Town of Dagsboro, DE
Sussex County
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Table of Contents
Table of Contents
[HISTORY: Adopted by the Town Council of the Town of Dasboro 9-24-2007. Amendments noted where applicable.]
A. 
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. 
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. 
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]
[1]
Editor's Note: See Ch. 275, Zoning.
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. 
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) 
Summary of previous year's activities in the development of the gas system and total number of customers.
(2) 
Gross and net book values of the facilities used to distribute gas in the Town.
(3) 
Details sufficient to allow the Town to ascertain that the standards prescribed by this agreement are achieved and maintained.
(4) 
Fiscal and financial data sufficient to accurately document franchise fees payable.
(5) 
Notice of any proceedings before any state or federal court, regulatory agency or governmental body that would or may affect this agreement.
B. 
All information provided pursuant to this § A283-8 shall be deemed confidential proprietary information of the company and shall not be disclosed to any third party by the Town.
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. 
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. 
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:
A. 
Town.
(1) 
If to the Town:
The Town of Dagsboro
Attn: Town Manager
504 Main Street
P.O. Box 420
Dagsboro, DE 19939
(2) 
With a copy to:
Robert V. Witsil, Jr.
120 South Bedford Street
P.O. Box 799
Georgetown, DE 19947
B. 
Company.
(1) 
If to Chesapeake:
Chesapeake Utilities Corporation, Inc.
Attn: Director of Natural Gas Operations
350 S. Queen Street
Dover, DE 19904
(2) 
With a copy to:
William A. Denman, Esquire
Parkowski, Guerke & Swayze
P.O. Box 598
Dover, DE 19903
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.