiration or termination of this Franchise as hereinbefore provided shall not, by itself, be an independent basis of any claim by Minnesota Power against the City.
Section 5. Electric facilities relocation.
5.1. Relocation. In the event the City reasonably determines that it is necessary for Minnesota Power to move any part of its Electric Facilities because the City has determined to change, move or improve its Public Ways or that the Electric Facilities have become or will become a substantial impairment to the existing or imminent public use of Public Ground, upon reasonable Notice by the City to Minnesota Power, then Minnesota Power will move its Electric Facilities at its sole cost. The City shall consider reasonable alternatives in designing its public works projects so as not to arbitrarily cause Minnesota Power unreasonable additional expense in exercising its authority under this Section 5.1. This Section 5.1 shall not constitute a taking by the City nor be construed as a waiver or modification of any easement or prescriptive rights acquired by Minnesota Power independent of and without reliance by Minnesota Power on this Franchise.
5.2. No Release of Liability. Nothing contained herein shall relieve any third party from liability arising out of their failure to exercise reasonable care to avoid injuring Minnesota Power’s Electric Facilities while performing any work connected with grading, regrading or changing the line of any Public Way or with any construction on or adjacent to any Public Way; provided, however, this Section 5.2 shall not limit the City’s rights to indemnification under Section 6.1 nor shall the City in any way be liable to Minnesota Power for claims arising from the negligence of any third party.
Section 6. Indemnification and insurance.
6.1. Indemnification. To the fullest extent permitted by law, Minnesota Power shall defend, indemnify, and hold City and its employees, officers and agents harmless from and against any and all costs or expenses, claims or liabilities, including but not limited to, reasonable attorney’s fees and expenses, whether asserted by Minnesota Power or any third party, which are attributable to the acts, omissions, negligence, or misconduct of Minnesota Power or that of its agents, employees, or contractors which may occur during Minnesota Power’s performance of its duties under this Ordinance. The obligations shall include, but not be limited to, the obligations to defend, indemnify, and hold harmless the City in all matters where claims of liability against the City are alleged to be or could be found to arise out of the negligent or otherwise wrongful act or omission of Minnesota Power in its performance of its duties under this Ordinance or are passive, derivative, or vicarious of the negligent or intentional acts or omissions of Minnesota Power in its performance of its duties under this Ordinance, including breach of any duty in this Ordinance by Minnesota Power. The Company’s obligation to indemnify the City shall not extend to any injury to persons or property caused by the negligent act or failure to act by the City or any actions taken by the Company pursuant to directions of the City if performed within the scope of the City’s directions without negligence by the Company. The obligations to defend, indemnify, and hold harmless shall be triggered upon the assertion of a claim for damages against City. This Section shall survive the termination of this Ordinance for any reason. Nothing in this provision shall affect the limitations of liability of the City as set forth in Minnesota Statutes Chapter 466. This Section is not, as to third parties, a waiver of any defense or immunity otherwise available to the City; and the Company, in defending any action shall be entitled to assert every defense or immunity that the City could itself assert in its own behalf. The City shall determine who will defend any such claims arising under this Section 6.1 and the Company will thereafter have complete control of such litigation; provided, however, the Company may not settle any such claims without the prior approval of the City, which approval will not be unreasonably withheld.
6.2. Insurance. Before the Effective Date, Minnesota Power shall furnish the City a summary of insurance, if any, carried by Minnesota Power, or of its self-insured status, in either case demonstrating adequate protection to the City from any and all obligations, liabilities, or claims of any nature whatsoever, growing out of the operation, construction, and maintenance of its Electric Facilities within the City. Minnesota Power shall maintain such insurance coverage at all times during this Franchise.
6.3. Compliance with Laws; Hazardous Substances. In its operation under this Ordinance, the Company shall observe all federal, state and local laws, rules, regulations and orders with respect to the transmission, distribution, transformation or furnishing of electric energy and the handling of materials, substances and wastes deemed toxic or hazardous to health, natural resources or the environment (collectively, “Hazardous Substances”). Minnesota Power shall remove or remediate any Hazardous Substances located on, in or surrounding its Electric Facilities or caused to be located on, in or surrounding the Public Ways and Public Grounds or elsewhere in the City in compliance with all applicable laws, regulations and lawful government orders, and pay or cause to be paid all costs associated therewith. The indemnification terms and conditions of Section 6.1 shall apply to all claims made against the City by any Person, including any governmental agency, who or which asserts any right to costs, damages or other relief based upon the terms and conditions imposed upon Minnesota Power under this Section 6.3 or which arise from or are related to Minnesota Power’s acts or failure to act in compliance with any law, rule, regulation or lawful order governing Hazardous Substances.
Section 7. Abandoned facilities. Minnesota Power shall comply with City ordinances and Minnesota Statutes, Section 216D.01 et seq., as they may be amended from time to time. Minnesota Power shall maintain records describing the exact location of all abandoned and retired Facilities within the City, produce such records at the City’s request and comply with the location requirements of Section 216D.04 with respect to all Electric Facilities, including abandoned and retired Electric Facilities.
Section 8. Rates and service. The electric service provided and the rates charged by Minnesota Power for electric service, as of the Effective Date, are subject to the jurisdiction of the Commission as provided in Minnesota Statutes, chapter 216B. In the event Minnesota Power shall determine after the Effective Date to change its rates or terms and conditions of electric service, Minnesota Power shall provide reasonable advance Notice of such proposed action to the City.
Section 9. Franchise fee.
9.1. Authority. The City reserves all rights under Minnesota Statutes, Sections 216B.36 and 301B.01 or other law to require a franchise fee at any time during the term of, and in consideration for, this Franchise. Any franchise fee must be imposed by a separate ordinance adopted by the City, which ordinance may not become effective until Minnesota Power’s first full billing cycle that is at least thirty (30) days following Minnesota Power’s filing notifying the Commission of such fee and including a copy of Minnesota Power’s tariff sheet for the franchise fee. Minnesota Power will thereby pass along the costs of such fee to Minnesota Power’s customers located within the City through a surcharge equivalent to the franchise fee in its rates for electric service. Minnesota Power agrees to use its commercially reasonable efforts to obtain such Commission authorization.
9.2. Payment of Fee. Subject to Commission approval, the franchise fee shall be payable monthly and shall be based on the complete billing month for which payment is due. The payment shall be due forty-five (45) days after the end of the month for which the payment is due. Each payment shall be accompanied by a brief report showing the basis for the computation of the payment and such other relevant facts to support the computation as may be requested by the City from time to time. Minnesota Power shall pay the City the franchise fee based upon the prevailing rate and as billed to the customer, but subject to subsequent adjustment in either of the following events: (i) if any amount so billed subsequently becomes uncollectible after reasonable efforts of collection by Minnesota Power or (ii) if Minnesota Power shall, after any said billings, retroactively reduce its rates or costs to its retail electric customers so that a refund is due from Minnesota Power of an amount previously paid or incurred by the retail electric customers. For purposes of calculating the franchise fee, no other adjustment may be made to Gross Revenues, regardless of how calculated or described and whether or not characterized as a rebate, dividend, patronage, refund, return of capital or ownership interest.
9.3. No Waiver or Release. No acceptance of any payment shall be construed as an accord that the payment made is in fact the correct amount, nor shall such acceptance of the payment be construed as a release of any claim that the City may have for further sums payable under the provisions of this Ordinance. All amounts paid shall be subject to audit and re-computation by the City. Minnesota Power agrees to make all records necessary to audit Minnesota Power’s calculation of any payment available for inspection by the City or its designated representative at reasonable times.
9.4. Separate Ordinance. Notwithstanding anything to the contrary, the franchise fee may be changed by the City from time to time by separate ordinance; provided, however, such changes shall not occur more often than once in any calendar year and shall be effective not sooner than the first day of the first calendar month which follows the effective date of the ordinance adopting the change by not less than thirty (30) days subject to Minnesota Power obtaining Commission approval of the new franchise fee rate but no later than ninety (90) days.
Section 10. Defaults. If Minnesota Power 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 thirty (30) days (or fails to initiate the cure of the default within said period and diligently pursue said cure, if the cure of the default cannot reasonably be accomplished within said 30 days) after receiving Notice from the City of such default, the City may elect to cure such default and charge Minnesota Power for the costs thereof.
Section 11. Amendment procedure. The City reserves the right to amend this Franchise by ordinance. Minnesota Power’s rights hereunder are subject to the police power of the City to adopt and enforce ordinances necessary to the health, safety, and welfare of the public, and this Franchise may be amended by the City as deemed necessary or appropriate in the exercise of such power.
Section 12. General provisions of ordinance.
12.1. Governing Law. This Franchise is granted and is intended to be performed in the State of Minnesota and shall be construed and enforced in accordance with the laws of the State of Minnesota. Minnesota Power shall be subject to personal jurisdiction in the State of Minnesota. All actions related to this Ordinance or its enforcement shall be venued in Saint Louis County District Court in the State of Minnesota.
12.2. Dispute Resolution. If either party asserts that the other party is in default in the performance of any obligation hereunder, the complaining party shall notify the other party in writing of the default and the desired remedy. Representatives of the parties must promptly meet and attempt in good faith to negotiate a resolution of the dispute. If the dispute is not resolved withing thirty (30) days of the written notice, the parties may jointly select a mediator to facilitate resolution. The parties will equally share the fees and expenses associated with mediation. If a mediator is not used, or if the parties are unable to resolve the dispute within thirty (30) days after the first meeting with a mediator, either party may commence an action in Saint Louis County District Court to interpret and enforce this franchise or for such other relief as may be permitted by law or equity for breach of contract, or either party may take any other action permitted by law.
12.3. Severability. Every section, provision, or part of this Ordinance is declared separate from every other section, provision, or part and if any section, provision or part shall be held invalid, it shall not affect any other section, provision, or part. This Franchise and other ordinances of the City shall be construed to give effect to all provisions to the maximum extent possible. In the event of a direct conflict between the provisions of any other City ordinance and this Franchise, the terms of this Franchise shall govern.
12.4. Limitation on Applicability. This Ordinance constitutes a franchise between the City and Minnesota Power as the only parties and no provision of this Franchise shall in any way inure to the benefit of any third person (including the public at large) so as to constitute any such person as a third party beneficiary of the agreement or of any one or more of the terms hereof, or otherwise give rise to any cause of action in any person not a party hereto.
12.5. Assignment. The Company may assign this Franchise without the prior approval of, but upon not less than thirty (30) days’ prior Notice to, the City. Such Notice shall include the identity of and contact information for the assignee and the statement of the assignee's plans and intentions for the operation of the Electric Facilities under this Franchise.
Section 13. Acceptance by the company.
13.1. Acceptance by Minnesota Power. Minnesota Power shall, within thirty (30) days after passage and publication of this Ordinance or any amendment thereto, file with the City Clerk in writing its acceptance or rejection as provided in Section 14.2. If such acceptance is not filed or if a rejection is filed within said period, Minnesota Power, by its continuing operations, shall be deemed to have accepted the terms and conditions of this Franchise or any amendment hereto, except with respect to such particulars as it may successfully challenge under the procedures specified in Section 13.2.
13.2. Rejection procedures. A rejection of this Franchise or any amendment hereto may be made by Minnesota Power only upon the grounds that the terms and conditions hereof or of such amendment exceed the lawful authority of the City under the Constitutions or Laws of the United States or the State of Minnesota or are otherwise unlawful. Any rejection shall be submitted in writing to the City, stating with particularity the points and authorities of law upon which Minnesota Power relies. If the City fails to amend this Franchise or otherwise satisfy Minnesota Power’s objections as stated within thirty (30) days of its receipt of Minnesota Power’s rejection, Minnesota Power shall have the right thereafter to seek appropriate judicial or administrative relief based solely upon those provisions it has alleged are unlawful in its rejection notice. If Minnesota Power fails to initiate such legal action within thirty (30) days from the expiration of the aforementioned thirty (30) day period provided for the City’s amendment or cure, Minnesota Power shall be deemed to have waived its objections and to have accepted the terms of this Franchise or any amendment hereto.
Section 14. Publication. Pursuant to section 82 of the Home Rule Charter of the city of Duluth, this ordinance shall be published verbatim in the official paper of the city of Duluth once a week for four successive weeks after its passage.
Section 15. Effective Date. The Effective Date of this ordinance shall be thirty (30) days after its last publication by the City Clerk in accordance with Section 82 of the Duluth City Charter; provided however, that this Ordinance shall not become effective unless Minnesota Power has filed a signed written acceptance of the terms and conditions of this Ordinance with the city clerk prior to January 1, 2027. Notwithstanding the Effective Date of this Ordinance, all terms and conditions of Ordinance 10473 on file in the office of the city clerk as File No. 16-061-O, including but not limited to the Franchise Fee, shall remain in effect until 11:59:59 pm on December 31, 2026.
Statement of Purpose
STATEMENT OF PURPOSE:
This ordinance replaces that City’s 2016 franchise ordinance and agreement with Minnesota Power prior to its expiration. The 2016 ordinance and agreement have a ten (10) year term set to expire December 31, 2026. The current franchise fee is 3%. The history of franchise fees imposed by the City from Minnesota Power electric service is as shown in the attached Document A.