Decision 2012-207

The City of

Potable Water Supply Agreement with

August 2, 2012

The Utilities Commission Decision 2012-207: The City of Medicine Hat Potable Water Supply Agreement with Cypress County Application No. 1608596 Proceeding ID No. 1978

August 2, 2012

Published by The Alberta Utilities Commission Fifth Avenue Place, Fourth Floor, 425 First Street S.W. , Alberta T2P 3L8

Telephone: 403-592-8845 Fax: 403-592-4406

Web site: www.auc.ab.ca

The Alberta Utilities Commission Calgary, Alberta

The City of Medicine Hat Decision 2012-207 Potable Water Supply Agreement with Application No. 1608596 Cypress County Proceeding ID No. 1978

1. The City of Medicine Hat (Medicine Hat) filed an application with the Alberta Utilities Commission (AUC) on June 27, 2012, for approval to enter into the Dunmore Gate amending agreement pursuant to Section 30(1) of the Municipal Government Act, RSA 2000, c. M-26. The amending agreement was negotiated between Medicine Hat and Cypress County to increase the supply of potable water through the Dunmore Potable Water Gate to accommodate future growth in the Hamlets of Dunmore, Irvine and Walsh. The existing potable water agreements were originally approved by the Alberta Energy and Utilities Board in Order U2005-2391 and Order U2005-240,2 and amended in Decision 2011-004.3 The water supply agreements between Medicine Hat and Cypress County with extensions expire May 31, 2034.

2. The AUC published notice of application on the AUC website on July 3, 2012, and in the Medicine Hat News on July 9, 2012. Anyone with concerns or objections was directed to file a submission with the AUC by July 23, 2012. The AUC has processed this application without further notice as no submissions were received.

3. The Dunmore Gate amending agreement, which is attached as Appendix 1, amends the potable water agreements. This agreement allows Medicine Hat to provide an increased volume of water at the Dunmore Gate, and increases the maximum number of people that can be served by the Dunmore Potable Water Gate.

4. Medicine Hat confirmed that the water system can accommodate the increase without any impact to Medicine Hat’s customer needs. In addition, the volumes of potable water to be provided will be supplied from water licenses provided by Cypress County, which allow water to be diverted through Medicine Hat’s water system.

5. Based on the foregoing, the AUC considers that the privilege contained in the Water Supply Agreements is necessary and proper for the public convenience and properly serves the public interest.

1 Order U2005-239: City of Medicine Hat, Water Supply Agreement with Cypress County, Application No. 1395800, July 18, 2005. 2 Order U2005-240: City of Medicine Hat, Water Supply Agreement with Cypress County, Application No. 1395800, July 18, 2005. 3 Decision 2011-004: City of Medicine Hat, Water Supply Agreements with Cypress County, Application No. 1606499, January 11, 2011.

AUC Decision 2012-207 (August 2, 2012) • 1 Potable Water Supply Agreement with Cypress County The City of Medicine Hat

6. Therefore, pursuant to Section 30(1) of the Municipal Government Act, the AUC hereby orders that Application No. 1608596 by Medicine Hat dated June 27, 2012, is approved, subject to the terms and conditions of the amending agreement for the Dunmore Potable Water Gate.

Dated on August 2, 2012.

The Alberta Utilities Commission

(original signed by)

Neil Jamieson Commission Member

2 • AUC Decision 2012-207 (August 2, 2012)

Potable Water Supply Agreement with Cypress County The City of Medicine Hat

Appendix 1 – Amending Agreement for the Dunmore Potable Water Gate

(return to text)

Appendix 1 - Amending Agreement for the Dunmore Potable Water Gate.pdf

(consists of 21 pages)

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k This Memorandum of Agreement made this 2 day of wf^ , 2012

BETWEEN:

CITY OF MEDICINE HAT, a municipal corporation in the Province of Alberta ("Medicine Hat")

-and-

CYPRESS COUNTY, a municipal corporation in the Province of Alberta ("Cypress")

AMENDING AGREEMENT FOR THE DUNMORE POTABLE WATER GATE

WHEREAS:

A. Medicine Hat and Cypress have entered into a Memorandum of Agreement for Supply of Potable Water dated August 4, 2005, whereby Medicine Hat agreed to supply and Cypress agreed to accept Potable Water from the Medicine Hat Potable Water System at specified Gates (including but not limited to the Dunmore Gate) for delivery into the Cypress Potable Water System for the purposes of providing Potable Water to Cypress (the "Potable Water Agreement").

B. The Potable Water Agreement was amended by the Master Agreement for Seven Persons Potable Water Gate dated August 4, 2005 between the parties to add an additional Gate for the benefit of the of Seven Persons located within Cypress (the "Seven Persons Master Agreement").

C. Medicine Hat and Cypress also entered into an Amending Agreement for the Seven Persons Potable Water Gate dated July 13, 2010 (the "Seven Persons Gate Amending Agreement"), which amended the Seven Persons Master Agreement and under which Medicine Hat agreed to supply additional volumes of Potable Water to Cypress through the Seven Persons Gate, subject to the terms and conditions set out in the Seven Persons Gate Amending Agreement.

D. Medicine Hat, Cypress and the Town of Redcliff have entered into an Intermunicipal Development Plan ("IDP") which, inter alia, addresses future subdivision and development of specified areas located within the IDP boundaries of Cypress as shown in Map "A" of the IDP (the "IDP Boundaries").

E. The IDP states that Medicine Hat will provide additional volumes of Potable Waterto Cypress for future subdivision and development within the IDP Boundaries that is in

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accordance with the IDP, subject to the terms and conditions of a Gate agreement between Medicine Hat and Cypress.

F. Medicine Hat and Cypress have entered into an Agreement for the Southwest Potable Water Gate dated July 13, 2010 (the "Southwest Potable Water Agreement") which amended the Potable Water Agreement to add the Southwest Gate and under which Medicine Hat agreed to supply additional volumes of Potable Water to Cypress within the IDP Boundaries, subject to the terms and conditions set out in the Southwest Potable Water Agreement.

G. Medicine Hat and Cypress acknowledge that the Southwest Gate will not be constructed in the immediate future and as a result, Cypress has requested that Medicine Hat supply additional volumes of Potable Water to Cypress through the Dunmore Gate.

H. Medicine Hat and Cypress desire to amend the Potable Water Agreement for the purposes of permitting additional volumes of Potable Water to be supplied from Medicine Hat to Cypress through the Dunmore Gate in accordance with the terms and conditions set out in this Agreement.

NOW THEREFORE in consideration of the covenants and obligations contained in this Agreement, Medicine Hat and Cypress agree as follows:

1. Interpretation

1.1 Definitions

All capitalized terms which are not expressly defined in this Amending Agreement shall have the meanings given to such terms as set out in the Potable Water Agreement. In this Agreement, including the recitals, this section and the Schedules, the following words and phrases shall have the following meanings:

(a) "IDP" means the Intermunicipal Development Plan as adopted by Medicine Hat, Cypress and the Town of Redcliff.

(b) "Potable Water Agreement" means the Memorandum of Agreement for the Supply of Potable Water between Medicine Hat and Cypress dated August 4, 2005, as amended.

(c) "Seven Persons Master Agreement" means the Master Agreement for Seven Persons Potable Water Gate dated August 4, 2005 between the parties which added the Seven Persons Gate to the Potable Water Agreement.

(d) "Seven Persons Gate Amending Agreement" means the Amending Agreement for the Seven Persons Potable Gate dated July 13, 2010 between the parties amending the terms and conditions with respect to the Seven Persons Gate set out in the Potable Water Agreement.

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(e) "Southwest Gate Agreement" means the Southwest Potable Water Gate Agreement dated July 13, 2010 between the parties which added the Southwest Gate to the Potable Water Agreement.

1.2 Headings - The headings of the Sections of this Agreement and the attached Schedules are inserted for convenience and reference only and shall not affect the meaning, interpretation or construction of this Agreement.

1.3 Schedules - The following Schedules are attached to, form part of, and are incorporated into this Agreement:

Schedule "A"- Amended Terms of Supply for Delivery of Potable Water to the Dunmore Gate (to be inserted as Article 1 of Schedule "A" of the Potable Water Agreement in place of the existing Article 1).

Schedule "B"- A Map identifying the Location of the Dunmore Gate (to be inserted into Schedule "B" of the Potable Water Agreement in place of the existing Map for the Dunmore Gate).

Appendix "2" - Dunmore Gate Recording Table (to be inserted as Appendix "2" of the Potable Water Agreement).

2. Conditions Precedent

2.1 Notwithstanding any other provision contained herein, this Agreement between Medicine Hat and Cypress is subject to the following conditions precedent:

(a) approval of the general terms and conditions of this Agreement by the municipal councils of both Medicine Hat and Cypress at meetings open to the public; and

(b) Medicine Hat and Cypress receiving approval of this Agreement from the Alberta Utilities Commission in accordance with section 30 of the MGA.

2.2 The conditions precedent set out in section 2.1 are for the benefit of Medicine Hat and Cypress and must be completed to the satisfaction of Medicine Hat and Cypress in each party's sole and unfettered discretion, within one year of the date of this Agreement, subject to any extension of this date by agreement in writing of the parties, otherwise this Agreement shall be null and void and of no force or effect.

2.3 Cypress acknowledges and agrees that any costs incurred by Cypress prior to the satisfaction of the conditions precedent set out in section 2.1 shall be at its sole risk.

3. Amendments to the Potable Water Agreement

3.1 The Potable Water Agreement is hereby amended by:

(a) deleting Article 1 of Schedule "A" of the Potable Water Agreement and inserting in its place Article 1 of Schedule "A" of this Agreement as Article 1 of Schedule "A" of the Potable Water Agreement,

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(b) deleting the existing map of the Dunmore Gate in Schedule "B" of the Potable Water Agreement and inserting in its place the map attached as Schedule "B" of this Agreement, and

(c) inserting Appendix "2" of this Agreement as Appendix "2" of the Potable Water Agreement.

4. General

4.1 Exercise of Statutory Authority- Medicine Hat and Cypress mutually acknowledge and agree that their respective municipal councils each have the sole and exclusive authority and discretion to pass, amend, rescind and establish bylaws and resolutions in accordance with the MGA and other statutes. Nothing contained within this Agreement shall be construed nor interpreted as fettering the municipal councils' discretion in exercising their statutory authority and discretion under the MGA or any other statute.

4.2 Further Documents - Both parties shall execute and deliver all further documents and assurances reasonably necessary to give effect to this Agreement and to discharge the respective obligations of the parties.

4.3 Waiver - A waiver by either party of the strict performance by the other of any covenant, provision or term of this Agreement shall not of itself constitute a waiver of any subsequent breach of such covenant, provision or term, or of any other covenant, provision or term of this Agreement.

IN WITNESS WHEREOF the parties have caused their respective corporate seals to be affixed by their duly authorized officers effective the date set out on the first page of this Agreement.

CITY OF MEDICINE HAT

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City Clerk - Angela Cruic ''s

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SCHEDULE "A"

TERMS OF SUPPLY FOR DELIVERY OF POTABLE WATER TO THE DUNMORE GATE

The Potable Water Agreement is amended by deleting Article 1 of Schedule "A" and inserting in its place the following as Article 1 of Schedule "A" of the Potable Water Agreement:

1. Dunmore Gate - Point of Supply No. 1

Location of the Dunmore Gate

1.1 Located southeast of the south end of Rundle Road S.E. in Medicine Hat as shown in Schedule "B", at the downstream flange of the shut-off valve immediately upstream of an underground meter station vault and downstream of the pressure sustaining vault located approximately at coordinates N: 5540000.6m E:26064.1 m in the NAD 1983 UTM Zone 12N (3TM Projection) (the "Dunmore Gate"). Cypress owns and is fully responsible, both physically and financially, for infrastructure, machinery, equipment and lines of pipe located downstream from the Dunmore Gate (including the meter station and everything inside it) whether within or outside the municipal boundaries of Medicine Hat, with the sole exception of the water meters located within the meter station, which are owned and maintained by Medicine Hat. Cypress shall allow Medicine Hat personnel to access the water meters at any time. Cypress owns and is fully responsible for the backflow prevention device inside the City owned vault immediately upstream of the Dunmore Gate. Medicine Hat shall allow Cypress personnel to access the backflow prevention device at any time subject to prior notification.

Intermunicipal Development Plan

1.2 Medicine Hat, Cypress and the Town of Redcliff have entered into an Intermunicipal Development Plan ("IDP") which, inter alia, addresses future subdivision and development of specified areas located within the IDP boundaries of Cypress as shown in Map "A" of the IDP (the "IDP Boundaries").

1.3 The IDP states that Medicine Hat will provide additional volumes of Potable Water to Cypress for future subdivision and development within the IDP Boundaries of Cypress that is in accordance with the IDP, subject to the terms and conditions of a Gate agreement between Medicine Hat and Cypress. Medicine Hat and Cypress acknowledge and agree that the area of Cypress within the IDP that is intended to receive Potable Waterfrom the Dunmore Gate includes the Hamlet of Irvine and the Hamlet of Walsh, notwithstanding that the Hamlet of Irvine and the Hamlet of Walsh are not within the IDP Boundaries. Prior to Cypress supplying any Potable Water from the Dunmore Gate to any other locations outside the IDP Boundaries, Cypress shall obtain the prior written approval of Medicine Hat, at Medicine Hat's discretion.

1.4 Medicine Hat agrees to supply and Cypress agrees to accept Potable Water from the Medicine Hat Potable Water System at the Dunmore Gate for delivery into the Cypress Potable Water System for the purposes of providing Potable Water to areas

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within Cypress that are within the IDP Boundaries, the Hamlet of Irvine and the Hamlet of Walsh, subject to the terms and conditions set out in this Article 1.

Volumes of Potable Water Through the Dunmore Gate

1.5 Medicine Hat and Cypress acknowledge and agree upon the following:

2010 Population of the Hamlet of Dunmore = 920 persons (more or less)

2010 Total Annual Demand for Potable Water at the Dunmore Gate = 283,751 m3 ("2010 Maximum Annual Demand") which is equal to 230.04 acre-feet (= 283,751 m3 divided by 1233.49 m3 per acre-foot)

2010 Maximum Daily Demand for Potable Water at the Dunmore Gate = 2,449 m3 ("2010 Maximum Daily Demand" or "2010 MDD").

Ultimate Population served by the Dunmore Gate (which includes areas within Cypress that are within the IDP Boundaries, and the Hamlets of Irvin and Walsh) = 3,356 people

Ultimate Total Annual Demand for Potable Water at the Dunmore Gate = 1,004,279 m3 ("Ultimate Maximum Annual Demand")

Ultimate Maximum Daily Demand at the Dunmore Gate = 8,466 m3 ("Ultimate Maximum Daily Demand" or "Ultimate MDD")

Maximum Daily Demand Peaking Factor = 3.043 (which represents that peaking factor used to determine Maximum Daily Demand from Average Daily Demand where Maximum Daily Demand = 3.043 times Average Daily Demand where Average Daily Demand = Maximum Annual Demand divided by 365 days/year)

1.6 Medicine Hat and Cypress agree that Medicine Hat will continue to supply the 2010 Maximum Annual Demand and 2010 Maximum Daily Demand of Potable Water to Cypress through the Dunmore Gate without the requirements for Cypress to construct additional infrastructure, provide Water Licenses and pay an amount equivalent to off-site levies as set out in this Article 1.

Conditions Precedent to Delivery of Increased Volumes of Potable Water at the Dunmore Gate

1.7 Notwithstanding sections 1.5 and 1.6 of this Article 1, the supply of additional volumes of Potable Water by Medicine Hat to Cypress through the Dunmore Gate exceeding the 2010 Maximum Annual Demand orthe 2010 Maximum Daily Demand ("Increased Volumes of Potable Water") are subject to and conditional upon Cypress constructing additional infrastructure, providing Water Licenses and paying an amount equivalent to off-site levies to Medicine Hat and Cypress complying with all other terms and conditions set out in this Article 1.

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1.8 Medicine Hat's obligation to deliver Increased Volumes of Potable Water to Cypress at the Dunmore Gate is subject to and conditional upon the satisfaction of the conditions precedent set out in Article 2 of the Amending Agreement for Dunmore Potable Water Gate between Medicine Hat and Cypress dated , 2012 (the "Dunmore Gate Amending Agreement").

1.9 Medicine Hat's obligation to deliver any Increased Volumes of Potable Water to Cypress at the Dunmore Gate is subject to the completion of all conditions, terms and requirements referenced in this Article 1 to the satisfaction of Medicine Hat. The parties acknowledge and agree that Medicine Hat may temporarily supply Increased Volumes of Potable Water at the Dunmore Gate for the purposes of testing the Cypress Potable Water System or the Medicine Hat Potable Water System but that such actions shall not obligate Medicine Hat to continue to provide such Increased Volumes of Potable Water following testing.

1.10 Without limiting the generality of section 1.9 of this Article 1, Medicine Hat's obligation to supply any Increased Volumes of Potable Water at the Dunmore Gate is subject to and conditional upon the following:

(a) Cypress completing the construction and installation of infrastructure and equipment in accordance with this Article 1;

(b) Cypress providing Water Licenses equal to or exceeding the Increased Volumes of Potable Water requested by Cypress from the Dunmore Gate in accordance with this Article 1;

(c) such supply of water being authorized by the terms of Cypress' Water Licenses, the WaterAct (Alberta) and any order issued under the WaterAct (Alberta);

(d) Cypress paying to Medicine Hat an amount of monies equivalent to an offsite levy in accordance with this Article 1;

(e) the IDP remaining in force and all subdivisions and developments having been approved within the IDP Boundaries being in compliance with the IDP; and

(f) Cypress not being in breach of any term or condition of this Article 1 or the Potable Water Agreement.

For the purposes of this Article 1, "Water Licenses" shall include all licenses and other written authorizations to divert water issued to Cypress or approved by Alberta Environment or any other provincial or authorized agent held by or under the control of Cypress or any village, town, hamlet or property within the municipal boundaries of Cypress that ties into the Potable Water line from the Dunmore Gate (including any connections made after the initial connection to the Medicine Hat Potable Water System) for supply of Increased Volumes of Potable Water through the Dunmore Gate.

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Construction of Infrastructure for Increased Potable Water at the Dunmore Gate

1.11 Medicine Hat and Cypress acknowledge and agree that prior to the supply of Increased Volumes of Potable Water by Medicine Hat at the Dunmore Gate, Cypress shall:

(a) design and complete construction of an expansion of Cypress' Potable Water reservoir storage facility in relation to the Dunmore Gate to increase the capacity of the reservoir to at least 7,000 m3 (from approximately 3,000 m3);

(b) design, implement and verify a fill control management strategy in relation to Cypress' Potable Water reservoir storage facility referenced in (a); and

(c) develop, implement and enforce a policy to ensure that Cypress will not approve nor allow any Potable Water service line or distribution line to be connected to the Cypress Potable Water line between the Dunmore Gate and the Potable Water reservoir storage facility identified above and that Medicine Hat and Cypress acknowledge that the sole service connection existing on the date of the Dunmore Gate Amending Agreement may continue to exist and that Cypress is fully responsible for any circumstance where Potable Water is not delivered through this sole service connection for any reason whatsoever, including but not limited to, a flow or pressure restriction as a result of the operation of the pressure sustaining value referred to this Article 1 (including but not limited to sections 1.12 and 1.21 of this Article 1);

all satisfactory to Medicine Hat.

1.12 Cypress acknowledges that the Medicine Hat owned and operated pressure sustaining valve located upstream of the Dunmore Gate may restrict the volume of Potable Water that may pass through the Dunmore Gate and that Medicine Hat shall not be considered in breach of this Agreement whenever the pressure sustaining valve restricts the flow of Potable Water to Cypress.

1.13 Cypress shall own and shall be fully responsible, both physically and financially, for the Dunmore Gate and infrastructure, machinery, equipment and lines of pipe located downstream from the Dunmore Gate and any other infrastructure, machinery, equipment and lines of pipe Cypress constructs or connects to this system at any time in the future except for the water meters in the meter vault immediately downstream of the Dunmore Gate which shall be the responsibility of Medicine Hat. Medicine Hat shall be fully responsible, both physically and financially, for the infrastructure, machinery, equipment and lines of pipe located upstream from the Dunmore Gate except for the backflow prevention device (which shall be the responsibility of Cypress) located inside the pressure sustaining vault immediately upstream of the Dunmore Gate.

1.14 Cypress shall be responsible, at its expense, for designing, constructing and installing the expansion of the water reservoir and any pump station and other

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required infrastructure, machinery, equipment and lines of pipe of sufficient size and structure required to meet the peak hourly demand and all fire flow requirements with respect to any Increased Volumes of Potable Water supplied at the Dunmore Gate.

Potable Water Volumes and Increased Volumes of Potable Water at the Dunmore Gate

1.15 Medicine Hat and Cypress acknowledge and agree that Cypress' demand for Potable Water at the Dunmore Gate is estimated to increase incrementally from the 2010 Maximum Annual Demand and 2010 Maximum Daily Demand over time as areas within the Hamlet of Dunmore and other areas with the IDP Boundaries within Cypress, as well as areas within the Hamlet of Irving and Hamlet of Walsh, are developed. Subject to the satisfaction of the terms, conditions and requirements for the Dunmore Gate set out in this Article 1, Cypress may from time to time during the Term and any Extension Period of the Potable Water Agreement request that Medicine Hat increase the volume of Potable Water available to Cypress at the Dunmore Gate. The maximum volume of Potable Water that Cypress maytake from Medicine Hat on any one day through the Dunmore Gate at any point in time shall be referred to as the "Maximum Daily Demand" or "MDD", and shall be recorded in Appendix 2.

1.16 Medicine Hat and Cypress acknowledge and agree that the MDD will increase from the 2010 MDD towards the Ultimate MDD and that this increase will occur in incremental steps. Medicine Hat and Cypress further acknowledge and agree that any and all incremental changes to the MDD and other calculations and amounts set out in Appendix 2 shall at all times be recorded in Appendix 2. Medicine Hat and Cypress shall each have its designated representative sign Appendix 2 on its behalf to confirm any agreed upon changes to the calculations and amounts set out in Appendix 2, and each party shall at all times maintain the most recent copy of Appendix 2 (with the most recent changes to the calculations and amounts acknowledged by the representatives of each party) with this Agreement. For the purposes of this Article 1, "Incremental MDD" shall mean the incremental increase in MDD in relation to the Dunmore Gate that Cypress requests in relation to a request for Increased Volumes of Potable Water at a specific date while the "Cumulative MDD" shall mean the sum of the Incremental MDDs as of a specific date.

1.17 Cypress shall, at its expense, install and maintain one or more meters on the Cypress side of the Dunmore Gate to monitor the MDD from the Dunmore Gate. This meter, or meters, shall be independent of the Medicine Hat owned meters immediately downstream of the Dunmore Gate. In the event that on any day or days of a month Cypress exceeds 75% of the MDD in effect at that time, within 15 days of the end of that month Cypress shall notify Medicine Hat in writing and the notice shall specify the number of days which exceeded 75% of the MDD (including the actual percentage of the MDD that was reached), and Cypress shall also provide to Medicine Hat a Potable Water demand management plan outlining the action Cypress intends to take to ensure that the existing MDD is not exceeded at the Dunmore Gate.

1.18 In addition to and without limiting any other rights or remedies of Medicine Hat, Cypress acknowledges and agrees that Medicine Hat will monitor the MDD flows at the Dunmore Gate and that Medicine Hat may physically close a valve at the

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Dunmore Gate if the MDD flow is reached during any day. Cypress accepts any and all risks arising from or related to Cypress reaching the MDD and any such resulting action by Medicine Hat to stop or restrict the flow of Potable Water through the Dunmore Gate. Cypress acknowledges and agrees that, due to the possibility of such action, Cypress shall design the Cypress Potable Water System downstream of the Dunmore Gate to respond to any vacuum created in the Pipeline between the Dunmore Gate and the expansion of the Potable Water reservoir (to be expanded by Cypress) in order to attempt to mitigate and prevent possible damage to the pipeline or any other infrastructure resulting from such action by Medicine Hat.

1.19 Subject to the satisfaction of the terms, conditions and requirements in this Article 1, Medicine Hat and Cypress agree that the total maximum volume of Potable Water that Cypress may ultimately take from Medicine Hat on any one day through the Dunmore Gate is the Ultimate MDD, and in any one year is the Ultimate Maximum Annual Demand as set out in section 1.5 of this Article 1. Cypress acknowledges that the Ultimate MDD and the Ultimate Maximum Annual Demand are calculations and limits determined solely by Cypress and that Medicine Hat did not undertake to review the appropriateness, accuracy or sufficiency of such calculations and limits for Cypress' present or future Potable Water requirements. Cypress acknowledges and agrees that the Ultimate MDD is a physical limit at the Dunmore Gate, and further that Medicine Hat cannot and will not consider any future requests by Cypress to increase the supply of Potable Water through the Dunmore Gate beyond the Ultimate MDD.

1.20 Any obligation of Medicine Hat to provide any Increased Volume of Potable Water (including any Incremental MDD) at the Dunmore Gate requested by Cypress is subject to and conditional upon:

(a) Cypress paying to Medicine Hat an amount equivalent to an offsite levy;

(b) Cypress providing and maintaining Water Licenses with sufficient volumes and rates of diversion; and

(c) all subdivisions and developments having been approved within the IDP Boundaries being in compliance with the IDP;

in accordance with this Article 1. The amounts set out in subsection (a) and (b) (and any changes thereto) shall be recorded in Appendix 2.

1.21 Cypress acknowledges and agrees that the water pressure and flows available at the Dunmore Gate are created by the Medicine Hat Potable Water System for Medicine Hat requirements and will not be adjusted for Cypress' needs or requirements at the Dunmore Gate. Notwithstanding any term or condition of the Potable Water Agreement, Cypress further acknowledges and agrees that Medicine Hat has and will continue to operate a pressure sustaining valve immediately upstream of the Dunmore Gate, and the purpose of the pressure sustaining valve is to control the flow and volume of Potable Water passing through the Dunmore Gate to ensure that the Potable Water demands from Medicine Hat customers within the municipal boundaries of Medicine Hat are given priority access to Medicine Hat Potable Water system pressure and flow over Cypress demands at the Dunmore Gate. Cypress

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agrees that it has obtained or will obtain the advice of a qualified professional engineer to understand and accept the technical meaning and limitations of the peak flow demand, fire flow requirements, pressure and flow limitations, and all other technical aspects of this Agreement.

Water Licenses

1.22 Prior to Medicine Hat having any obligation to supply any Increased Volume of Potable Water (including any Incremental MDD) through the Dunmore Gate, Cypress shall, at its expense, obtain Water Licenses in its name and which authorize Medicine Hat to divert water through the Medicine Hat Potable Water System in compliance with the WaterAct (Alberta) and any orders issued under the WaterAct (Alberta) equal to or greater than any Increased Volume of Potable Water requested by Cypress for supply through the Dunmore Gate in accordance with this Article and Appendix 2. Cypress shall provide to Medicine Hat copies of all Water Licenses issued to Cypress. Medicine Hat and Cypress agree that Cypress is not required to obtain Water Licenses to cover the 2010 Maximum Annual Demand. Medicine Hat and Cypress agree that Cypress will be required to provide Water Licenses for all Increased Volumes of Potable Water exceeding the 2010 Maximum Annual Demand up to the Ultimate Maximum Annual Demand and that this change will occur in incremental steps. Medicine Hat and Cypress further agree that any and all incremental changes to the amount of Water Licenses required under this Article 1 and other calculations and amounts set out in Appendix 2 shall at all times be recorded in Appendix 2. Medicine Hat and Cypress shall each have its designated representative sign Appendix 2 on its behalf to confirm any agreed upon changes to the calculations and amounts set out in Appendix 2, and each party shall at all times maintain the most recent copy of Appendix 2 (with the most recent changes to the calculations and amounts acknowledged by the representatives of each party) with this Agreement. For the purposes of this Article 1, "Incremental Water Licenses Required" shall mean the amount of Water Licenses required to cover the Incremental MDD that Cypress requests in relation to the Dunmore Gate at a specific date while the "Cumulative Water Licenses Required" shall mean the sum of the Incremental Water Licenses Required as of a specific date.

1.23 Cypress shall, at its expense, acquire and at all times retain Water Licenses equal to or greater than the Cumulative Water Licenses Required in effect at any time which shall be defined and calculated as follows:

Incremental Water Licenses Required = Incremental MDD (in m3 per day) times 584.14 acre-feet per year divided by 6,017 m3 per day

Where:

584.14 acre-feet per year = (Ultimate Maximum Annual Demand minus 2010 Maximum Annual Demand) divided by 1233.49 m3 per acre-foot = (1,004,279 - 283,751)/1233.49

6,017 m3 per day

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= Ultimate MDD minus 2010 MDD = 8,466 - 2,449

Incremental MDD = (Incremental Maximum Annual Demand times Maximum Daily Demand Peaking Factor divided by 365 days per year) minus 2010 Maximum Daily Demand = (Incremental Maximum Annual Demand x 3 .043 / 365) - 2,449

The Cumulative Water Licenses Required and any changes thereto shall be recorded in Appendix 2. The parties acknowledge and agree that the actual Water Licenses held by Cypress shall also be recorded in Appendix 2 and may exceed the Cumulative Water Licenses Required.

1.24 Cypress acknowledges and agrees that:

(a) Alberta Environment has closed the South Saskatchewan River to issuing further licenses to divert water which will require Cypress to acquire Water Licenses that must be transferred from existing license holders;

(b) users of licenses to divert water have priority among themselves according to the priority number that has been assigned to the license or registration;

(c) during times of water shortages or droughts, licenses to divert water that have a lower priority are more susceptible to water rationing, restrictions or termination than more senior licenses to divert water that have a higher priority; and

(d) subject to other provisions of this Article 1, Medicine Hat shall have an obligation to supply Potable Water and Cypress shall have the right to draw Increased Volumes of Potable Water at the Dunmore Gate only when Cypress' right to take water is authorized by the Water Licenses, the Water Act (Alberta) and any orders issued under the Water Act (Alberta).

1.25 Cypress, at its expense, agrees:

(a) to copy Medicine Hat with all Water License applications and submissions made by or on behalf of Cypress in relation to the Dunmore Gate, and all approvals, directions, limitations and any other correspondence related to the Water Licenses;

(b) that all Water Licenses obtained by Cypress in relation to the Dunmore Gate shall permit Medicine Hat to divert water from the South Saskatchewan River at a location acceptable to Medicine Hat for Medicine Hat's water treatment plant;

(c) that Cypress shall not sell, transfer, assign, cancel or otherwise dispose of, restrict or reduce any Water License obtained by Cypress in relation to the Dunmore Gate without the written consent of Medicine Hat, such consent which may be withheld at Medicine Hat's absolute discretion;

AUC Decision 2012-207 (August 2, 2012)

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Amending Agreement between City of Medicine Hat and Cypress County for the Dunmore Water Gate Page 13

(d) that, prior to Medicine Hat supplying any Incremental MDD at the Dunmore Gate or any new connection to the Cypress Potable Water System, Cypress shall provide additional Water Licenses, if required, to Medicine Hat;

(e) that in any calendar year Cypress shall not draw through the Dunmore Gate a volume of Potable Water exceeding the total of the volume of the 2010 Maximum Annual Demand Volume of Potable Water plus the Cumulative Water Licenses Required in effect at that time. Cypress shall immediately notify Medicine Hat if the Potable Water volumes at the Dunmore Gate exceed the total of the volume of the 2010 Maximum Annual Demand Volume of Potable Water plus the Cumulative Water Licenses Required;

(f) to monitor Potable Water volumes at the Dunmore Gate and within 30 days of the end of each calendar year provide an annual report in writing to Medicine Hat outlining the volumes of Potable Water delivered through the Dunmore Gate over the past year. In the event that in any calendar year Cypress exceeds 75% of the total of the volume of the 2010 Maximum Annual Demand Volume of Potable Water plus the Cumulative Water Licenses Required in effect at that time, the annual report from Cypress shall include a Potable Water demand management plan outlining the action Cypress intends to take to ensure that the total volume of the 2010 Maximum Annual Demand Volume of Potable Water plus the existing Cumulative Water Licenses Required are not exceeded for the Dunmore Gate;

(g) to report in writing to Medicine Hat any permanent loss or termination of any Water License or any permanent restriction, reduction or rationing with respect to the volume of any Water License by Alberta Environment or any other regulatory agency that affects or may affect the amount of water Medicine Hat may divert for the Dunmore Gate or the delivery of Potable Water by Medicine Hat at the Dunmore Gate. If any Water License held by Cypress is terminated or permanently restricted or reduced, the MDD available to Cypress at the Dunmore Gate pursuant to this Article shall be reduced to the total volume of the 2010 Maximum Annual Volume of Potable Water plus the valid Water Licenses in effect and applicable to the Dunmore Gate at that time using the same but reverse calculations as used to calculate the increase in the Cumulative Water Licenses Required set out in section 1.23 of this Article 1, and Cypress shall be responsible for reducing, restricting or limiting the volumes of Potable Water drawn at the Dunmore Gate accordingly to ensure that volumes of Potable Water do not at anytime exceed the total volume of the 2010 Maximum Annual Demand Volume of Potable Water plus the Cumulative Water Licenses Required or the MDD that comes into effect at that time. Cypress acknowledges and agrees that Medicine Hat will not refund any payment or any portion of a payment of an amount equivalent to an offsite levy paid by Cypress pursuant to this Article 1 in the event that the MDD is reduced. Medicine Hat agrees that if Cypress restores any lost Water License capacity with adequate volumes to re- establish the lost MDD, Medicine Hat will not impose an amount equivalent to an offsite levy on any volume of MDD previously paid;

AUC Decision 2012-207 (August 2, 2012)

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Amending Agreement between City of Medicine Hat and Cypress County for the Dunmore Water Gate Page 14

(h) that, if the terms of the Water Licenses or the Water Act (Alberta) or any order or other action of Alberta Environment (or any other regulatory authority) impose any temporary prohibitions, restrictions or reductions on Cypress' right to take water under the Water Licenses or if there is any rationing order imposed on Cypress or if Cypress agrees to voluntary prohibitions, restrictions, reductions or rationing with respect to any Water License, Cypress shall immediately notify Medicine Hat in writing and the MDD shall be temporarily reduced accordingly, and Cypress shall be responsible for reducing, restricting or limiting the volumes of Potable Water drawn at the Dunmore Gate accordingly to ensure that volumes of Potable Water do not at any time exceed the MDD in effect after the imposition of the prohibitions, restrictions, reductions or rationing;

(i) that Cypress shall have the obligation to take all reasonable measures to resist any prohibition, restriction or reduction pursuant to the Water Act (Alberta) (or any other applicable legislation) or any order issued under the Water Act (Alberta) (or any other applicable legislation) that may affect any Water License obtained by Cypress in relation to the Dunmore Gate, unless otherwise agreed to in writing by Medicine Hat;

U) that Cypress shall immediately notify Medicine Hat in writing of any breach of any Water License, the Water Act (Alberta) or any order issued under the Water Act (Alberta) and immediately report the breach to the licensing authority;

(k) that any prohibition, reduction, restriction or rationing under a Water License or any loss or termination of a Water License or exceeding of the volume of any Water Licenses held by Cypress shall be at the risk of Cypress and shall be reported immediately to Medicine Hat, and in addition to and without limiting any other rights or remedies of Medicine Hat, Cypress shall indemnify, defend and save harmless Medicine Hat from and against any and all claims, damages, actions, causes of action, orders, fines and penalties arising from or related to Cypress exceeding the water volumes set out in any Water License or Cypress otherwise breaching any Water License, the Water Act (Alberta) or any order issued under the Water Act (Alberta); and

(I) that if Cypress acquires Water Licenses or additional Water Licenses, the volume and MDD of Potable Water available to Cypress at the Dunmore Gate shall not increase unless and until all other conditions for any increase in volume and MDD are satisfied.

Payment of an Amount Equivalent to Offsite Levies

1.26 Prior to Medicine Hat having any obligation to supply any Increased Volume of Potable Water (including any Incremental MDD) through the Dunmore Gate, Cypress agrees to pay Medicine Hat an amount equivalent to an offsite levy based upon the offsite levy for water that would be paid by developers with respect to development within the municipal boundaries of Medicine Hat under Medicine Hat's offsite levy bylaw in place at that time and in accordance with this Article 1 and Appendix 2. The

AUC Decision 2012-207 (August 2, 2012)

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amount equivalent to an offsite levy payable from Cypress to Medicine Hat for a requested Increased Volume of Potable Water (any Incremental MDD) at the Dunmore Gate shall be calculated as follows:

Equivalent Offsite Levy Payment (for any Incremental MDD) for the Dunmore Gate = Incremental MDD (in m3 per day) times 65.84 hectares divided by 6,017 m3 per day times Medicine Hat's Offsite Levy Rate for Potable Water in effect at the time a request for Increased Volumes of Potable Water from Cypress is approved by Medicine Hat (in $/ha) as determined in accordance with section 1.27 of this Article 1 (the "Equivalent Offsite Levy Rate");

Where:

6,017 m3 per day is as defined in clause 1.23; and

The fixed number of 65.84 hectares is calculated as follows: 65.84 hectares = Cypress estimated population that will be ultimately served through the Dunmore Gate of 3,356 persons less the estimated population of the Hamlet Dunmore for 2010 of 920 persons (which equals 2,436 persons), divided an equivalent urban density for calculation purposes only of 37 persons/hectare

Medicine Hat and Cypress acknowledge and agree that:

(a) 65.84 hectares;

(b) the estimated population increase of persons of 2,436; and

(c) the equivalent urban density of 37 persons/hectare;

are fixed numbers used solely for the purpose of calculating Equivalent Offsite Levy Payments. The amounts of Equivalent Offsite Levy Payments, calculated as set out above, shall be final and binding and shall not be subject to adjustment based on actual developed area, population or density.

1.27 The Equivalent Offsite Levy Rate for Potable Water in effect at the time a requestfor Increased Volumes of Potable Water (including any Incremental MDD) from Cypress is approved by Medicine Hat shall be determined by Medicine Hat as follows:

(a) if Medicine Hat's Offsite Levy Bylaw includes an Equivalent Offsite Levy Rate for Cypress, it shall be the per hectare amount for Cypress specified in the Bylaw, adjusted from time to time at the same percentage as used for adjustments of the offsite levy rate for water in the Bylaw;

(b) if Medicine Hat's Offsite Levy Bylaw does not include an Equivalent Offsite Levy Rate for Cypress, the Equivalent Offsite Levy Rate shall be derived from information in the Offsite Levy Bylaw in existence at that time in order to calculate a per hectare amount equivalent to the offsite levy for water charged to developers within Medicine Hat, adjusted from time to time at the same percentage as used for adjustments of the offsite levy rate for water in the Bylaw; or

AUC Decision 2012-207 (August 2, 2012)

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Amending Agreement between City of Medicine Hat and Cypress County for the Dunmore Water Gate Page 16

(c) if, in the future, no offsite levy is charged for development within Medicine Hat but developers within Medicine Hat contribute to the capital costs of water projects other than through the payment of water rates, then the Equivalent Offsite Levy Rate shall be a per hectare amount equivalent to the amounts paid by developers towards capital costs of water projects within Medicine Hat.

1.28 Medicine Hat and Cypress acknowledge and agree that Medicine Hat's offsite levy rate for Potable Water under Medicine Hat's applicable Offsite Levy Bylaw and the Equivalent Offsite Levy Rate may change significantly over time and could become significantly lower or significantly higher than Medicine Hat's offsite levy rate in effect at the date of the Dunmore Gate Amending Agreement. Both Medicine Hat and Cypress accept the risk of any such potential changes to Medicine Hat's offsite levy rate for Potable Water and to the Equivalent Offsite Levy Rate, and Cypress agrees to make payments of an amount equivalent to Medicine Hat's offsite levy for Potable Water for any Incremental MDD requested by Cypress for the Dunmore Gate approved by Medicine Hat based upon the rate in effect at the time under Medicine Hat's Offsite Levy Bylaw, and in accordance with sections 1.26 and 1.27 of this Article 1.

IDP

1.29 In addition to and without limiting any other rights or remedies Medicine Hat may have under this Agreement or the Dunmore Gate Amending Agreement, Cypress acknowledges and agrees that if;

(a) the IDP is repealed by one or more of the parties to the IDP;

(b) a court of competent jurisdiction declares that the IDP or any portion is invalid;

(c) subdivision or development is allowed within the IDP Boundaries contrary to the provisions of the IDP; or

(d) Potable Water is used within the IDP Boundaries contrary to the provisions of the IDP;

Medicine Hat may, at its option,

(e) refuse to supply any volumes of Potable Water at the Dunmore Gate over and above the approved MDD in existence at that time; or

(f) temporarily restrict or permanently reduce the volume of Potable Water that Cypress is permitted to draw in any year through the Dunmore Gate to a volume equivalent to the average of the total annual volumes in m3 actually drawn through the Dunmore Gate in the preceding thirty six (36) months, or, alternatively (the "Maximum Annual Volume"), and Medicine Hat, acting reasonably, shall have the right to manage, restrict and limit the monthly and/or daily volumes and flows of Potable Water in relation to the Dunmore

AUC Decision 2012-207 (August 2, 2012)

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Gate (including but not limited to the maximum volumes, flows and MDD permitted pursuant to this article 1 of this Schedule "A") accordingly to ensure that the Maximum Annual Volume is not exceeded by Cypress; or

(g) take action under both (e) and (f).

1.30 Cypress acknowledges and agrees that Medicine Hat will not refund any payment or any portion of a payment of an Equivalent Offsite Levy Payment paid by Cypress pursuant to this Article 1 in the event that the MDD is reduced for any reason whatsoever.

Other Remedies

1.31 In addition to and without limiting any other rights or remedies Medicine Hat may have under this Agreement or the Dunmore Gate Amending Agreement, Cypress acknowledges and agrees that if Cypress breaches any term or condition of this Agreement or the Dunmore Gate Amending Agreement, including without limitation:

(a) permitting any connection, use or consumption of Potable Water contrary to any provision set out in Article 1 of this Schedule "A"; or

(b) failing to comply with any of the requirements relating to Water Licenses or the payment of Equivalent Offsite Levy Amounts set out in Article 1 of this Schedule;

Medicine Hat may, at its option,

(c) refuse to supply any volumes of Potable Water at the Dunmore Gate over and above the approved MDD in existence at that time; or

(d) reduce the volume of Potable Water that Cypress is permitted to draw in any year through the Dunmore Gate to a volume equivalent to the average of the total annual volumes in m3 actually drawn through the Dunmore Gate in the preceding thirty six (36) months (the "Maximum Annual Volume"), and Medicine Hat, acting reasonably, shall have the right to manage, restrict and limit the monthly and/or daily volumes and flows of Potable Water in relation to the Dunmore Gate (including but not limited to the maximum volumes, flows and MDD permitted pursuant to this article 1 of this Schedule "A") accordingly to ensure that the Maximum Annual Volume is not exceeded by Cypress; or

(e) take action under both (c) and (d).

AUC Decision 2012-207 (August 2, 2012)

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SCHEDULE "B" A MAP AND A SKETCH IDENTIFYING THE LOCATION OF THE DUNMORE GATE [To be inserted into Schedule "B" of the Potable Water Agreement]

AUC Decision 2012-207 (August 2, 2012)

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Potable \ Water Supply

pp O cP Agreement

00 d \ 0 \ with Cypress County ti

\ NOTE: COORDINATE AT POINT OF SUPPLY CITY VAULT N: 5540000.6m (PR ESSURE SUSTAINING VALVE E: 26064.1m AN D BACK FLOW PREVENTOR) < •; / ALL COORDINATES ARE IN: NAD 1983 UTM Zone 12N •Z \ \ (3TM PROJECTION) POINT OF SUPPLY \ \ l AUC Decision COUNTY VAULT

(METER STATION) \ \ \ \ \ \ BY I CHKO 2012-207 Page Appendix The

Medicine Hat City 19

(August The Gas City of of 1 21 Medicine METER STATION AT

2, TRANS- HIGHWAY

2012) \ WATERMAIN TO DUNMORE Hat DESIGN SHEET SCALE: CRB 1 OF 1 BY:' No. 1:1500

DRAM' CRB DWG. No. REV No. BY:' DATE 12/01 EU-OA-12021 0 DRAWN' S-Dole: 2012/01/10 8:48 AN Login: Co- Bobil2Me 1:\eulil\eng-lecn\oooa\aro.ings \oo-files\o0 -2012\euoo1202.wg

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Amending Agreement between City of Medicine Hat and Cypress County for the Dunmore Water Gate Page 19

APPENDIX 2 DUNMORE GATE AGREEMENT RECORDING TABLE [To be inserted as Appendix 2 of the Potable Water Agreement]

AUC Decision 2012-207 (August 2, 2012)

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9

(Cypress)

cknowledged

Hat)

8

pproved

(Medicine

7

Total

Made

(dollars)

Payment

Equivalent

Offsite Levy

6

(dollars)

Payment

Required

Equivalent

Incremental Offsite Levy

Agreement - Dunmore Gate Recording Table

5

Water

Licenses

Provided

(acre feet)

Water

feet)

4

Water

Licenses

Required

(acre

Cumulative

3

Water

Licenses

Required

(acre feet)

Incremental

Appendix "2" of Potable

2

(in m3)

(This table is to be read as accumulated data to the date of the most recent date that is signed by both Medicine Hat and Cypress)

Cumulative

Daily

(MDD) Maximum

Demand

1

Daily

(MDD)

(in m3)

Demand

Maximum

Incremental

Incremental Maximum Daily Demand requested by Cypress County in cubic meters on the date shown. County on the date shown. Cumulative Maximum Daily Demand requested by Cypress County in cubic meters as of the date shown Incremental Water Licenses Required = Incremental MDD (in m3) times 584.14 acre-feet divided by 6017 m3 = Incremental Water Licenses Required in acre-feet by Cypress Water Licenses actually provided by Cypress County for this gate (Cannot be less than Cumulative Water Licenses Required). Incremental Offsite Levy Equivalent Payment = Incremental MDD (in m3) times 65.84 HA divided by 6017 m3 times City Offsite Levy Rate for Water (in $/HA) = incremental Cumulative Water Licenses Required by Cypress County in cubic meters as of the date shown

Total Offsite Levy Equivalent Payments made as of the date shown Medicine Hat General Manager Environmental Utilities Department payment in dollars on the date shown Cypress County Manager

I.

3. 5.

2. 6. 8. 4. 7.

9.

ate

Notes

AUC Decision 2012-207 (August 2, 2012)

Notes: