6.5. ERMUSR 05-16-2006Ji
Elk River
Municipal Utilities ~
13069 Orono Parkway ~ phone: 763.441.2020
Elk River, MN 55330 Fax: 763.491.8099
May 4, 2006
To: Elk River Municipal Utilities Commission
Jerry Takle
John Dietz
Jim Tralle
From: Bryan Adams
Subject: Substation Agreement
Connexus Energy & Elk River Municipal Utilities has a substation joint use agreement
for substation north. Connexus Energy desires to utilize our new station 14 bank # 2
substation for a feeder to feed the North Star Business Park and other loads along
Highway 10. The attached agreement reflects the terms and conditions. The green
version shows the changes from the existing North Substation agreement.
Staff recommends approving this agreement for joint use for station 14 bank #2.
Anri121.2006 draft
SUBSTATION JOINT USE AGREEMENT
FOR
ELK RIVER 14 STATION BANK 2
BY AND AMONG
ELK RIVER MUNICIPAL UTILITIES
AND
CONNEXUSENERGY
April 21, 2006 draft
This Distribution Interconnection Ageement, hereinafter referred to as
- Deleted: 2002
"Agreement", is made and entered into this day of 006, by ___-.---'
and among the Elk River Municipal Utilities of the City of Elk River, a municipal
corporation of the State of Minnesota, hereinafter referred to as the "City"; and Connexus
Energy, a Minnesota cooperative corporation. Said parties are sometimes referred to
herein individually as "Party" and collectively as "Parties:; the City and Connexus
Energy are sometimes referred to herein individually as "Utility" and collectively as
"Utilities".
WITNESSETH
0.01 WHEREAS, City owns, operates and maintains an electric distribution
system and other facilities and is responsible for providing electrical energy to its
customers within and adjacent to the City limits; and
0.02 WHEREAS, Connexus Energy owns, operates and maintains an electric
distribution system and other facilities and is responsible for providing electrical energy
to its consumer-owners in service areas defined and certified by the Minnesota Public
Utilities Commission; and
0.03 WHEREAS, Connexus Energy and the City each serve their customers
and consumer owners by means of the 12.5 kilovolt distribution feeders in adjacent areas;
and
0.04 WHEREAS, City is constructing a new 69/12.5 kilovolt 15/28 MVA
distribution substation named Elk River 14 Station Bank 2 substation; and
0~5 WHEREAS, the City is willing_to allow Connexus Energy_to use_the Elk
River ,l4 Station Bank 2 substation.
NOW THERFORE, the Parties agee as follows:
ARTICLE I
FACILITIES AND SERVICES
Deleted: 04
.- Deleted: North
2
Apri121.2006 draft
1.01 Purpose. This Agreement provides a means for Connexus Energy and the
City to serve their distribution loads from the Elk River~l4 Station Bank 2 substation
using equipment and facilities as shown in Exhibit A (*** note -need to develop
attached hereto and made a part hereof.
1.02 Service. Pursuant to this Agreement, the City is obligated to allow
Connexus Energy to use the distribution facilities shown in Exhibit A.
1.03 Expansion. The City will provide for all design, construction, operation
and maintenance of Portion A shown in Exhibit A in a timely fashion. Connexus Energy
will reimburse the City for its annual costs for Portion A based on demand ratios per Art.
III. The City will provide for all design, operation, construction and maintenance of
Portion B shown in Exhibit A at its own expense. Connexus Energy shall provide for all
design, operation, construction and maintenance of Portion C as shown in Exhibit A at its
own expense. If Connexus Energy requires additional facilities, such as another
distribution circuit, it shall require approval from the City. Approval will not be
unreasonably withheld. Connexus Energy would do design and construction of
additional facilities in Portion C, or alternatively, the City may provide the design and
construction. Utilities shall provide proper planning and load forecasting to ensure
timely expansion of facilities.
1.04 Design Capacity Limit. The Parties agree that the design capacity limits
of the Parties facilities will not be exceeded,_and that Connexus Energy_shall limit the
Deleted: North
- Deleted: until expansions are complete
normal (non-emergency) load on it's single feeder to 6 M W unless otherwise mutually
agreed to.~(*** Note to Bryan -This is in response to your request to have a cap on the -- Deleted: .
Connexus usage. ***)
1.05 Power Factor. Each Utility will provide sufficient capacitance and
reactive control on its system in order to ensure minimum reactive flow through the
interconnection.
1.06 Emergencies. Each Utility shall, as soon as possible, notify the system
operators of the other Party when it requires emergency electric service which may
- ----- ,- Deleted:.
require Connexus Energy or the City to exceed their normal firm demand, Notification
of emergency service is required so that: I the capability of the substation is not
-- - .- Deleted:
exceeded, and 2)Yhe eak demands used for substation cost sharing can be adiusted as ",-"""
-----p- - - ----------- ------ - -----------
3
April 21, 2006 draft
appropriate to reflect only non-emergency service. Connexus Energy shall secure
approval from the City before emergency service is put in place. Approval will not be
unreasonably withheld.
1.07 Access and Easements. The Parties hereby grant each other access to the
immediate interconnection location for the purpose of inspecting, constructing, operating,
maintaining, and repairing Connexus Energy's and the City's facilities.
1.08 Additional Backup Interconnection Points. Additional backup
interconnection points may be incorporated into this Agreement by means of a
Supplement or Supplements to this Distribution Interconnection Agreement.
1.09 Transmission or Transformer Failure. In case of transmission or
transformer loss of power, both utilities will make reasonable efforts to provide back up
power and energy from their respective distribution circuits.
ARTICLE II
OPERATION AND MAINTENANCE
2.01 Operation and Maintenance Responsibility. Each Party will be
responsible for the operation and maintenance of its own facilities. Both Utilities shall be
responsible for all annual costs associated with Portion A in Exhibit A as outlined in Art.
III.
2.02 Operation and Maintenance Costs. Each Party shall be responsible for
the operation and maintenance costs of the interconnection facilities it owns as shown in
Portions B and C in Exhibit A. A party may, however, perform certain operation and
maintenance activities on non-owned facilities at the request of the owning Party upon
such terms and conditions as shall be otherwise agreed to.
2.03 Normal Operation. The interconnections will be operated normally
closed and only be opened by mutual agreement of the Utilities system operators.
ARTICLE III
.- Deleted: DEMAND
COST SHARING/ANNUAL FEES
4
April 21, 2006 draft
3.01 ,-- Deleted: Demands
Cost Sharing. _ All design, construction, operation and maintenance costs -"--
of facilities in Portion A, shown in Exhibit A will be done by the City. The annual costs
of the facilities in Portion A will be based on peak demands at the Elk River~l4 Station "" Deleted: North
Bank 2 substation, and shall be the ratio of the Connexus Energy peak demand and City
peak demand divided by the sum of the Connexus Energ, a~~peak demand times
the annual costs (see example). The cost ratio for Connexus shall be limited by the 6
MW firm load limit divided by the 28 MW substation capacity (***Note to Bryn -
Since Connexus usage is limited to 6 MW, our cost sharing responsibility should likewise
be limited. ***). The Monthly peak demands of the City, and Connexus Energy cannot
be less than the previous month's peak. However, the demand of Connexus Energy and
the City shall be adjusted upward or downward as appropriate to reflect the City's
acquisition of Connexus Energy customers when such event occurs. Monthly demands
"- Deleted: substation
shall be the one hour coincident demands at the time of the,GRE peak, unless both parties ""-""
aeree to another method. As the load served by Connexus Energy is reduced due to
territory acquisition by the City, Connexus Energy, at its option, may convert the
interconnection from "normally closed" to normally open" resulting in no further
monthly payments except for the minimum charge.
Examples of Monthly Charges:
Month 1 City = 3,000 KW
Connexus demand = 2,000 KW
Sub demand + 5,000 KW
Month 2 City = 3,500 KW
Connexus demand = 1,800 KW
Sub demand + 5,300 KW
Month 3
City
Connexus demand
Sub demand
= 2,700 KW
= 2,100 KW
+ 4,800 KW
Month 4
City
Connexus demand
Sub demand
= 3,400 KW
= 1,800 KW
+ 5,200 KW
Month 5 City acquires 500 KW load
from Connexus Energy. Re-adjust
Connexus Energy pays 1/12:
2,000 K *Annual Cost
[3,000 + 2,000
Connexus Energy pays 1 / 12:
2,000 KW *Annual Cost
[3,500 + 2,000
Connexus Ener y pays 1/12:
2,100 KW *Annual Cost
3,500 + 2,100
Connexus Ener y pays 1 / 12:
2,100 KW *Annual Cost
,500 + 2,100
Connexus Ener y pays 1/12:
C 1,600 KW~*Annual Cost
April 21, 2006 draft
maximum demands as follows: 4,000 + 1,600
City = 4,000 KW
Connexus = 1,600 KW
5,600 KW
Month 6 City acquires additional 1,000 KW
load from Connexus Energy.
City = 5,600 KW
Connexus = 0 KW
3.02 Annual Costs. The City sha
Connexus Energy exercises
its option to convert
substation to Normally
open interconnection and
monthly charge defaults to
$200 monthly minimum
Il determine its budgeted annual costs
for Portion A (Exhibit A). The 200~budgeted annual costs are as follows (*** Note -
ERMU needs to update***1
.- Deleted:3
- -- Deleted::
1) Operations and Maintenance $~ _------ Deleted: s,ooo
2) Administrative and General __________ ____ ______ __ _
$ _
-- Deleted: 1,000
3) Depreciation and Interest ~_ __-__-- Deleted: »,66~
4) Payment in lieu of Taxes ~ ~______________________________ __________- Deleted: ass
Total annual costs:
--------------------------- ------ ------- -- Deleted: z4sso
After the calendar year is completed, a `true-up' billing or payment shall be made to
Connexus Energy to reflect differences between budget and actual costs. Each Party
shall, at all reasonable times, have the right to audit and inspect such other Party's
records and/or documents as may be related to its performance of this Agreement. The
minimum monthly charge to Connexus Energy from the City for use of the facilities is
$200.00/month.
ARTICLE IV
BILLING AND PAYMENT
4.01 Billing Procedures. Each Utility shall bill the other Utility monthly by
first class mail or other electronic means as mutually agreed, for services provided
hereunder during the previous month in accordance with the provisions of Article III.
Such bills shall be rendered on or before the tenth day after the end of the month during
which service was furnished.
6
April 21.2006 draft
4.02 Delayed Payment Charge. Payments not received on or before the close
of business on the 20~' day after the end of the month during which service has been
provided shall be subject to a three percent (3%) late payment charge.
ARTICLE V
FORCE MAJEURE
No Party shall be liable to any other Party for its failure to perform all or any part of this
Agreement when such failure is caused by or arises out of any event or circumstance
which is reasonably beyond its control and not caused by said Party's negligence.
7
April 21, 2006 draft
ARTICLE VI
GENERAL
6.01 Metering. Connexus Energy and City will provide metering as shown in
Exhibit A. Metering will be tested on an annual basis. Either Party has a right, upon 10-
day notice, to test or observe testing of their respective meters.
6.02 Limitation of Liability. Notwithstanding anything to the contrary herein,
the Parties shall have no liability to each other or for any indirect, special or
consequential, damages including but not limited to loss of use, revenues or profits.
6.03 Arbitration. Arbitration of disputes between the parties with respect to
any provision of this Agreement shall be handled as follows:
A) Any controversy, claim, counterclaim, dispute, difference, or
misunderstanding arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration. The Party desiring
arbitration shall demand such arbitration by giving written notice to the
other party setting forth the point or points in dispute. Any such
arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect,
subject to the qualification that the arbitrator named shall be competent by
virtue of education and experience in the subject matter.
B) Each Party shall have the rights of discovery in the manner provided under
the rules governing civil actions in State district court in the State of
Minnesota. The arbitrator shall specifically consider all factors relevant to
the reasonableness of each Party's position regarding the dispute
including, but not limited to, 1) the facts known and the facts that should
have been known to each Party at the time of action or inaction giving rise
to the dispute, 2) the time available in which to act, and 3) other factors
relevant under the circumstances. In arriving at a decision, the arbitrator
necessarily must interpret and construe this Agreement; however, nothing
contained herein shall be deemed to permit the arbitrator to waive or
change any of the express provisions of this Agreement, including this
provision
C) Each Party shall bear its own costs related to the arbitration and the costs
in connection with arbitrator shall be paid in equal parts by the Parties
involved in the arbitration unless the award shall specify otherwise.
Pending the fmal decision of the arbitrator of a dispute hereunder, all
Parties agree to diligently proceed with the performance of all obligations,
including all payments, required by this Agreement. The decision of the
Anri121, 2006 draft
arbitrator may be enforced by any court having jurisdiction over the Party
against which the decision is rendered.
D) This Section 6.03 shall survive termination of this Agreement.
6.04 Governing Law. This Agreement shall be interpreted and governed by
the laws of the State of Minnesota, or the laws of the United States, as applicable.
6.05 Notices. Any written notice required or authorized under this Agreement
from one Party to the others shall be delivered or mailed by first class mail, postage
prepaid, as follows, unless otherwise agreed to:
General Manager President and CEO
Elk River Municipal Utilities Connexus Energy
13069 Orono Parkway _ _ _ ___ _______________ _ _______________ ___ 14601_Ramsey Blvd. _---- ~e~eted: s22x,~gn~enue
Elk River, MN 55330 Ramsey, MN 55303
6.06 Successors and ASS1EnS. Except as may be required by the terms of any
mortgage or security interest granted or given by Connexus Energy to any third party
covering all or substantially all of Connexus Energy's assets, none of the provisions of
this Agreement, whether in whole or in part, shall be assigned by any Party to any third
party without the written consent of the other Parties which consent shall not be
unreasonably withheld.
6.07 Term of Agreement. This Agreement shall become effective as of the
date first above written and shall remain in effect for a period of five (5) years.
Thereafter, it shall continue in full force and effect for an indeterminate period of time
subject, however, to the right of City or Connexus Energy to terminate upon not less than
five (5) years prior written notice to be given by the terminating Utility to the other
Utility. Connexus Energy has the right to terminate the agr~eementprior to the 5 year
notice period, if either, a) Connexus Energy has requested more feeders and capacity
from the substation and the City refuses to provide the additional capacity*** note to
Bryan -this gives Connexus the option to build its own substation if ERMU cannot
provide the additional capacity.. ***) b) Connexus Energy deems it no longer needs use
of the Elk River 14 Station Bank 2 substation as a result of the City's territory acquisition
of Connexus Energy's system.
April 21, 2006 draft
6.08 Headings. Article and paragaph headings are used herein for reference
purposes only and shall not be used to construe or interpret the meanings thereof.
IN WITNESS WHEREOF, the parties have caused this Ageement to be duly
executed as of the day and year first above written.
ELK RIVER MUNICIPAL UTILITY CONNEXUS ENERGY
(CITY)
By By
Its Its
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