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~oc~e~ 8~ <br />fi~ <br />~'~ <br />'~ o- <br />v ,~ <br />rD <br />~ ~ <br />~~~ <br />a°6~ussen+y January 7, 2009 <br />Elk River Municipal Utilities <br />Attention: Vance Zehringer <br />P.O. Box 430 <br />Elk River, MN 55330 <br />Attorneys at Law <br />Ronald G. Black <br />Elizabeth K. Moore Dear Mr. Zehringer: <br />James A. Bumgardner <br />Rhonda J. Magnussen ~ You requested an opinion regarding "loopholes" in the "All Requirements <br />Contract" with Connexus dated December 20, 1990 which provides for a <br />120 month termination notice. The prior agreement provided a 24 month <br />Ethne 0. Hedren notice prior to termination. Connexus has given a notice that it will <br />Christopher J. Johnson terminate the Contract at the end of the notice period. <br />The simple answer is no there is not a "loophole". However, the analysis <br />should not end there. A party to any agreement has several options. Of <br />course, one option is to perform as provided in the agreement. The <br />second is to negotiate a revision of the agreement. The third is to breach <br />the agreement by failing to perform. <br />First National When an agreement is breached, the non-breaching party is entitled to <br />damages. The typical measure of damages is lost profits. In other <br />Financial Center Words, what profit would the non-breaching party have made had the <br />Biz Main Street contract been fully performed. I have not researched the damages issue <br />suite l02 with respect to the contract at issue. Several factors come to mind <br />Elk River, MN 55330 initially, which one should analyze. For example, Connexus as a pass <br />through entity, may or may not incur damages if ERMU failed to perform; <br />how reasonable is the 120 month notice provision; what obligation does <br />ERMU have to find an alternative supplier and if it does find a supplier, <br />can it be held to the 120 month term; finally, does FERC have any role to <br />play? <br />I would be happy to meet with you and/or the Commission to discuss <br />further. <br />Phone <br />763.441.7040 Very truly yours, <br />Fax BLACK, MOORE, BUMGARDNER, <br />763.441.0901 MAGN S N, LTD. <br />Web <br />www.minnlawfirm.com RO Id G. Black <br />RGB/bmg <br />Qualified Neutral Under Rule u4 <br />