[HISTORY: Adopted by the Town Council of the Town of Dasboro 9-24-2007.
Amendments noted where applicable.]
A.Â
The Town of Dagsboro (the "Town"), located in the State
of Delaware, hereby grants unto Chesapeake Utilities Corporation, a Delaware
Corporation, its successors or assigns ("Chesapeake" or the "Company"), the
nonexclusive right, privilege and franchise to carry on within the municipal
limits of the Town, inclusive of annexation areas granted hereafter, the business
of acquiring, distributing and selling natural or mixed gas ("gas") for light,
heat, power and other purposes (this "agreement"). The nonexclusive right,
privilege and franchise hereby granted shall be deemed to include the right
to construct, operate and maintain in, along and upon the streets, alleys,
bridges, public highways and other public places within the Town, gas mains,
valves, manholes, meters, service connections, and other appurtenances for
the purpose of distributing gas for light, heat, power and other purposes
to the Town and the inhabitants thereof. The company's rights hereunder shall
not be assigned without the consent of the Town, which consent shall not be
unreasonably withheld, provided the assignee is a suitable, reputable and
competent distributor of gas.
B.Â
The term of this agreement shall be for the initial term
of 15 years from the effective date hereof, unless terminated sooner in accordance
with the other terms and conditions set forth herein. This agreement shall
automatically renew for an additional term of five years unless either party
hereto provides the other party with written notice of termination at least
one year prior to the expiration of the initial term.
C.Â
The Town may request reasonable extensions of the system
to serve residents and/or nonresidents of the Town. In evaluating a request
for an extension, Chesapeake shall comply with the terms and conditions of
Chesapeake's line extension policy, as set forth in Chesapeake's tariff on
file with the Delaware Public Service Commission. After Chesapeake, at its
sole expense, has conducted a cost analysis of any such request by the Town
to extend the system, the financial responsibility of Chesapeake, the Town,
the property owner, and any other party shall be reasonably determined, subject
to the terms and conditions of Chesapeake's line extension policy.
Chesapeake, for itself, its successors and assigns, covenants and agrees
to indemnify and hold harmless the Town, its elected officials, directors,
officers, agents, employees or designees, of and from any and all damage,
injury, claim, penalty, judgments, costs, charges, expenses (including reasonable
attorney's fees) and/or any other liability of any nature to the extent said
claim arises directly or indirectly from the exercise of Chesapeake's rights,
privileges and franchise under this agreement, including, but not limited
to, any liability by reason of the distribution of gas under this agreement,
and in connection therewith, the operation or use of streets, alleys, bridges,
public highways or other public places by Chesapeake. Notwithstanding the
foregoing, Chesapeake shall not be obligated to indemnify the Town, its directors,
officers, agents, employees or designees for any claim or liability to the
extent said claim arises directly or indirectly out of the negligence of the
Town, its directors, officers, agents, employees, or designees. It is expressly
understood and agreed that Chesapeake is and shall be deemed to be an independent
contractor for purposes of this agreement and shall therefore be solely responsible
to all parties for its respective acts and/or omissions. This indemnification
shall survive the termination of this agreement. The Town shall be added as
an additional insured under Chesapeake's general public liability policy providing
minimum coverage in the amount of $1,000,000 per occurrence and $5,000,000
in aggregate. Chesapeake shall, at its sole cost and expense, provide and
keep in force a general liability insurance policy protecting and indemnifying
Chesapeake and the Town. A copy of a certificate of insurance for the referenced
policy shall be provided annually to the Town evidencing the validity of said
insurance coverage.
Before any street, alley, bridge, public highway or other public place
is opened, obstructed or in any manner interfered with for the purpose of
altering, installing or making additions to any of the gas mains, valves,
manholes, meters, service connections, or other appurtenances for any other
purpose, written application shall be made to the Town Council or Town Manager
or such other person as the Town Council shall from time to time designate,
setting forth in general terms the nature, location and extent of openings
or obstructions desired. Prior to the commencement of any work, a permit shall
be obtained by the company from said Town Council or Town Manager or such
other designated person, which permit shall not be unreasonably withheld.
All reasonable specifications set forth in said permit as to the minimum or
maximum area or depth or both for openings or other matters shall be observed
by the company.
The repairing and restoring of all openings and obstructions to the
condition of the adjacent road bed shall be completed by the company or by
a firm or person employed by the company as soon as practical and in accordance
with the provisions of 26 Del. Code Section 1301(b)(2)a. All work shall be
completed in accordance with Town standards or, if none, reasonable and customary
standards of road construction and at the sole expense of the company. If
without good cause the company fails to make such repairs and restorations
as soon as practical after the completion of work, the Town shall have the
right to make such repairs or restorations or to employ a person or firm to
make such repairs and restorations and charge the company for all reasonable
costs of such repairs and restoration of said openings.
So long as the proposed location of any gas mains, valves, manholes,
meters, service connections, or other appurtenances or the erection, laying
or removal of the same, will not unnecessarily interfere with ordinary travel
and/or the use of the streets, utilities, alleys, bridges and public ways
of the Town, and/or unnecessarily interfere with the use and enjoyment of
private property, and otherwise complies with this agreement, the Town Council,
Town Manager or other designated person shall approve the same and issue a
permit or permits therefor. Gas storage tanks, if any, are subject to permitting
processes in accordance with the Town's zoning code.[1]
The determination of the company's rates shall be subject solely to
the rules and regulations of such state or federal authority that shall have
jurisdiction over this type of industry or enterprise.
In consideration of the granting of this franchise and pursuant to 26
Del.C. § 1301, the company shall pay the Town a franchise fee in
the amount of $0.0181 per 100 cubic feet (ccf) of gas delivered to customers
through the company's distribution system within the limits of the Town during
the term hereof. The company is authorized, subject to any necessary approvals
from any state or federal regulatory body having jurisdiction over the company,
to collect said franchise fee from the company's customers within the Town,
including any future annexations of the Town, by way of a surcharge on the
customer's bill. The franchise fee otherwise payable hereunder shall not apply
to any gas delivered to any customer of the company from whom the company
is prohibited by law from collecting said surcharge. The franchise payable
hereunder shall be paid annually based upon gas delivered for the period January
1 through December 31. Payment shall be due prior to March 1 of the following
year. The company will advance franchise fees to the Town in the amount of
$30,000 in three installments. This advance of franchise fees shall be recovered
from the company's customers, as set forth herein, and is not considered reimbursable
to the company by the Town. No later than March 1 of the year immediately
following the mutual execution of this agreement, the company shall advance
a franchise fee payment in the amount of $10,000. No later than March 1 of
the second year immediately following the mutual execution of this agreement,
the company shall advance a franchise fee payment in the amount of $10,000.
No later than March 1 of the third year immediately following the mutual execution
of this agreement, the company shall advance a franchise fee payment in the
amount of $10,000. The total of the three advance payments shall be retained
from any funds collected from the company's customers in the Town until such
time as the total advance of $30,000 has been recovered. Subsequent to full
recovery of the advance payments, all franchise fees collected from the company's
customers in the Town will be transferred to the Town annually. In the event
the Town grants additional nonexclusive franchises for the purpose of carrying
on the business of acquiring, distributing and selling natural or mixed gas
for light heat, power and other purposes, each such additional franchisee
will be required to pay the Town fees at least equivalent to the fees for
which the company is obligated pursuant to this agreement, or any subsequent
franchise agreements, between the company and the Town.
A.Â
During the term of this agreement, the company shall
submit a written annual report to the Town, upon request, within three months
of the end of the company's fiscal year and in a form approved by the Town,
including the following information:
(1)Â
Summary of previous year's activities in the development
of the gas system and total number of customers.
(2)Â
Gross and net book values of the facilities used to distribute
gas in the Town.
(3)Â
Details sufficient to allow the Town to ascertain that
the standards prescribed by this agreement are achieved and maintained.
(4)Â
Fiscal and financial data sufficient to accurately document
franchise fees payable.
(5)Â
Notice of any proceedings before any state or federal
court, regulatory agency or governmental body that would or may affect this
agreement.
All real property of the company within the corporate limits of said
Town shall be at all times subject to taxation in accordance with any law
now or hereafter enacted; provided, however, the company shall have the right
to terminate this agreement if the Town hereafter enacts a tax on the company's
property or profits or otherwise levies a tax on the company which does not
apply to all businesses selling products or services within the Town, including
but not limited to other energy providers such as propane dealers and distributors,
oil dealers and distributors, and electric providers.
Subject to the provisions of the federal bankruptcy laws, the Town shall
have the right to cancel this agreement 120 days after the appointment of
a receiver or trustee to take over and conduct the business of the company,
unless such receivership or trusteeship shall have been vacated prior to the
expiration of said 120 days or unless:
A.Â
Within 120 days after the election or appointment, such
receiver or trustee shall have fully complied with all the provisions of this
agreement and remedied all defaults thereunder; and
B.Â
Such receiver or trustee, within said 120 days, shall
have executed an agreement, duly approved by the court having jurisdiction
in the premises, whereby such receiver or trustee assumes and agrees to be
bound by each and every provision of this agreement.
For the purpose of this agreement, the following terms, phrases, words
and their derivations shall have the meaning given herein. When not inconsistent
with the context, words used in the present tense include the future, words
in the plural number include the singular number and words in the singular
number include the plural number. The word "shall" is mandatory and "may"
is permissive. Words not defined shall be given their common and ordinary
meaning.
During the term of this agreement, the company intends to construct
certain gas distribution facilities within the Town. For any such investments
in gas distribution facilities made by the company, the Town will not bear
the financial risk associated with the company's investment in such distribution
facilities.
This agreement shall become effective and shall constitute a binding
contract between the Town and the company on the latter of (a) the date when
the same shall have been duly adopted by a majority vote of the Council of
the Town in any regular or special meeting wherein action is taken in compliance
with the Town Charter; or (b) the date when the provisions hereof shall have
been accepted by the company as signified by the company's execution. This
agreement is also enacted pursuant to and in the manner provided for in 26
Del.C. § 1301. Performance of the terms of this agreement shall
commence on the effective date of this agreement.
The Town shall have the unilateral right to cancel this agreement any time after a period of the first eight years and to purchase and take over operation of the company's gas distribution system within the municipal limits of the Town, including the annexed areas. The Town will provide at least a twelve-month notice to exercise this right. In the event the Town exercises the purchase right described in this § A283-14, the price that it will pay the company for its investment in the gas distribution assets will be 225% of the net book value of such gas distribution assets. The assets that may be purchased by the Town pursuant to this § A283-14 excludes any gas transmission facilities owned by Eastern Shore Natural Gas Company ("ESNG") that exist within the municipal limits at the time of the purchase.
While this agreement is in effect, the company will be responsible for
maintaining transportation capacity on ESNG and interstate pipeline systems
upstream of ESNG and also purchasing gas supply for the sale of gas to the
Dagsboro sales service customers. If and when the Town purchases and takes
over control of the gas distribution system the company shall, at the request
of the Town, assign or release its gas transportation capacity and/or storage
contracts with interstate and intrastate pipelines and gas supply contracts
executed by the company, which were entered into for the purpose of serving
its gas customers in the Town. Upon assignment of these contracts, the Town
will be responsible for the provisions of these contracts. In the event these
contracts do not provide for assignment or release to the Town, the company
will assist the Town with the acquisition of alternative transportation and
gas supply contracts.
Chesapeake warrants and represents that this agreement represents the
binding obligation of Chesapeake and that Chesapeake has acquired, or prior
to the effective date will acquire, any and all necessary approvals from any
third party whose approval is necessary, including but not limited to any
approvals required by the Delaware Public Service Commission.
Chesapeake shall comply with all applicable federal, state and local
laws, ordinances and regulations related to the provision of gas services
under this agreement and any activity related thereto, including, but not
limited to, any rules and regulations adopted by the Delaware Public Service
Commission, the Underground Utility Damage Prevention and Safety Act of Title
26 of the Delaware Code (as amended) and Chapter 13 ("Gas, Water and Oil Corporations")
of Title 26 of the Delaware Code (as amended).
Any notice required herein shall be given by registered or certified
mail, postage prepaid, addressed as follows:
This agreement comprises the entire agreement between the parties hereto
relative to the subject matter hereof, and upon the effective date hereof
no earlier agreements, promises or other understandings entered into by either
party or its predecessors or assignors in connection therewith shall be of
any force or effect.
This agreement shall be governed by the laws of the State of Delaware,
and the parties hereto agree that the courts of Delaware shall have jurisdiction
over any case or controversy and hereby consent to such jurisdiction.
In the event that any part of this agreement is ruled invalid or unenforceable,
the parties agree that this agreement is deemed severable and that the balance
of the terms will remain in full force.
This agreement shall not be amended except in writing executed by all
parties hereto.
The fact that one party has drafted this agreement shall in no way be
used against that party in construing the terms, conditions, and obligations
hereunder.
