APPENDIX B FRANCHISESAPPENDIX B FRANCHISES\ORD. NO. 292 (NATURAL GAS)

AN ORDINANCE OF THE CITY OF MONTEZUMA, KANSAS GRANTING TO PEOPLES NATURAL GAS COMPANY, DIVISION OF INTERNORTH, INC., ITS LESSEES, SUCCESSORS AND ASSIGNS A NON-EXCLUSIVE AUTHORITY FOR A PERIOD OF 10 YEARS TO ERECT, MAINTAIN AND OPERATE, A GAS DISTRIBUTION SYSTEM AND ANY AND ALL NECESSARY MAINS, PIPES, SERVICES AND OTHER APPURTENANCES THEREUNTO APPERTAINING IN, UPON, OVER, ACROSS AND ALONG THE STREETS, ALLEYS, BRIDGES, AND PUBLIC PLACES OF THE CITY OF MONTEZUMA, AND FOR THE TRANSMISSION, DISTRIBUTION AND SALE OF NATURAL AND/OR MIXED GAS FOR LIGHTING, HEATING, INDUSTRIAL AND ALL OTHER USES AND PURPOSES IN THE CITY OF MONTEZUMA AND FOR THE PURPOSE OF TRANSMITTING, TRANSPORTING AND CONVEYING SUCH GAS INTO, THROUGH OR BEYOND THE IMMEDIATE LIMITS OF TOWNS TO OTHER TOWNS, CITIES AND CUSTOMERS, AND PRESCRIBING THE TERMS AND CONDITIONS UNDER WHICH THE COMPANY IS TO OPERATE, AND REPEALING ORDINANCE NO. 168 OF THE CITY OF MONTEZUMA.

Section 1. That Peoples Natural Gas Company, Division of InterNorth, Inc., its lessees, successors and assigns, hereinafter referred to as grantee, be and are hereby granted a non-exclusive authority for a period of 10 years, to erect, construct, maintain and operate, a gas distribution system and any and all necessary mains, pipes, services and other appurtenances and equipment thereunto appertaining, in, upon, over, across and along the streets, alleys, bridges and public places in the city for the transmission, distribution and sale of natural and/or mixed gas for lighting, heating, industrial and all other uses and purposes in the city and for the purpose of transmitting, transporting and conveying such gas into, through or beyond the immediate limits of towns to other towns, cities and customers.

Section 2. Whenever the grantee, in the construction or maintenance of its system or in the installation of any extension thereto, shall cut into or take up any pavement or shall make any excavation in any street, avenue, alley or public place, within the corporate limits of the city, the same shall be done in a manner so as not to unduly interfere with the use of such thoroughfares by the public. The grantee shall use such safeguards as may be necessary to prevent injury to persons or property during such construction work and upon its completion, all pavement shall be replaced in as good condition as it was before taken up. All excavations shall be refilled and all obstructions shall be removed at the expense of the grantee and to the satisfaction of the city. In the event that the grantee shall fail to comply with the provisions of this sections after having been given reasonable notice, the city may do such work as may be needed to properly repair the thoroughfare and the cost thereof shall be repaid to the city by the grantee.

Section 3. The grantee in constructing and maintaining the gas distribution system, and in entering and using the streets, highways, avenues, alleys and public places in the city and in laying and installing its mains, services, piping and related appurtenances and equipment, shall not in any manner interfere with or injure any improvement which the city now has or may hereafter have upon any of its streets, alleys, highways or public places. Grantee shall bear its costs associated with any removal or relocation of its facilities. Grantor and grantee shall confer with one another prior to construction, maintenance, removal, or relocation of an piping, appurtenances, or equipment by the grantee to provide minimal interference with and damage to any improvement which the city or the citizens now have or may hereafter acquire.

Section 4. Grantee agrees for and in behalf of itself, its lessees, successors and assigns, that for and during the term and period of this grant, it will maintain in the city an adequate, modem, standard and sufficient gas system and equipment and to maintain and operate the same in a modem and adequate fashion.

Section 5.This ordinance is granted subject to all conditions, limitations and immunities now provided for and applicable to the operations of a public utility, by the laws of the State of Kansas. The rates to be charged for natural gas service within the city and the rules and regulations with reference to the character, quality and standards of service to be furnished by grantee shall be under the jurisdiction and control of such regulatory body as may, from time to time during this grant, be vested by law with authority and jurisdiction of the rates, regulations and quality and standards of service to be supplied by grantee.

Section 6. The grantee shall, at all times, maintain an adequate pressure and adequate supply of clean, standards gas of the British Thermal Unit heating value of not less than 800 British Thermal Units per cubic foot of gas. Should the British Thermal Units fall below 800, the rate then in effect shall be automatically and correspondingly lowered and reduced during any period or periods of time in which such lower British Thermal Unit value shall be furnished. The city shall have the privilege of requesting grantee to furnish satisfactory proof of British Thermal Unit content of the gas.

Section 7. The grantee shall hold the city harmless from any and all claims and actions, litigation or damage, arising out of the passage of this ordinance or of the construction, erection, installation, maintenance or operation of its properties operated by authority of this ordinance within the corporate limits of the city or the negligence of its employees in the operation thereof, including the court cots and attorney fees in making defense against such claims. A copy of the process served upon the city shall be served by the city upon the grantee. The grantee shall have the right to defend in the name of the city and to employ counsel for such purpose.

Section 8. If the grantee shall be in default in the performance of any of the terms and conditions of this ordinance and shall continue in default for more than 30 days after receiving notice from the governing body of the city of such default, the governing body may, by ordinance duly passed and adopted, terminate all rights granted under this ordinance to the grantee. The notice of default shall specify the provision or provisions in the performance of which it is claimed the grantee is in default. The notice shall be in writing and served in the manner provided by the laws of Kansas for the service of original notices in civil actions.

Section 9. That in consideration for the grant and in compensation for the use and occupancy of the streets, alleys and public grounds, the grantee, its lessees, successors and assigns shall make a report of gross receipts and shall pay into the treasury of the city, semi-annually, three percent of grantee’s gross receipts from the sale of natural gas to domestic and commercial consumers who receive, are billed and pay for such gas at a rate provided for in the general rate schedule of the grantee which is applicable to the sale of gas in the city for domestic and commercial uses only. The amounts so paid by grantee to city shall be deemed to comply fully with payments provided for in K.S.A. 12-2001, and shall be in lieu of all Kansas occupation license or other excise taxes. Grantee shall submit payment to city with a certification of grantee’s gross receipts and the franchise tax to be paid pursuant to this section. Both parties to this agreement expressly agree that in no manner are they intending to enter into a partnership, either general or limited, or joint venture with one another.

Section 10. Ordinance No. 168 of the city as the same has been amended, is hereby repealed as of the effective date hereof.

Section 11. Grantee will from time to time during the term of this ordinance make such enlargements and extensions of its distribution system as the business of the grantee and the growth of the city justify, in accordance with its rules and regulations relating to customer connections and main and service line extensions currently in effect and on file from time to time with the Kansas Corporation Commission or other competent authority having jurisdiction in the premises; provided, however, that no obligation shall extend to, or be binding upon the grantee, to construct or extend its mains or furnish natural gas or natural gas service within the city if grantee is, for any reason, unable to obtain delivery of natural gas at or near the boundaries of the city or an adequate supply thereof to warrant the construction or extension of its mains, for the furnishing of such natural gas or gas service; provided, further, that when the amount of natural gas supplied to grantee at or near the city limits of the city is insufficient to meet the firm requirements of connected or new consumers, grantee shall have the right to prescribe reasonable rules and regulations for allocating the available supply of natural gas for such firm requirements to domestic, commercial and industrial consumers in that order of priority.

(11-5-84)