APP. C.—MID AMERICAN ENERGY COMPANY FRANCHISE

ORDINANCE NO. 023-11

AN ORDINANCE GRANTING TO MIDAMERICAN ENERGY COMPANY, ITS SUCCESSORS AND ASSIGNS, THE RIGHT AND NON-EXCLUSIVE FRANCHISE TO ACQUIRE, CONSTRUCT, ERECT, MAINTAIN AND OPERATE IN THE CITY OF CEDAR RAPIDS, IOWA, A NATURAL GAS SYSTEM AND TO FURNISH AND SELL NATURAL GAS TO THE CITY AND ITS INHABITANTS AND AUTHORIZING THE CITY TO COLLECT FRANCHISE FEES FOR A PERIOD OF 25 YEARS.

BE IT ENACTED by the City Council of the City of Cedar Rapids, Iowa:

Section 1. There is hereby granted to MidAmerican Energy Company, an Iowa corporation, hereinafter called "Company", and to its successors and assigns, the right and non-exclusive franchise to acquire, construct, erect, maintain and operate in the City of Cedar Rapids, Iowa, hereinafter called "City", a gas distribution system, to furnish natural gas along, under and upon the public streets, avenues, alleys and other public ways to serve customers within and without the City and to furnish and sell natural gas to the City and its inhabitants. For the term of this franchise the Company is granted the right of eminent domain, the exercise of which is subject to City Council approval upon application by the Company.

The term of this franchise shall be 25 (twenty-five) years beginning from and after the effective date of this ordinance. Either the Company or the City may not less than 90 (ninety) nor more than 180 (one hundred eighty) days prior to the tenth and fifteenth anniversary of the effective date of this ordinance provide written notice to the other party of its desire to amend the franchise. The parties shall negotiate these amendments in good faith for a period of up to ninety (90) days following receipt of notice. If, at the conclusion of the negotiation period, the City determines in good faith that the franchise, if continued without amendment, will have a material or significant adverse impact on the City or the Company's natural gas customers located within the corporate limits of the City, the City may terminate the franchise. The City shall have the burden to objectively demonstrate the material or significant adverse impact. Failure to amend the franchise at the first option does not render invalid the City's second option to amend the franchise.

Section 2. The rights and privileges hereby granted are subject to the restrictions and limitations of Chapter 364 of the Code of Iowa 2009 or as subsequently amended or changed.

Section 3. Company shall have the right to excavate, subject to a reasonable process of self-permitting developed jointly by the Company and City by memorandum of understanding, for the purposes of laying, relaying, repairing or extending gas pipes, mains, conduits, and other facilities provided that the same shall be so placed as not to unreasonably interfere with the construction of any water pipes, drain or sewer or the flow of water therefrom, which have been or may hereafter be located by authority of the City. In the event of an emergency the Company is authorized to excavate and repair Company facilities located in the public right of way without providing prior notification to the City. The memorandum of understanding may also cover appropriate procedures for minimizing the visual impact of utility facilities, abandoned facilities and the potential for future electronic exchange of Company mapping information with the City.

Section 4. The Company shall, excluding facilities located in private easements (whether titled in Company exclusively or in Company and other entities), in accordance with Iowa law including Company's tariff on file with and made effective by the Iowa Utilities Board as may subsequently be amended ("Tariff"), at its cost and expense, locate and relocate its existing facilities or equipment in, on, over or under any public street, alley or other public way in the City in such a manner as the City may reasonably require for the purposes of facilitating the construction reconstruction, maintenance or repair of a public street, alley, other public way or public facility or improvement. If the City has a reasonable alternative route for the street, alley or public way, or location for such facility or improvement or an alternative construction method, which would not cause the relocation of the Company utility installations, the City shall select said alternative route, or construction method. The City shall be responsible for surveying and staking the right of way for City projects that require the Company to relocate Company facilities. If requested the City shall provide, at no cost to the Company, copies of its relocation plan and profile and cross section drawings. If tree removals must be completed by the City as part of a City's project and are necessary whether or not the Company's utility facilities must be relocated, the City at its own cost shall be responsible for said removals. If the timing of the tree removals does not coincide with the Company's schedule for location of its utility facilities, and the Company must remove trees that are included in the City's portion of the project, the City shall either remove the trees at its cost or reimburse the Company for the expenses incurred to remove said trees.

If project funds from a source other than the City are available to pay for the relocation of utility facilities, the City shall attempt to secure said funds and provide them to the Company to compensate the Company for the costs of relocation.

Section 5. In making excavations in any streets, avenues, alleys, or other public way for the installation of gas pipes, conduits or apparatus, Company shall not unreasonably obstruct the use of any streets, alleys or other public way, and shall replace the surface and immediately adjacent areas, restoring it to the condition as existed prior to excavation. The Company shall not be required to restore or modify any street, alley or other public way or other areas in or adjacent to the Company's excavation project to a condition superior to its immediate previously existing condition unless necessary to comply with city, state or federal rules, regulations or law. Company agrees any replacement of road surface shall conform to applicable City code regarding its depth and composition.

Section 6. The City shall give the Company reasonable advance written notice of the vacation of a public way. Vacation shall not deprive the Company of its right to operate and maintain existing facilities on, below, above, or beneath the vacated property. Prior to abandoning or vacating any street, avenue, alley, or other public way where the Company has natural gas facilities, the City shall grant the Company a utility easement for said facilities. If the City fails to grant the Company a utility easement for said facilities prior to abandoning or vacating a street, avenue, alley, or other public way, the City shall at its cost and expense obtain easements for existing Company facilities.

Section 7. The Company shall not be required to relocate, at its cost and expense, Company facilities in the public right of way that have been relocated at Company expense at the direction of the City in the previous five years.

Section 8. Pursuant to relocation of Company facilities as may be required by Sections 3, 4, 5, 6, 7, 8 and 9 of this Ordinance, if the City orders or requests the Company to relocate its existing facilities or equipment in order to facilitate the project of a commercial or private developer or non-public entity, the City shall reimburse or the City shall require the developer or non-public entity to reimburse the Company for the cost of such relocation as a precondition to relocation its existing facilities or equipment. The Company shall not be required to relocate in order to facilitate such private project at its expense.

Section 9. The Company shall indemnify, defend and save harmless the City from any and all claims, suits, losses, damages, costs or expenses, on account of injury or damage to any person or property, caused or occasioned in whole or in part, by the Company's negligence in construction, reconstruction, excavation, operation or maintenance of the natural gas facilities authorized by this franchise; provided, however, that the Company shall not be obligated to defend, indemnify and save harmless the City for any costs or damages to the extent caused by the negligence of the City.

Section 10. Upon reasonable request the Company shall provide the City, on a project specific basis, information indicating the horizontal location, relative to boundaries of the right of way, of all equipment which it owns or over which it has control that is located in city right of way. The Company and City recognize the information provided will, under current Iowa law, constitute public records, but that nonetheless, some information provided will be confidential under state or federal law or both. Therefore, the City shall not release any information with respect to the location or type of equipment which the Company owns or controls in the right of way which may constitute a trade secret or which may otherwise be protected from public disclosure by state or federal law. Furthermore, the City agrees that no documents, maps or information provided to the City by the Company shall be made available to the public or other entities if such documents or information are exempt from disclosure under the provisions of the Freedom of Information Act, the Federal Energy Regulatory Commission Critical Energy Infrastructure requirements pursuant to 18 CFR 388.112 and 388.113, or Chapter 22 of the Code of Iowa, as such statutes and regulations may be amended from time to time.

Section 11. The Company shall construct, operate and maintain its facilities in accordance with the applicable regulations of the Iowa Utilities Board or its successors.

Section 12. During the term of this franchise, the Company shall furnish natural gas in the quantity and quality consistent and in accordance with the applicable regulations of the Iowa Utilities Board or its successors and Iowa law.

Section 13. There is hereby imposed upon and shall be collected from the natural gas customers of MidAmerican Energy Company receiving service pursuant to the Tariff located within the corporate limits of the City and remitted by the Company to the City, a franchise fee from each revenue class as set forth below of the gross receipts, minus uncollectable amounts, derived by the Company from the delivery and sale of natural gas to customers within the corporate limits of the City;

•	Residential Customers	three (3) percent
•	Commercial Customers	three (3) percent
•	Industrial Customers	three (3) percent
•	Public Authority Customers	three (3) percent
•	Distribution (Transportation) Customers	three (3) percent

 

(035-12, 026-13, 005-16)

Section 14. The City may, as allowed by Iowa law, exempt certain types or classes of sales from imposition of the franchise fee, or modify, decrease or eliminate the franchise fee. The City does therefore exempt the customer classes or customer groups in Section 14 from paying franchise fees. The City reserves the right to cancel any or all the franchise fee exemptions and also reserves the right to grant exemptions to additional customers or customer classes in compliance with Iowa law and Section 17 of this ordinance.

• None

(035-12)

Section 15. The City recognizes the administrative burden collecting franchise fees imposes upon the Company and the Company requires lead time to commence collecting said franchise fees. The Company will commence collecting franchise fees on or before the first Company billing cycle of the first calendar month following 90 days of receipt of information required of the City to implement the franchise fee, including the City's documentation of consumers subject to or exempted from City-imposed franchise fee. The City shall provide the information and data required in a form and format acceptable to the Company. The Company will, if requested by the City, provide the City with a list of premises considered by the Company to be within the corporate limits of the City.

Section 16. The City shall be solely responsible for identifying customers subject to or exempt from paying the City imposed franchise fee. The City shall be solely responsible for notifying Company of its corporate limits, including, over time, annexations or other alterations thereto, and customers that it wishes to subject to, or to the extent permitted by law, exempt from paying the franchise fee. The City shall provide to the Company, by certified mail, copies of annexation ordinances in a timely manner to ensure appropriate franchise fee collection from customers within the corporate limits of the City. The Company shall have no obligation to collect franchise fees from customers in annexed areas until and unless such ordinances have been provided to the Company by certified mail. The Company shall commence collecting franchise fees in the annexed areas no sooner than 60 days after receiving annexation ordinances from the City.

Section 17. The City agrees to modify the level of franchise fees to be imposed only once in any 24-month period. Any such ordinance exempting certain types or classes of customers, increasing, decreasing, modifying or eliminating the franchise fee shall become effective, and billings reflecting the change shall commence on an agreed upon date which is not less than 60 days following written notice to the Company by certified mail. The Company shall not be required to implement such new ordinance unless and until it determines that it has received appropriate official documentation of final action by the city council.

Section 18. The City shall indemnify the Company from claims of any nature arising out of or related to the imposition and collection of the franchise fee, except to the extent caused by the Company. In addition, the Company shall not be liable for collecting franchise fees from any customer originally or subsequently identified, or incorrectly identified, by the City as being subject to the franchise fee or being subject to a different level of franchise fees or being exempt from the imposition of franchise fees.

Section 19. The Company shall remit franchise fee revenues to the City no more frequently than on or before the last business day of the month following each quarter as follows:

• January, February and March

• April, May and June

• July, August and September

• October, November and December

The Company shall provide City with notice at least 30 days in advance of any changes made in this collection schedule, including any alterations in the calendar quarters or any other changes in the remittance periods.

Section 20. The City recognizes that the costs of franchise fee administration are not charged directly to the City and agrees it shall, if required by the Company, reimburse the Company for any initial or ongoing costs incurred by the Company in collecting franchise fees that Company in its sole opinion deems to be in excess of typical costs of franchise fee administration.

Section 21. The Company shall not, under any circumstances be required to return or refund any franchise fees that have been collected from City customers and remitted to the City. In the event the Company is required to provide data or information in defense of the City's imposition of franchise fees or the Company is required to assist the City in identifying customers or calculating any franchise fee refunds for groups of or individual customers the City shall reimburse the Company for the reasonable expenses incurred by the Company to provide such data or information.

Section 22. The obligation to collect and remit the franchise fee imposed by this ordinance is modified or repealed if:

1.

Any other person is authorized to sell natural gas at retail to City consumers and the City imposes a franchise fee or its lawful equivalent at zero or a lesser rate than provided in this ordinance, in which case the obligation of Company to collect and remit franchise fee shall be modified to zero or the lesser rate;

2.

The City adds additional territory by annexation or consolidation and is unable or unwilling to impose the franchise fee upon all persons selling natural gas at retail to consumers within the additional territory, in which case the franchise fee imposed on the revenue from sales by Company in the additional territory shall be zero or equal to that of the lowest fee being paid by any other retail seller of natural gas within the City; or

3.

Legislation is enacted by the Iowa General Assembly or the Supreme Court of Iowa issues a final ruling regarding franchise fees or the Iowa Utilities Board issues a final non-appealable order (collectively, "final franchise fee action") that modifies, but does not repeal, the ability of the City to impose a franchise fee or the ability of Company to collect from City customers and remit franchise fees to City. Within a reasonable time of final franchise fee action, the City and Company shall meet to determine whether this ordinance can be revised, and, if so, how to revise the franchise fee on a continuing basis to meet revised legal requirements. After final franchise fee action and until passage by the City of revisions to the franchise fee ordinance, Company may temporarily discontinue collection and remittance of the franchise fee if in its sole opinion it believes it is required to do so in order to comply with revised legal requirements.

The other provisions of this ordinance to the contrary notwithstanding, the Company shall be completely relieved of its obligation to collect and remit to the City the franchise fee as, effective as the date specified below with no liability therefore under each of any of the following circumstances as determined to exist in the sole discretion of Company:

1.

Any of the imposition, collection or remittance of a franchise fee is ruled to be unlawful by the Supreme Court of Iowa, effective as of the date of such ruling or as may be specified by that Court.

2.

The Iowa General Assembly enacts legislation making imposition, collection or remittance of a franchise fee unlawful, effective as of the date lawfully specified by the General Assembly.

3.

The Iowa Utilities Board, or its successor agency, denies the Company the right to impose, collect or remit a franchise fee provided such denial is affirmed by the Supreme Court of Iowa, effective as of the date of the final agency order from which the appeal is taken.

Section 23. Upon implementation of franchise fees, the City shall not, pursuant to Chapter 480A.6 of the Code of Iowa, impose or charge Company right of way management fees for permits for Company construction, maintenance, repairs, excavation, pavement cutting or inspections of Company work sites and projects or related matters.

Section 24. Either City or Company ("party") may terminate this franchise if the other party shall be materially in breach of its provisions. Upon the occurrence of a material breach, the non-breaching party shall provide the breaching party with notification by certified mail specifying the alleged breach. The breaching party shall have 60 days to cure the breach, unless it notifies the non-breaching party, and the parties agree upon a shorter or longer period for cure. If the breach is not cured within the cure period, the non-breaching party may terminate this franchise. A party shall not be considered to be in breach of this franchise if it has operated in compliance with state or federal law. A party shall not be considered to have breached this franchise if the alleged breach is the result of the actions of a third party or the other party.

Section 25. If any section, provision, or part of this ordinance shall be adjudged to be invalid or unconstitutional, such adjudication shall not affect the validity of the ordinance as a whole or any section, provision, or part thereof not adjudged invalid or unconstitutional.

Section 26. This ordinance and the rights and privileges herein granted shall become effective and binding upon its approval and passage in accordance with Iowa law and the written acceptance by the Company. The City shall provide Company with an original signed and sealed copy of this ordinance within ten (10) days of its final passage. The Company shall, within thirty (30) days after the City Council approval of this ordinance, file in the office of the clerk of the City, its acceptance in writing of all the terms and provisions of this ordinance. Following City Council approval, this ordinance shall be published in accordance with the Code of Iowa. The effective date of this ordinance shall be the date of publication.

Section 27. Upon the effective date of this ordinance, all prior natural gas franchises granted to the Company to furnish natural gas to the City and its inhabitants are hereby repealed and all other ordinances or parts of ordinances in conflict herewith are also hereby repealed.

INTRODUCED this 12 ^th day of April, 2011.

PASSED AND APPROVED this 26 ^th day of April, 2011.

CITY OF CEDAR RAPIDS, IOWA

By: ___________
Ron J. Corbett, Mayor

ATTEST:

___________
Amy Stevenson, City Clerk

(023-11, 035-12, 026-13)