AN ORDINANCE, granting to Kansas Gas Service, a Division of ONEOK, Inc., its successors and assigns, a natural gas franchise, prescribing the terms thereof and relating thereto, and repealing all ordinances or parts of ordinances inconsistent with or in conflict with the terms hereof.

BE IT ORDAINED BY THE GOVERNING BODY OF THE CITY OF ANDOVER, KANSAS:

SECTION I. That in consideration of the benefits to be derived by the City of Andover, Kansas, (“City”), and its inhabitants, there is hereby granted to Kansas Gas Service, a Division of ONEOK, Inc. (“Company”), said Company operating a system for the transmission and distribution of natural gas in the State of Kansas, the right, privilege, and authority for a period of ten (10) years from the effective date of this ordinance, to occupy and use the several streets, avenues, alleys, bridges, parks, parking areas, and public places of said City, for the placing and maintaining of equipment and property necessary to carry on the business of selling and distributing natural gas for all purposes to the City, and its inhabitants, and through said City and beyond the limits thereof; to obtain said natural gas from any source available; and to do all things necessary or proper to carry on said business.

SECTION 2. As further consideration for the granting of this franchise, and in lieu of any city occupation, license, or permit fees, or revenue taxes, the Company shall pay to the City during the term of this franchise five percent (5%) of the gross cash receipts from the sale of natural gas and transportation services to all consumers within the corporate limits of the City, such payments to be made monthly for the preceding monthly period. Gross cash receipts shall not include other operating revenues received by the Company, which are not related to the sale or transportation of natural gas. These include, but are not limited to, connection fees, disconnection and reconnection fees, temporary service charges, delayed or late payment charges, collection fees, and returned check charges as such terms are used in tariffs or in the natural gas industry.

SECTION 3. All mains, services, and pipe which shall be laid or installed under this grant shall be so located and laid as not to obstruct or interfere with any water pipes, drains, sewers, or other structures already installed. Company shall inform the City when it will be working within the street rights of way. This information shall be provided in a form which identifies the location of the work, the general nature of the work being performed, the name of the contractor performing the work, the dates the proposed work will be performed, and sites where boring under the right of way will be required. Company shall also inform the City of the date when such work is completed. Company shall pay a fee to the City to supplement the cost the City incurs inspecting the work site. The fee will apply to each separate work site and shall be calculated by the City and billed on a monthly basis. In the event of an emergency, Company shall have the right to commence work without prior notice to the City, but shall provide notice as soon as practicable thereafter.

SECTION 4. Company shall, ill doing the work in connection with its said gas mains, pipes, and services, avoid, so far as practicable, interfering with the use of any street, alley, avenue, or other public thoroughfare, it shall at its own expense and in a manner satisfactory to the duly authorized representatives of the City, replace such paving or surface in substantially as good condition as before said work was commenced.

SECTION 5. In addition to the assessment of franchise fees on transportation revenues set forth in Section 2, the City may by separate Ordinance provide for the assessment and collection of additional franchise fees on all natural gas transported (transport gas) by the Company or by others to any consumer or user within the City through the facilities of the Company located in the public right of way and such ordinance may include an assessment for the value of the commodity. Such ordinance shall provide that the customer transporting gas through the facilities of the Company shall be solely responsible for the payment of any applicable franchise fee associated with the commodity value of the gas, but said franchise may grant to the Company the authority to collect on behalf of the City the total compensation to be made to the City by other parties using the Company's facilities for distribution of transport gas. Such franchise assessment shall be compatible with Company's billing system. To the extent any transporter using the Company's facilities fails to pay any amounts owed by transporters under the separate ordinance, Company shall notify the City of such amount and City shall be solely responsible for collecting any sums owed.

SECTION 6. It is recognized that the natural gas to be delivered hereunder is to be supplied from a pipeline system transporting natural gas from distant sources of supply; and the Company, by its acceptance of this franchise as hereinafter provided, does obligate itself to furnish natural gas in such quantity and for such length of time, limited by the terms hereof, as the said sources and said pipelines are reasonably capable of supplying.

SECTION 7. Company, its successors and assigns, in the construction, maintenance, and operation of its natural gas system, shall use all reasonable and proper precaution to avoid damage or injury to persons and property, and shall hold and save harmless the City from any and all damage, injury, and expense caused by the negligence of said Company, its successors and assigns, or its or their agents or servants.

SECTION 8. After the approval of this Ordinance by the City, Company shall file with the City Clerk of the City its written acceptance of this Ordinance. Said Ordinance shall become effective and be in force and shall be and become a binding contract between the parties hereto, their successors and assigns, no later than the first cycle of the monthly billing cycle which begins no later than sixty (60) days after its passage and approval by the City, acceptance by the Company, and publication in the official City newspaper. In its letter of acceptance, Company shall identify the effective date as set forth above and Company shall begin charging its customers for those fees set forth in Section 2 above on that date.

SECTION 9. This Ordinance, when accepted as above provided, shall constitute the entire agreement between the City and the Company relating to this franchise and the same shall supercede and cancel any prior understandings, agreements, or representations regarding the subject matter hereof, or involved in negotiations pertaining thereto, whether oral or written, 2 shall be binding upon the parties, including their successors and assigns, and shall not be amended or further obligations imposed without mutual consent of the parties hereto.

SECTION 10.

I.     Upon written request of either the city or the Company, the franchise may be reviewed after five (5) years from the effective date of this ordinance and either the City or the Company may propose amendments to any provision of this franchise by giving thirty days written notice to the other of the amendment(s) desired. The City and the company shall negotiate in good faith in an effort to agree upon mutually satisfactory amendments(s).

II.    Upon written request of either the City or the Company, the franchise shall be reopened and renegotiated at any time upon any of the following events:

a.     Change in federal, state, or local law, regulation, or order which materially affects any rights or obligations of either the City or Company, including, but not limited to, the scope of the grant to the Company or the compensation to be received by the City.

b.    Change in the structure or operation of the natural gas industry which materially affects any rights or obligations of either the City or Company, including, but not limited to, the scope of the grant to the Company or the compensation to be received by the City.

c.     Any other material and unintended change or shift in the economic benefit to the City or the Company relied upon and anticipated upon entering into this franchise.

III.   The compensation provision of this franchise shall be reopened and renegotiated at any time if energy consumers within the City have access to alternative natural gas suppliers or other suppliers of energy through pipelines, and use the public rights of way or public property of the City without paying a franchise fee or other payment substantially equivalent to the franchise fee established herein, which results in a material and unfair disadvantage to the Company. The use of right of provision of this franchise shall be reopened and renegotiated if energy consumers within the City have access to alternative natural gas suppliers or other suppliers of energy through pipelines which use the public rights of way or public property of the City, and do not have requirements on the use of the public ways substantially equivalent to the requirements of this franchise, which results in a material and unfair disadvantage to the Company. Upon any such event, the City shall have up to ninety (90) days after written request of the Company to restore competitive neutrality. Following notice to the City, Company may suspend collection and payment of the franchise fee to the City for the affected customers until the City resolves the competitive disadvantage. After the last above referred ninety (90) day period expires without resolution of the competitive disadvantage, the Company shall have no liability to the City for any uncollected franchise fees suspended as provided in the subsection.

SECTION 11. The franchise is granted pursuant to the provisions of K.S.A. 12-2001 and amendments thereto.

SECTION 12. Any and all ordinances or parts of ordinances in conflict with the terms hereof are hereby repealed or considered as having no effect as of the first cycle of the monthly billing cycle as referenced in Section 8 of this ordinance.

SECTION 13. Should the Kansas Corporation Commission take any action with respect to this franchise ordinance and any amendment thereto which precludes Company from recovering from its customers any costs or fees provided for hereunder, the parties hereto shall renegotiate this ordinance in accordance with the Commission's ruling.

(11-11-2008)