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2.4 ERMUSR 06-13-2017 Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Tom Sagstetter—Conservation and Key Accounts Manager MEETING DATE: AGENDA ITEM NUMBER: June 13, 2017 2.4 SUBJECT: Wright-Hennepin Electric Cooperative Association Service Territory Transfer Agreement ACTION REQUESTED: Approve the Orderly Service Territory Transfer Agreement between Wright-Hennepin Cooperative Electric Association and Elk River Municipal Utilities. BACKGROUND: Elk River Municipal Utilities (ERMU) and Wright Hennepin Electric Cooperative Association (WH) have agreed upon a service territory modification that will resolve an electric service territory challenge. DISCUSSION: The territory modification will allow WH to serve 7 existing homes and lots in the Mississippi Cove development in Otsego, MN. In exchange for those 7 sites,ERMU will receive the service territory that includes 11 sites for townhome structures in Wild Flower Villas, also located in Otsego, MN. The service territory exchange agreement was based on actual and estimated energy sales to determine the equitable number of sites in Wild Flower Villas to be exchanged for the existing homes and new home sites located in Mississippi Cove. FINANCIAL IMPACT: None ATTACHMENTS: • Orderly Service Territory Transfer Agreement Page 1 of 1 37 ORDERLY SERVICE TERRITORY TRANSFER AGREEMENT Between WRIGHT-HENNEPIN COOPERATIVE ELECTRIC ASSOCIATION And ELK RIVER MUNICIPAL UTILITIES This agreement entered into this day of June, 2017, (the "Agreement") between Wright-Hennepin Cooperative Electric Association, a Minnesota rural electric cooperative association pursuant to Minnesota Statutes Chapter 308A (the "Cooperative"), and Elk River Municipal Utilities, a Minnesota municipal utility pursuant to Minnesota Statutes Section 412.321 (the "Municipal") (each a "Party," and collectively, the "Parties"). RECITALS A. Under Minnesota law, Minnesota Statutes, Sections 216B.37 — 216B.47, each Party has the exclusive right to provide electric service within its assigned electric service area. B. Minnesota Statutes, Sections 216B.37 - 216B.47, also authorize and permit electric utilities to define and revise their electric service territories by their written consent and agreement. C. The Parties wish to modify their assigned service areas as follows: (1) permanently transferring 7 lots in the Mississippi Cove development that is currently in the Municipal's assigned service area to the Cooperative ("Area 1" or "Cooperative Transfer Area"), and (2) permanently transferring 11 lots in the Wild Flower Villas development that is currently in the Cooperative's assigned service area to the Municipal ("Area 2" or "Municipal Transfer Area"). An overview of these two areas is provided in the map attached hereto as Exhibit A. (the foregoing exchange of service territory rights is referred to herein as the "Exchange") D. The Cooperative currently provides electric service to the 7 lots in the Cooperative Transfer Area. The Parties have authorized the Municipal to provide electric service to the Municipal Transfer Area, and the Municipal is currently providing temporary service to one building. E. The Parties wish to set forth the terms and conditions of their agreement for the Exchange, and to cause a joint petition pursuant to Minn. Stat. § 216B.39, subd. 3 to be filed with the Commission to change the electric 1 38 service boundaries of each Party. NOW THEREFORE, in consideration of the promises exchanged herein, the Parties agree as follows: 1. Description of Exchange: The Parties have agreed to a permanent transfer of the exclusive right and obligation to provide electric service as follows: Transfer to the Cooperative from the Municipal (Area 1): Lots 10- 13 of Block 3 and Lots 1-3 of Block 1 of Mississippi Cove in Otsego Area 1 is further depicted in the map attached as Exhibit B. Transfer to the Municipal from the Cooperative (Area 2): Lots 1-4 of Block 3 and Lots 1-7 of Block 2 of the Villas In Otsego. Area 2 is further depicted in the map attached as Exhibit C. 2. No Transfer of Existing Facilities and Customers: There are no transfers of any electric distribution facilities or equipment, and each Party will retain ownership and use of its respective facilities and equipment. No existing customers will be affected by a change of service provider due to this transfer, based on the existing informal service by exception arrangements presently in place. This transfer will make it easier and more cost-effective to serve customers now, and in the future. 3. Compensation: The Parties agree that no compensation is due for the mutual transfer of service areas. Neither Party shall owe any expense or cost reimbursement to the other in connection with the Exchange, and each Party will pay its own costs and expense associated with this Agreement and the Exchange 4. Reservation of Rights: Except as specifically set forth herein, this Agreement does not modify or limit the legal rights of any Party, or revise any electric service boundaries not expressly set forth herein. 5. No Precedent. The Parties recognize that this Agreement is the result of arms-length negotiations between the Parties and is limited to the Exchange set forth in section 1 above. For any electric service territory matters between the Parties not governed by this Agreement, this 2 39 Agreement does not represent any binding or legal precedent on any party in any such other matter. 6. Request for Commission Approval of the Agreement. Upon execution of this Agreement by all Parties, the Parties will prepare and file a Joint Petition under Minn. Stat. § 216B.39, subd. 3 to the Minnesota Public Utilities Commission (MPUC) by the Parties to modify the assigned service territory to reflect the mutual transfer of assigned service areas according to section 1 above. The Parties will exercise any and all lawful efforts reasonable and necessary to respond to any questions, communicate with customers, and to and assure the transfer of the affected service areas. The Parties will also cooperate in sending in any required notices to affected customers regarding the MPUC proceeding. If the Commission, Department of Commerce, or Office of Energy Security raises any question or challenges any provision of this Agreement, its exhibits, or the due performance thereof, the Parties shall each, at their own expense, exercise any and all lawful efforts reasonable and necessary to respond to said questions and to assure approval. If for any reason the Commission refuses to recognize any service territory change described in Article 1, the Exchange shall be null and void. 7. Miscellaneous. (a) Entire Agreement and Modification. This Agreement (including recitals and exhibits hereto) contains the entire agreement and understandings of the Parties hereto regarding the scope of the Agreement and compensation for the service areas. All previous communications, or agreements, between the Parties hereto, either verbal or written, with reference to the subject matter of this Agreement are hereby abrogated. No amendment, modification or waiver of, or consent with respect to any provision of this Agreement shall be effective unless the same shall be in writing and signed by duly appointed representatives of all Parties and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Headings are provided for convenience and are not part of this Agreement. (b) Binding; Assignment. This Agreement shall inure to the benefit of the Parties hereto and shall be binding on them and their respective legal representatives, successors, and assigns. Provided, however, neither 3 40 Party shall assign this Agreement, voluntarily, involuntarily, or by operation of law, without the prior written consent of the other. (c) Severence. If any provision of this Agreement shall be found invalid or unenforceable, in whole or in part, by a court of competent jurisdiction or the MPUC, then such provision shall be deemed to be modified or restricted to the extent and in a manner necessary to render the same valid and enforceable, or if that is not possible, such provision shall be stricken and deleted from this Agreement, as the case may require, and this Agreement shall then be construed and enforced to the maximum extent permitted by law and with the purpose to achieve the fundamental intent of the Parties. (d) Choice of Laws. This Agreement shall be construed and interpreted in accordance with the laws of the State of Minnesota and excluding any choice of law or rules that may direct the application of laws of another jurisdiction. (e) Agreement Drafted Jointly. The Parties agree that none of the Parties shall be deemed solely responsible for drafting all or any portion of this Agreement, and in the event of a dispute, responsibilities for any ambiguities arising from any provision of this Agreement shall be shared equally among the Parties. (f) Effective Date. The effective date of this Agreement is the date upon which the Agreement has been signed by duly appointed representatives of both Parties. (g) Notice. Any notice permitted or required by this Agreement shall be made in writing and personally served or mailed (postage prepaid, return receipt requested) and shall be effective upon the date of personal service, or if by mail, upon the date of receipt. (h) Counterparts. This Agreement may be executed in counterpart copies by the Parties and each counterpart, when taken together with the other, shall be deemed one and the same executed Agreement. (i) Execution Representations. By executing this Agreement, the Parties acknowledge that they: (a) enter into this Agreement knowingly, voluntarily and freely; (b) have had an opportunity to consult an attorney before signing this Agreement; (c) have not relied upon any representation or statement not set forth herein; and (d) have 4 41 read this entire Agreement, understand all its terms and conditions, and have had any questions concerning the same answered to their full satisfaction. (j) Dispute Resolution. In the event that a dispute arises between the Parties as to the interpretation or performance of this Agreement, then upon written request of either Party, representatives with settlement authority for each Party shall meet in person and confer in good faith to resolve the dispute. If the Parties are unable to resolve the dispute within thirty (30) days, they shall make every effort to settle the dispute through mediation or other alternative dispute resolution methods. If the Parties are unable to resolve the dispute through these methods within an additional thirty (30) day period, the Parties may resolve their dispute through applicable administrative or court proceedings. Notwithstanding the Parties' agreement to utilize alternative dispute resolution methods, each Party reserves its rights and remedies available under the law IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written and the Parties agree to take such additional steps and actions including execution of such instruments and other documents as are reasonably necessary to effectuate the intentions of expressed hereby. Elk River Municipal Utilities Wright-Hennepin Cooperative Electric Association By: Troy Adams P.E. 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