HomeMy WebLinkAboutORD 04-068 ORDINANCE NO. 04-068
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF BEAUMONT ACCELERATING THE
EXPIRATION OF THE EXISTING ELECTRIC
FRANCHISE BETWEEN THE CITY OF BEAUMONT
AND ENTERGY GULF STATES, INC., WHICH PASSED
THIRD AND FINAL READING ON THE 19TH OF
SEPTEMBER, 1961 AND WAS AMENDED BY
ORDINANCE NO. 82-137, AND GRANTING A NEW
FRANCHISE TO ENTERGY GULF STATES, INC.;
AUTHORIZING THE CITY'S ATTORNEY TO SEEK
APPROVAL FROM THE PUBLIC UTILITY
COMMISSION OF TEXAS OF A FRANCHISE FEE
SURCHARGE TARIFF; PROVIDING AN EFFECTIVE
DATE UPON THE ACCEPTANCE IN WRITING OF THE
SURCHARGE BY ENTERGY GULF STATES, INC.;
AND FINDING AND DETERMINING THAT THE
MEETING AT WHICH THIS ORDINANCE WAS
CONSIDERED WAS OPEN TO THE PUBLIC AND IN
ACCORDANCE WITH TEXAS LAW.
WHEREAS, the City of Beaumont ("City") contends that consideration or
compensation for the use of the City's streets, alleys and rights-of-way paid by Entergy
Gulf States, Inc. ("EGSI" or "Company") has not kept pace with changes in the rate of
inflation or the increasing cost of goods and services or the requirements of the Public
Utility Regulatory Act Section 33.008; and
WHEREAS, Section 1 of Ordinance 82-137 which amends Sections 11 and 19 of
the franchise agreement which passed on its third and final reading on the 19th of
September, 1961, hereinafter sometimes referred to in combination as the "existing
franchise agreement", provides for the annual payment consisting of the sum of money
equal to four percent (4%) of the annual gross receipts of Company within the City from
electric lighting and power sales for consumption within the corporate limits of the City,
exclusive of receipts from (i) sales to industrial consumers, (ii) sales for governmental
pumping, and (iii) street lighting; and
WHEREAS, the method of calculating this payment was modified by EGSI in
Ordinance 1
response to the enactment, by the 76th Legislature, of Section 33.008 of the Public
Utility Regulatory Act ("PURA"), and the revised rate, as provided by said statute, is
$0.00215246407 per kilowatt hour ("kWh") for each kWh delivered by EGSI within the
corporate limits of the City and is a reflection of calculating the rate based upon
consumption instead of gross receipts; and
WHEREAS, the City of Beaumont is concerned that the per kWh method of
calculating the amount of franchise fees due to the City may produce a lower level of
franchise compensation than the gross receipts method contained in Section 1 of
Ordinance No. 82-137 if, with everything else being equal, the cost of electric generation
increases; and
WHEREAS, laws enacted by the 76th Legislature provide that on the expiration
of a franchise agreement existing on September 1, 1999, an electric utility and a
municipality may mutually agree to a different level of compensation or to a different
method for determining the amount the municipality may charge for the use of a
municipal street, alley, or public way in connection with the delivery of electricity at retail
within the municipality; and
WHEREAS, the City desires, and EGSI agrees, conditional upon EGSI's
satisfaction that procedures are in place by which EGSI will recover any and all
incremental increases in franchise payments, associated with this ordinance, over the
amounts calculated pursuant to the existing franchise agreement, as modified by
Section 33.008 of PURA, together with all associated costs and expenses, including
gross receipts taxes, to accelerate the expiration of the existing electric franchise, and to
execute a new franchise agreement which is consistent with the new law; and
WHEREAS, it is reasonable that EGSI, as a condition to its agreement, requires
procedures and processes to be in place, to its satisfaction, by which it will recover all
associated increases in payments and associated costs, expenses and taxes; and
WHEREAS, it is reasonable that the expiration of the existing franchise and the
contemporaneous implementation and effect of new franchise agreement be
conditioned upon EGSI's acceptance in writing of an order of the Public Utility
Commission of Texas ("PUCT" or "Commission") which approves a surcharge that
Ordinance 2
authorizes the Company to collect any incremental increase in franchise payments over
the amounts calculated pursuant to the existing franchise agreement, as modified by
Section 33.008 of PURA, together with all associated costs and expenses, including
gross receipts taxes; and
WHEREAS, it is the intention of the City and EGSI that certain provisions of this
ordinance providing for EGSI's recovery of any incremental increase in franchise
payments over the amounts calculated pursuant to the existing franchise agreement, as
modified by Section 33.008, together with all associated costs and expenses, shall
remain in effect even if other provisions, such as, but not limited to, those providing for a
per-kWh calculation of franchise payments, are found to be null and void; and
WHEREAS, by this ordinance the City is authorizing the City's attorney to take
action to obtain a PUCT order that would include the provisions set forth in the
immediately preceding paragraphs; NOW THEREFORE,
BE IT ORDAINED BY THE CITY OF BEAUMONT, TEXAS THAT:
Section 1. That the findings and provisions set out in the preamble to this
ordinance are hereby in all things approved and adopted.
Section 2. The expiration date of the existing franchise agreement is hereby
amended to provide for an expiration date contemporaneous with the effective date of
this ordinance and the attached franchise agreement ("new franchise agreement").
Section 3. Subject to EGSI's acceptance, as provided in this ordinance and
the new franchise agreement and as required for this ordinance to become effective, the
franchise agreement attached as Exhibit A and signed (for the purpose of
this ordinance "new franchise agreement"), is hereby enacted and is incorporated by
reference herein and will be in full force and effect upon the effective date as provided
therein and in Section 5 of this ordinance.
Section 4. This Section 4 is included for explanatory purposes only and is not
intended to change or alter, and does not change or alter, in any respect, the new
franchise agreement.
a. The new franchise agreement provides that the franchise fee due
Ordinance 3
from EGSI shall be calculated by multiplying the factor of
$0.00316612909 per kWh times the total kWh delivered by EGSI
during the preceding calendar quarter to each retail customer
whose consuming facility's point of delivery is located within City's
boundaries. This franchise rate replaces the rate provided by the
franchise agreement existing on the effective date of this ordinance,
as modified by Section 33.008 of the Public Utility Regulatory Act
("P U RA"),
b. This ordinance and the new franchise agreement, including the franchise
rate therein, reflect the mutual interest of both the City and EGSI. An
underlying premise is that the Company shall be kept financially whole
with respect to any and all increases in franchise fees calculated pursuant
to the new franchise agreement over and above the franchise fees
calculated under the existing franchise agreement, as modified by Section
33.008 of the PURA, together with all associated costs and expenses,
including gross receipts taxes ("incremental amounts"). Consistent with
this premise, the Company shall collect such incremental amounts through
a "corresponding surcharge."
C. As provided below, and as provided in the new franchise agreement, the
corresponding surcharge must be approved by the Public Utility
Commission of Texas as a condition to this ordinance taking effect.
Attached to this ordinance as Exhibit B is a tariff entitled Municipal
Franchise Fee Surcharge that City intends as the corresponding
surcharge, subject to any amendments necessary to accommodate
EGSI's acceptance as required herein.
Section 5. Effective date. Except as provided in Section 7 below, this
ordinance shall take effect ("effective date") upon the latter of 1) its final passage, or 2)
EGSI's acceptance, in writing (in the form provided below) of a final order of the
Commission ("final order") approving the corresponding surcharge implementing
collection of the incremental amounts described in Section 4. Such acceptance shall be
Ordinance 4
within the sole discretion of EGSI. If applicable, such acceptance shall be filed with the
Office of the City Secretary, within thirty (30) days of the final order, in substantially the
following form:
To the Honorable Mayor and City Council:
EGSI acting by and through the undersigned authorized
officer hereby accepts in all respects, on this the day
of , 2004, Ordinance No.
amending, and accelerating the expiration of, the existing
electric franchise between the City and EGSI and
implementing the new franchise agreement, and the same
shall constitute and be a binding contractual obligation of
EGSI and the City.
Entergy Gulf States, Inc.
By:
Title:
In the event that EGSI has not filed said acceptance as required, and in the form
provided, within the specified thirty (30) day period, this ordinance shall not become
effective.
Section 6. Upon the effective date of this ordinance, EGSI is authorized to
charge the Municipal Fee surcharge as set forth in the attached tariff, or any
amendment thereof, as the corresponding surcharge referred to in Section 4, said
surcharge to be effective on the 1 st day of the 1 St full billing cycle subsequent to the
effective date of this ordinance.
Section 7. Notwithstanding the provisions of Section 5 above, the following
provisions shall apply and become effective upon the passage of this ordinance [which
shall be prior to its effective date as defined in Section 5]:
(a) City's attorney is authorized to take action to obtain a PUCT order as
contemplated in this ordinance and approving the attached Municipal
Franchise Fee Surcharge, which shall be amended as necessary to
accommodate EGSI's acceptance as required herein.
(b) As part of the consideration for this ordinance and the new franchise
Ordinance 5
agreement, the City shall bear the costs and expenses associated with
obtaining the approval of the corresponding surcharge (regardless of
whether the PUCT approves the corresponding surcharge and regardless
of whether EGSI accepts such approval). Such costs and expenses
include, but are not limited to:
i. costs and expenses of the City, related to obtaining approval of the
corresponding surcharge; and/or
ii. costs and expenses of or to EGSI related to obtaining approval of
the corresponding surcharge, whether such costs and expenses
are associated with EGSI's employees or consultants and/or
attorneys retained by EGSI, including, but not limited to, costs and
expenses incurred in preparing for and/or supporting the PUCT
filing, docket or proceeding initiated for the approval of the
corresponding surcharge.
Such costs and expenses of or to EGSI, as are enumerated in
Subsections 7(a)(i) and (ii) above, including carrying costs, shall be
recovered from the City pursuant to direct payment or a reduction of future
franchise payments as provided in this subsection. Prior to EGSI's
reduction in franchise payments, EGSI shall provide the City 30 days for a
one-time opportunity to make a direct payment to EGSI of any such costs
or expenses, such 30 days to run from City's receipt of Company's written
notice, which written notice shall identify any such costs and expenses.
Subsequent to said 30 day period, and in the absence of timely direct
payment by the City of the entirety of such costs and expenses, EGSI is
authorized to reduce any future franchise payment(s) in an amount equal
to any unpaid portion of such costs and expenses identified. At its sole
discretion, EGSI may recover all costs or expenses identified in any notice
in a one-time reduction to a future franchise payment. EGSI is authorized
to pursue the procedure(s) set forth in this subsection periodically as
determined by EGSI, in its sole discretion, to be required for the recovery
Ordinance 6
of any ongoing expenditure of such costs and expenses.
Section 8. Nothing in this ordinance, nor EGSI's acceptance as provided
herein, has the affect of conceding City's jurisdiction over EGSI's rates, including the
corresponding surcharge.
Section 9. The attached Municipal Franchise Surcharge (or an amendment as
referenced in Section 6) and Franchise Agreement signed by the Mayor, City of
Beaumont the President, EGSI—TX, and dated the 28tiday of September ,
2004, are adopted and made part of this ordinance.
Section 10. If any provision, section, subsection, sentence, clause or phrase of
this ordinance is, for any reason, held to be unconstitutional, void or invalid (or for any
reason unenforceable), the validity of the remaining portions of this agreement shall not
be affected thereby, it being the intent of the City in adopting this ordinance that no
portion thereof or provision or regulation contained herein shall become inoperative or
fail by reason of any unconstitutionality or invalidity of any other portion, provision, or
regulation, and, to this end, all provisions of this ordinance are declared to be severable.
Section 11. It is hereby officially found and determined that the meeting at
which this Ordinance passed is open to the public as required by law and that public
notice of the time, place and purpose of said meeting was given.
PASSED AND APPROVED ON THE FIRST READING this 24th day of
August , 2004.
ATTEST:
.e._..v,_.. V,
City Secretary Mayor
PASSED AND APPROVED ON THE SECOND READING this 14th day of
September, 2004.
ATTEST:
Ordinance 7
.4 A a 0,*u-,,. L
City Secretary Mayor
READ IN FULL AND PASSED AND ADOPTED ON THE THIRD
REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF Beaumont this
28th day of September , 2004.
ATTEST:
City Secretary Mayor
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Ordinance 8
FRANCHISE AGREEMENT
WHEREAS, the City of Beaumont ("City") desires to enter into a franchise
agreement granting to Entergy Gulf States, Inc. ("EGSI" or "Company") the right,
privilege and franchise to conduct within the City, an electrical lighting and power
business and to enter upon, erect, construct, maintain, extend, repair, replace
and remove in, under, upon, within, over, above, across and along any and all of
the present and future public roads, highways, streets, lanes, and alleys of the
city, and over and across any and all stream or streams, and bridge or bridges
now or hereafter owned or controlled by City, a system of poles, pole lines,
towers, distribution lines, transmission lines, wires, guys, cables, conduits,
transformers, and other distribution and transmission instrumentalities, facilities
and appurtenances (including telephone and telegraph poles and wires for said
company's own use), necessary or proper for the transmission and distribution of
electricity into, in, within, from, across, and through the City , as now existing, or
as said city limits may hereafter be extended; and
WHEREAS, the City desires to grant EGSI, its successors and assigns,
the authority to use such for the purpose of transmission, distribution, delivery
and sale of electricity to the City, and to the inhabitants of the City, or any other
person or persons, firms or corporations, wherever located within or without the
city limits of Beaumont, for use by such purchaser or purchasers, for light, power,
cooling and heat or for either or all of said purposes, or for any other purpose or
purposes for which electricity may be used;
WHEREAS, the franchise provided herein shall be effective until February
12, 2018, commencing upon and extending from the effective date as provided
herein;
WHEREAS, the City desires to provide for: the temporary removal, raising
or lowering by Company of its wires and other appurtenances; the right to, and
condition of, the opening of pavements and sidewalks by company; the retention
of all rights of City to regulate the location of Company's facilities in, upon, along,
under and over the streets, alleys and other public places of City, as well as to
require the re-location of same; the waiver of claims for damages by Company
Franchise Agreement Page 1
EXHIBIT "A"
against, and the provision of indemnity to, City; efficient electrical service and the
maintaining of Company's facilities; the use by City for the purposes specified of
poles and conduits of Company;
WHEREAS, the City and Company desire to provide for: fair
compensation, and method of payment of such, to the City for the use by
Company of the streets, alleys and public ways of the City; and the surcharge
recovery by EGSI of certain incremental franchise payments, together with
associated costs and expenses (including gross receipts taxes), paid to the City
by Company pursuant to this franchise;
WHEREAS, said franchise shall: provide for the maintenance of records
by Company with right of inspection by City reserving to City all powers of
regulation; prohibit assignment except by consent by City; give City's consent to
the cutting and trimming by Company of conflicting trees; provide a severability
clause; provide that this franchise shall not be exclusive; and provide that the City
shall have the right at any time within five years of the expiration of the term
hereof, but prior to the last twelve months of said term, to purchase, or cause to
be purchased, the property of the holder of this franchise within the limits of City
and devoted to public service hereunder, and shall provide a method of
determining the value of such properties if such purchase is made; make
miscellaneous provisions relative to this grant of franchise; and repeal all
previous electrical lighting and power franchise ordinances and agreements; and
WHEREAS, said franchise shall provide for the publication of this
franchise agreement and condition its effectiveness on acceptance by Company
as provided therein;
NOW THEREFORE:
Section 1.
Subject to the terms, conditions, and provisions of this franchise
agreement (sometimes "franchise" or "agreement"), the City of Beaumont, Texas,
hereinafter referred to as "City", does hereby grant unto Entergy Gulf States, Inc.,
hereinafter referred to as "EGSI" or "Company", its successors and assigns, the
right, privilege and franchise to conduct within the boundaries of the City, as such
Franchise Agreement Page 2
boundaries now exist or may hereafter be extended, an electrical lighting and
power business and to enter upon, erect, construct, maintain, extend, repair,
replace and remove in, under, upon, within, over, above, across and along any
and all of the present and future public roads, highways, streets, lanes and alleys
of the City and over and across any stream or streams, bridge or bridges, now or
hereafter owned or controlled by the City a system of poles, pole lines, towers,
distribution lines, transmission lines, wires, guys, cables, conduits, transformers,
and other distribution and transmission instrumentalities, facilities and
appurtenances (including telephone and telegraph poles and wires for
Company's own use) necessary or proper for the transmission and distribution of
electricity into, in, within, from, across and through the City as now existing or as
the said city limits may hereafter be extended; and Company, its successors and
assigns, are authorized to use said poles, pole lines, towers, distribution lines,
transmission lines, wires, guys, conduits, transformers, and other distribution and
transmission instrumentalities, facilities and appurtenances for the transmission,
distribution, delivery and sale of electricity to the City and to the inhabitants of the
City or any other person or persons, firms or corporations wherever located
within or without the city limits of Beaumont for use by such purchaser or
purchasers for light, power, cooling and heat, or for either or all of said purposes,
or for any other purpose or purposes, whether same or different from those
herein specified for which electricity may be used.
Section 2.
Company, on written request of any person, firm, corporation or
governmental authority, shall relocate, raise or lower its wires, where located on,
in or over the streets, alleys and other public ways of City, temporarily to permit
construction work in the vicinity thereof, or to permit the moving of houses or
other bulky structures. The expense of such temporary relocation, raising or
lowering of such wires shall be paid by the benefited party or parties, and the
Company may require the payment in advance, being without obligation to
remove, raise or lower its wires until such payment shall be made, provided,
however, that no such payment shall be required of the City except as provided
in Section 3. The Company shall be given not less than forty-eight (48) hours
Franchise Agreement Page 3
prior notice to arrange for such temporary wire changes.
Section 3.
Within the streets or other public ways of the City, the location and route of
all poles, stubs, guys, anchors, lines, conduits and cables placed and constructed
and to be placed and constructed by Company in the construction and
maintenance of its electrical lighting and power system in, within and through the
City shall be subject to the reasonable and proper regulation, control and
direction of the City, or of any city official to whom such duties have been or may
be duly delegated. All poles erected by the Company shall be so set that they
will not interfere with the flow of water in any gutter or drain and so that the same
will interfere as little as practicable with the ordinary travel on the streets,
sidewalks or other public way. The regulation and control herein reserved shall
include, but not by way of limitation, the right to require in writing the relocation of
Company facilities at Company's cost, within the streets or other public ways
whenever such shall be reasonably necessary on account of the removal of a
traffic hazard, the widening, change of grade, relocation or other City construction
within such streets or public ways; provided, however, Company shall be entitled
to be paid for its costs and expenses of any relocation, raising or lowering of its
wires, required by City, pursuant to this Section or Section 2, if such expenses or
costs are reimbursable or payable to the Company or the City by the State of
Texas, the United States or any governmental agency or subdivision of either,
whether directly or indirectly, but nothing herein shall impose any obligation on
the City to pay such costs and expenses except to the extent it receives funds
from the United States, State of Texas, or any governmental agency or
subdivision of either, for the reimbursement or payment of same.
Section 4.
If it becomes necessary in furnishing electricity as contemplated under this
franchise, the City grants to the Company the right and privilege to take up
pavements and sidewalks, if any, in and upon said streets, alleys and highways
in said City of Beaumont, and such as may be over and across any stream or
bridge, for the purpose of making such excavation and installation as may be
Franchise Agreement Page 4
necessary; provided, however, that Company shall not take up or excavate any
pavement at any time without first securing permission of the Director of Public
Works of City or City Manager; and provided further, that all excavations and
installations so made shall be performed in such manner as will cause the least
inconvenience to the public, and Company shall promptly restore to as good
condition as before working thereon, and to the reasonable satisfaction of the
Director of Public Works of City or City Manager, all streets excavated by it. The
City of Beaumont shall have the right to have one inspector present at each
excavation and installation, whose salary for the time he is so present at, and
traveling to and from, such excavation or installation, shall be paid by Company.
Section 5.
If any of the facilities installed by Company hereunder shall be in any
respect damaged or injured by The City of Beaumont or any of its officers,
agents, representatives, or employees, in connection with the performance of any
work or repairs that may be done upon the streets, avenues, alleys, and other
public places of the City of Beaumont, Company shall not be entitled to prosecute
or maintain a claim against the City of Beaumont for any such damage or injuries
so sustained by it, and the same is hereby in all things waived; provided,
however, the foregoing portion of this Section shall not apply where such
property is damaged or injured as a proximate result of installing, maintaining or
removing City's equipment upon or from Company's poles, or in or from
Company's ductlines, as provided in Section 9 hereof.
Section 6.
The City, by the granting of this franchise, does not surrender or to any
extent lose, waive, imperil or lessen the lawful powers and rights now or
hereinafter vested in the City under the Constitution and statutes of the State of
Texas and under the Charter of the City to regulate the rates for services of
Company; and Company, by its acceptance of this franchise, agrees that all such
lawful regulatory powers and rights as the same may be from time to time vested
in the City shall be in full force and effect and subject to the exercise thereof by
the City at any time and from time to time.
Franchise Agreement Page 5
Section 7.
It shall be the Company's obligation hereunder to furnish efficient electrical
service to the public at its rate schedule, said service to be first class in all
respects, considering all circumstances, and Company shall maintain its system
in reasonable operating condition during the continuance of this agreement.
Section 8.
Nothing contained in this franchise agreement shall be construed as
conferring upon Company any exclusive rights or privileges of any nature
whatsoever.
Section 9.
In addition to the consideration set forth elsewhere in this franchise
agreement, the Company shall hold itself ready to furnish free of charge, subject
to the use of the City, such pole space as may be required from time to time for
the installation of City-owned traffic, police and fire alarm system conductors, and
alarm or other necessary signal boxes; provided that such conductor space does
not exceed the capacity of one cross-arm on any one pole, and provided that
such space is then available on existing poles. The specific location for these
traffic, police and fire alarm conductors and boxes on Company's poles shall be
determined by the Company, and will be allotted at the times specific applications
for space are received from the City. Where a main underground ductline is
constructed or installed between manholes by Company after the effective date
of this franchise agreement, Company shall, as part of same, provide free of
charge for the installation by City of its traffic, police or fire alarm cables, one top
duct having one capped off entry channel and one capped off exit channel
between each two manholes, such entry and exit channels leaving the duct bank
enclosure outside of, but near to, such manholes, and no cable or other
equipment of City shall enter Company's manholes. Company shall, prior to
each addition by it to any duct now existing or hereafter constructed, notify the
Electrical Department of City of the nature and location of such intended addition;
further, Company shall, along with its application for a permit to open a street for
the purpose of laying a new duct, provide the City Electrical Department and the
Franchise Agreement Page 6
City Engineer's office each with a set of plans showing the type, number, and
location in the street, of the ducts to be constructed. City, prior to the original
installation by it of its equipment in any such top duct, shall notify Company of the
time and place it intends to make such entry and installation. All cables installed
by the City in Company ducts shall be of the non-metallic, sheath type to prevent
corrosive or electrolytic action between the City and Company-owned cables. All
City-owned conductors and cables, whether on poles or in ductlines, shall be
constructed, maintained and operated in such manner as to not interfere with or
create a hazard in the operation of the Company's electrical transmission and
distribution system. Further, all City-owned traffic, police and fire alarm
conductors, and alarm boxes, and any City circuits on Company poles, and all
cables installed by City in ducts constructed by Company, shall be installed in
strict compliance with the applicable provisions of the National Electric Safety
Code, Handbook 30, as published in March, 1948, by the United States
Department of Commerce, Bureau of Standards, as from time to time amended
or supplemented; provided, however, nothing herein shall impair the right of the
City in the future by ordinance to adopt any new, amended or revised code, or by
ordinance to specify such further or different standards as may be found to be in
the public interest.
Section 10.
The design and purpose of this franchise fee compensation clause is to
establish an administratively simple uniform method of compensating the City for
the use of the public right-of-way that: (1) is consistent with state law; (2) is
consistent with the opening of the markets for competition; (3) is competitively
neutral and nondiscriminatory; (4) is consistent with the burdens placed on the
City created by EGSI's use of the right-of-way; (5) provides fair and reasonable
compensation for the use of the public right-of-way; and (6) provides a
mechanism by which EGSI will remain financially whole with respect to any
increases in franchise payments resulting from the implementation of this
franchise over and above the franchise fees calculated under the previous
franchise agreement, as modified by Section 33.008 of the PURA, together with
all associated costs and expenses, including gross receipts taxes. (Hereinafter,
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such incremental franchise fees and associated costs and expenses, including
gross receipts taxes are referred to as "incremental amounts").
(a) In consideration of the right granted by the City to EGSI to use and
occupy the Public Ways in the City for the conduct of its business
under this agreement, the Company agrees to pay to the City franchise
fees in the amount and manner described herein. The rate provided in
Subsection (b) shall be effective for any delivery of electricity that will
be billed to retail customers on the first day of the month immediately
following the effective date of this franchise agreement. Franchise fee
rental payments shall be made on a quarterly basis on or before the 15
th day of May, August, November and February for the preceding
calendar quarter ending March, June, September and December of
each year. The first quarterly payment shall be due on the due date
immediately following the first full calendar quarter following the
effective date of this agreement. If necessary, EGSI shall adjust its
first payment to include any increase in the amount of franchise fees
resulting from this agreement that are owed for deliveries made in any
partial previous quarter for which this agreement became effective. All
franchise fees due and owing to the City for the period prior to the
effective date of this agreement shall be paid on or before the first day
of August subsequent to the effective date of this franchise agreement.
(b) Except as otherwise provided below in Subsection 10(g), and subject
to any reductions in payments as provided below in this Section 10, the
quarterly franchise fee shall be a sum of money which shall be
equivalent to a $0.00316612909 charge per kilowatt hour (or "kWh")
multiplied times the number of kilowatt hours delivered by EGSI to
each retail customer whose consuming facility's point of delivery is
located within the City's boundaries.
(c) An underlying premise of this franchise agreement and the ordinance
implementing it is that the Company shall be kept financially whole with
respect to any and all incremental amounts, as defined above in this
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Section 10.
i. EGSI shall collect such incremental amounts through 1) a
corresponding surcharge designed to collect the incremental
increases in franchise fees calculated pursuant to the rate set forth
in Subsection (b), including any increase due to the escalator
provided for in Subsection 10(I), over and above the franchise fees
calculated under the previous franchise agreement, as modified by
Section 33.008 of the PURA, along with all applicable taxes,
including gross receipts taxes ("corresponding surcharge"), which
surcharge shall be approved by the Public Utility Commission of
Texas ("PUCT" or "Commission"), and 2) a direct payment from the
City to EGSI or a reduction in franchise payments to City, as set
forth below.
ii. The corresponding surcharge referred to in the preceding
Subsection shall become effective on the 1St day of the 1st full
billing cycle subsequent to the effective date of the ordinance
implementing this franchise.
iii. In the event the Company does not collect in the corresponding
surcharge all incremental amounts associated with the three-month
periods corresponding with the quarterly due dates as set out in
Subsection 10(a), the Company is authorized to collect such
amounts not collected in the surcharge ("uncollected difference")
through either direct payment by City or a reduction of franchise
payments to City as provided in this Subsection. Prior to EGSI's
reduction in franchise payments, EGSI shall provide the City 30
days for a one-time opportunity to make a direct payment to EGSI
of any uncollected difference, such 30 days to run from City's
receipt of Company's written notice, which shall identify the
uncollected difference, the time period over which the uncollected
difference accrued and a detailed explanation of the calculations.
Subsequent to said 30 day period, and in the absence of timely
direct payment by the City of the entirety of the uncollected
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difference, EGSI is authorized to reduce any future franchise
payment(s) in an amount equal to any unpaid uncollected
difference not paid by the City. EGSI is authorized to implement
the procedures set forth in this Subsection periodically as EGSI, in
its sole discretion, determines is necessary to recover any ongoing
uncollected difference.
iv. With respect to the preparation for, or implementation of, retail open
access in EGSI's Texas service territory, City agrees to authorize
and support the approval and implementation of a monthly
surcharge for both Entergy's affiliate distribution company in Texas
("DISCO") and Entergy's affiliate retail electric provider in Texas
("REP") that provides for the collection and recovery of the same
amounts as are recovered through the corresponding surcharge
described in Subsection 10(c). The monthly surcharge described in
this subsection shall be in addition to the base rates otherwise
established for DISCO or the Price to Beat rates otherwise
established for the REP.
V. The corresponding surcharge described in this Subsection 10(c)
shall appear as a line item on EGSI's retail electric bill and identified
as a "Municipal Franchise Fee."
(d) In addition to the provisions of Subsection 10(c), EGSI is authorized to
reduce the quarterly franchise payments by $150.00. Further, the City
shall have until the latter of December 31, 2004 or 90 days after the
effective date of this franchise agreement to pay to EGSI an amount of
$24,400.00 for the cost of implementing the provisions of this franchise
agreement ("implementation costs"). In the event payment in full is not
timely made, the Company is authorized to reduce subsequent franchise
payments in an amount necessary to recover the entirety of the
implementation costs.
(e) The City shall bear the costs and expenses of all claims, challenges, and
lawsuits, of either the City or EGSI, regarding the validity of the new
franchise agreement or the corresponding surcharge, regardless if such
Franchise Agreement Page 10
claim or challenge is brought before a regulatory authority or in a federal
or state court of law, including payment of attorneys fees and costs
associated with the defense to EGSI or affiliates of EGSI for any legal or
regulatory challenge to the new franchise agreement or corresponding
surcharge, at the time such claim or challenge is made. The costs and
expenses referred to in this Subsection include, but are not limited to:
i. costs and expenses of the City, related to obtaining
the corresponding surcharge; and/or
ii. costs and expenses of or to EGSI, whether such costs and
expenses are associated with EGSI's employees or consultants
and/or attorneys retained by EGSI in the defense of such claims,
challenges and lawsuits.
(f) Such costs and expenses of or to EGSI, as are enumerated in
Subsection10(e) above, including carrying costs, shall be recovered from
the City pursuant to direct payment or a reduction of franchise payments
as provided in this Subsection. Prior to EGSI's reduction in franchise
payments, EGSI shall provide the City 30 days for a one-time opportunity
to make a direct payment to EGSI of any such costs or expenses, such 30
days to run from City's receipt of Company's written notice, which written
notice shall identify any such costs and expenses. Subsequent to said 30
day period, and in the absence of timely direct payment by the City of the
entirety of such costs and expenses, EGSI is authorized to reduce any
future franchise payment(s) in an amount equal to any unpaid portion of
such costs and expenses identified. At its sole discretion, EGSI may
recover all costs or expenses identified in any notice in a one-time
reduction to a future franchise payment. EGSI is authorized to pursue the
procedure(s) set forth in this Subsection periodically as determined by
EGSI, in its sole discretion, to be required for the recovery any ongoing
expenditure of such costs and expenses.
(g) Upon the occurrence of any of the following events, the franchise fee rate
provided for in Subsection 10(b) shall no longer be applicable or effective
for the purpose of calculating the franchise payment:
Franchise Agreement Page 11
i. the recovery of the incremental amounts through a corresponding
surcharge ceases, such as (but not exclusively) through the
PUCT's determination that the incremental amounts shall be
recovered through the Company's base rates rather than through
the corresponding surcharge;
ii. the PUCT or a court of competent jurisdiction 1) finds the
corresponding surcharge unlawful or otherwise prohibits the
surcharge recovery of the incremental amounts; 2) finds that the
franchise fees calculated under this Section 10, or the amounts
collected through the corresponding surcharge or through a
reduction in franchise payments, as provided herein, may not be
recovered by EGSI from its customers; or 3) in some manner
prevents or prohibits EGSI from recovering said incremental
amounts; and
iii. with respect to the preparation for, or implementation of, retail open
access in EGSI's Texas service territory, EGSI or Entergy's affiliate
distribution company in Texas ("Disco") or Entergy's affiliate retail
electric provider in Texas ("REP"), at any time, is not permitted to
implement the monthly surcharge described in Subsection 10(c)(iv).
Upon the occurrence of any of the events enumerated in Subsections
10(g) i, ii, or iii, the franchise rate effective immediately prior to the
effective date of this franchise agreement shall be applicable and effective
for the purpose of calculating the franchise payment under this franchise
agreement. Further, in the event the PUCT or a court of competent
jurisdiction finds a portion of the corresponding surcharge unlawful or
otherwise prohibits a portion of the surcharge recovery of the incremental
amounts, the franchise rate provided for under Subsection 10(b) shall be
amended and adjusted such that the franchise payment made by the
Company to the City is no greater than the amounts the Company is
authorized to collect through its base rates and the corresponding
surcharge. Nothing in the immediately preceding sentence permits the
realignment of the recovery of any portion of the incremental amounts
Franchise Agreement Page 12
from the corresponding surcharge to the Company's base rates, prohibited
by Subsection 10(g)i.
(h) If the PUCT or a court of competent jurisdiction orders EGSI to refund to
customers any amounts for the franchise fees or any associated costs or
expenses, including taxes, collected pursuant to this franchise agreement,
such amounts refunded shall be recovered from the City pursuant to a
direct payment or a reduction of franchise payments, under the procedure
set forth in Subsection(c) iii above.
(i) Entergy Gulf States, Inc. Franchise Fee Recovery Tariff (Corresponding
Surcharge)
L City agrees that (a) it will adopt and approve the corresponding
surcharge approved by the PUCT and accepted by EGSI as
provided herein and, if required, amend accordingly the Municipal
Franchise Surcharge attached to the implementing ordinance; (b) if
City intervenes in any regulatory proceeding before a federal or
state agency in which the recovery of EGSI's franchise fees is an
issue, the City will take an affirmative position supporting 100%
recovery of franchise fees by EGSI in the manner consistent with
this agreement; (c) in the event of an appeal of any such regulatory
proceeding in which the City has intervened, the City will take an
affirmative position in any such appeals in support of the 100%
recovery of such franchise fees by EGSI in the manner consistent
with this agreement; and (d) subsequent to this agreement
becoming effective, EGSI may take whatever action with, and seek
whatever approval from, the PUCT, that it deems appropriate to
continue to achieve full recovery of any incremental amounts under
this agreement.
ii. City agrees that it will take no action, nor cause any other person or
entity to take any action, to prohibit the recovery of such
incremental amounts by EGSI.
iii. Neither the adoption of this franchise, the accompanying ordinance,
nor the corresponding tariff shall be used by either the City or the
Franchise Agreement Page 13
Company, in any proceeding before a regulatory authority or state
or federal court of law, as precedent for a reduction in the
Company's rates or as evidence of or support for the positions
taken by the City or the Company in such matters, other than in
requesting PUCT approval of the corresponding surcharge or in any
direct court appeal of a PUCT order addressing the corresponding
surcharge.
(j) At the time of each quarterly payment, EGSI shall also submit to the City a
sworn statement showing the following: (i) its kilowatt hour sales delivered
to each retail customer whose consuming facility's point of delivery is
located within the City's boundaries for the preceding calendar quarter
upon which the franchise fee payment is calculated; (ii) a detailed listing of
any claimed costs and expenses, including taxes, uncollected difference
(not paid by City) and/or claimed refund items (all as referred to in this
Section 10) ; and (iii) a detailed reconciliation of the quarterly franchise
payment calculation.
(k) Said quarterly payments above provided shall be exclusive of and in
addition to ad valorem taxes. Any and all such quarterly payments made
by Company pursuant to this Section shall be credited on any amount
imposed, levied or assessed against Company by the City of Beaumont,
pursuant to ordinance or otherwise, at any time as a charge (whether
designated as rental, tax or otherwise) for the use by Company of City's
streets, alleys and public ways.
(1) Upon approval by the PUCT as provided herein, and beginning on the first
anniversary of the effective date of this agreement and annually thereafter,
EGSI shall annually adjust the total unit per kWh franchise fee rate, set
forth in Subsection 10(b), by an amount to be designated in writing by the
City based on one-half the annual increase, if any, in the consumer price
index as calculated in accordance with the Local Government Code
§283.055(8). The adjustment provided for in this Subsection shall become
effective only upon the PUCT's approval of an equivalent adjustment to
the corresponding surcharge which provides for the Company's collection
Franchise Agreement Page 14
through the corresponding surcharge of the increase in the franchise
payment resulting from the adjustment provided in this subsection. The
approval of the PUCT referenced in the immediately preceding sentence
may be obtained contemporaneously with, and contained in, a final order
approving the corresponding surcharge, subject to acceptance by the
Company, in its sole discretion, as provided in Section 18(a).
Section 11.
At all times during the continuance of the rights herein granted, Company
shall keep in its office at the disposal of and open to inspection by the City of
Beaumont at all reasonable times all contracts, books of accounts, and costs and
operating records, a full, true, complete and accurate account of all monies
received and expended, and liabilities incurred by it in connection with its
business in the construction, maintenance and operation of its properties
operated hereunder, and also complete statistical records of its business and
operations. Notwithstanding the foregoing, City may conduct an inspection,
audit, or other inquiry, or may pursue any cause of action in relation to
Company's payments pursuant to this agreement only if such inspection, audit,
inquiry or pursuit of a cause of action concerns a payment made less than two
years before commencement of such inspection, audit, or pursuit of a cause of
action.
Section 12.
The Company, its successors and assigns shall indemnify, save and hold
harmless the City from any and all claims for injuries and damage to person or
property occasioned by or arising out of the construction, reconstruction,
maintenance, operation or repair of said Company's electrical lighting and power
system, or by the conducting of Company's business in The City of Beaumont, or
in any way growing out of the granting of this franchise, either directly or
indirectly, or by reason of any act, negligence or nonfeasance of the contractors,
agents or employees of Company, its successors and assigns, and shall refund
to City all sums which it may be adjudged to pay on any such claim, or which
may arise or grow out of the exercise of the rights and privileges hereby granted,
Franchise Agreement Page 15
or by the abuse thereof, and Company shall indemnify and hold the City
harmless from and on account of all damages, costs, expenses, actions and
causes of actions that may accrue to or be brought by any person, persons,
company or companies at any time hereafter by reason of the exercise of the
rights and privileges hereby granted, or of the abuse thereof; provided, however,
that the provisions of this Section shall not be applicable to any claims, damages,
costs, expenses, actions or causes of actions proximately resulting from the use
by City, its officers, agents, representatives or employees, of Company's poles
and ductlines for the installation, maintenance or removal of City's equipment, as
provided in Section 9.
Section 13.
In granting this franchise it is understood that the lawful power vested by
law in the City to regulate all public utilities within the City and to regulate the
local rates of public utilities within the City, within the limits of the Constitution and
laws and to require all persons or corporations to discharge the duties and
undertaking for the performance of which this franchise was made is reserved;
this grant is made subject to all the rights, powers and authorities either of
regulation or otherwise lawfully reserved to the City.
Section 14.
The rights, franchises and privileges granted hereby shall not be
transferred or assigned by Company except with the consent of the City Council
of The City of Beaumont expressed by Ordinance passed by said City Council.
Section 15.
The City shall have the right and reserves the right at any time within five
(5) years of the expiration of the term hereof, but prior to the last twelve (12)
months of said term, to purchase or cause to be purchased the property of the
holder of this franchise located within the boundaries of The City of Beaumont
and devoted to public service hereunder; said purchase, if made, to be effective
at the expiration of the term hereof. If the City elects to exercise such purchase
right, the values of such property, if not agreed between the parties, shall be
determined in an appropriate proceeding filed in any court having jurisdiction;
Franchise Agreement Page 16
provided, however, that before the City shall purchase or cause to be purchased
such property of Company, the matter of such acquisition of such property shall
be submitted at a municipal election to be determined by a majority vote of the
qualified taxpayers voting thereon.
Section 16.
To the extent that the City has authority so to do, it gives to Company,
during the life of this franchise, the right, license, privilege and permission to trim
trees upon and overhanging the streets, alleys, sidewalks and public places of
City, so as to prevent the branches of such trees from coming in contact with the
wires or other equipment of Company. Company agrees that it will fully protect
and indemnify City from any and all claims, demands, actions, causes of actions,
damages and expenses arising because of such trimming by Company under the
provisions of this Section.
Section 17.
(a) Except as provided in Section 10, Subsection (g), if any provision, section,
subsection, sentence, clause or phrase of this franchise is, for any reason,
held to be unconstitutional, void or invalid (or for any reason
unenforceable), the validity of the remaining portions of this agreement
shall not be affected thereby, it being the intent of the City in adopting this
franchise agreement that no portion thereof or provision or regulation
contained herein shall become inoperative or fail by reason of any
unconstitutionality or invalidity of any other portion, provision, or
regulation, and, to this end, all provisions of this franchise agreement are
declared to be severable.
(b) The failure of either party 1) to enforce any of its rights under this franchise
agreement or 2) to take any action authorized under this franchise, shall
not constitute a waiver of any rights, or a release of any obligations,
provided or imposed by this franchise.
Section 18.
(a) This agreement shall become effective upon the latter of 1) the final
passage of the ordinance approving this agreement, and 2) EGSI's
Franchise Agreement Page 17
acceptance, in writing (in the form provided below) of a final order of the
PUCT ("final order") approving the corresponding surcharge authorizing
collection of the incremental amounts collected under the rate, as
referenced in Subsection 10(c), as well as associated costs and expenses.
Such acceptance shall be within the sole discretion of EGSI. If applicable,
such acceptance shall be filed with the Office of the City Secretary, within
thirty (30) days of the final order, in substantially the following form:
To the Honorable Mayor and City Council:
EGSI acting by and through the undersigned authorized
officer, hereby accepts in all respects, on this the
day of , 2004, Ordinance No.
amending, and accelerating the expiration of, the existing
electric franchise between the City and EGSI and
implementing the new franchise agreement, and the same
shall constitute and be a binding contractual obligation of
EGSI and the City.
Entergy Gulf States, Inc.
By:
Title:
In the event that EGSI has not filed said acceptance as required, and in
the form provided, within the specified thirty (30) day period, this
agreement shall not become effective.
(b) Upon becoming effective pursuant to the terms of this Section, the
franchise shall be in full force and effect for a term and period extending
from its effective date until February 12, 2018.
Section 19.
This franchise replaces all former franchises granted to Company or its
predecessors, which are hereby repealed, which repeal is effective as of the time
the franchise herein granted takes effect.
Section 20.
The full text of this franchise agreement shall, after final passage by the
City Council of The City of Beaumont, be published once each week for four (4)
Franchise Agreement Page 18
consecutive weeks in a newspaper of general circulation published in The City of
Beaumont, and the expense of such publication shall be borne by Company.
Passed first reading on the 24th day of August, 2004 .
Passed second reading on the 14th day of Sept , 2004.
Passed third and final reading on the 28th day of Sept , 2004.
Passed this the 28th day of Sept . 2004
Approved this the 28th day of Sept . 2004 .
Mayor of the ity of Beaumont, Texas
Signed this 28th day of September , 2004
President, Entergy Gulf States, Inc.--Texas
Mayor of the City of Beaumont, Texas
Franchise Agreement Page 19
EXHIBIT B
ENTERGY GULF STATES, INC.
TARIFF FOR MUNICIPAL FRANCHISE FEES
Applicable: Within City Limits of Beaumont, Texas
Effective Date: On 1 st day of 1 st full billing cycle subsequent to effective date of Ordinance
Approving Tariff
Municipal Franchise Fee Surcharge
And Associated Tax Adjustment
APPLICATION
This schedule is applicable to all electric service rendered by Entergy Gulf States, Inc. to retail
customers whose consuming facility's points of delivery are located within the City Limits of
Beaumont, Texas.
MONTHLY RATE ADJUSTMENT
Municipal Franchise Fee Surcharge $0.00101366502 per kWh
In addition, the municipal franchise fee surcharge shall be adjusted for state gross receipts taxes
imposed by Sections 182-021 — 182-025 of the Texas Tax Code.
The municipal franchise fee surcharge shall also be adjusted by an amount equivalent to the
amount of all applicable taxes and any other governmental impositions, rentals, fees, or charges
(except state, county, city, and special district ad valorem taxes and taxes on net income) levied,
assessed, or imposed upon or allocated to Company with respect to the Electric Service provided
to Customer by Company, and any associated facilities involved in the performance of such
Electric Service. The municipal franchise fee surcharge shall also be adjusted by an amount
equivalent to the proportionate part of any increase or decrease of any tax and any other
governmental imposition, rental, fee, or charge (except state, county, city, and special district ad
valorem taxes and taxes on net income) levied, assessed, or imposed subsequent to the effective
date of this tariff, upon or allocated to Company's operations, by any new or amended law,
ordinance, or contract.
The municipal franchise fee surcharge shall further be adjusted annually by EGSI by an amount
which provides for the Company's collection through the municipal franchise fee surcharge of
the increase in the franchise payment resulting from the annual adjustment to the franchise fee
rate, as provided in the franchise, based on one-half the annual increase, if any, in the consumer
price index as calculated in accordance with the Local Government Code _ 283.055(g).
TERMS AND CONDITIONS
Electric Service will be furnished in accordance with Entergy Gulf States Inc.'s tariff manual
and standard terms and conditions.
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