Pipeline contracts hit snag

Concerns over workers'

comp, liability arise

By RON LARSEN

Journal Staff Writer

NEW ULM -- The contract negotiation phase of New Ulm Public Utilities' and Hutchinson Public Utilities' natural gas pipeline venture hit a momentary snag Tuesday because of workers' compensation and employers' liability insurance concerns.

Commissioners had just approved the signing of a 22-year Natural Gas Firm Transportation Capacity Agreement with Hutchinson Public Utilities when they ran into the snag contained in the two interconnect agreements covering the New Ulm and Fairfax meter stations. Because NUPU will be responsible for two connections on HPU's pipeline, two virtually identical interconnect agreements, one for each meter station, were required, Dan Sonnek, NUPU Director of Engineering, told the commission.

Paragraph 28 in each document deals with the types and amounts of insurance that each party is required to obtain and maintain.

"Because our workers' compensation and employers' liability insurance coverage differs from the required coverage in this paragraph, we would have to obtain a certificate of subrogation from our carrier, and that's not going to happen," City Manager Brian Gramentz explained.

He wondered how Hutchinson could do it because both cities get their insurance coverage through the League of Minnesota Cities.

"In discussing the situation with the League's insurance guys this afternoon, we were told our city coverage would be at risk by signing the agreements as presented," he said.

City Attorney Hugh Nierengarten was emphatic in his recommendation that the contract should not be signed with "that provision in it."

After a brief discussion, the commissioners deferred action on both agreements until its regular meeting next Tuesday, giving the PUC staff and Nierengarten a chance to negotiate a solution. Nierengarten also advised that the capacity agreement shouldn't be signed until the insurance matter is resolved.

In other action, the commission approved what is said to the last easement needed for completion of New Ulm's supply pipeline. It's on land owned by Richard Runck.

Sonnek said a permit from Minnesota Department of Natural Resources still needs to be obtained, but that doesn't require commission approval. All the pipe for New Ulm's pipeline, except for that which will cross Runck's land and DNR land, has been laid, Sonnek said.