HomeMy WebLinkAboutORD 06-058 i
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ORDINANCE NO. 06-058
ENTITLED AN ORDINANCE AMENDING FRANCHISE
NUMBER 04-068 GRANTED ENTERGY GULF STATES,INC.;
PROVIDING FOR AN ANNUAL PAYMENT; AUTHORIZING
THE CITY MANAGER TO EXECUTE AN AGREEMENT
RESERVING UNTIL THE YEAR 2017 THE RESOLUTION OF
PAYMENT TIMING ISSUE; PROVIDING AN EFFECTIVE
DATE UPON ACCEPTANCE IN WRITING BY ENTERGY
GULF STATES, INC.
WHEREAS, by Ordinance Number 04-068 adopted on the third and final reading
on September 28, 2004 by the City of Beaumont("City"),wherein Entergy Gulf States, Inc.
("EGSI"or"Company")was granted a franchise ("Franchise"), subsequently accepted by
EGSI on January 30, 2006 and made effective on February 1, 2006,to conduct within the
City an electrical power business and to use the streets, alleys and public ways of the City
for the purpose of conducting such business; and,
WHEREAS, City and Company desire to amend the Franchise by changing the
payments terms:
NOW, THEREFORE, BE IT RESOLVED BY THE
CITY COUNCIL OF THE CITY OF BEAUMONT:
SECTION 1.
That Section 10 of the Franchise is hereby amended to read as follows:
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, such incremental franchise fees and
associated costs and expenses, including gross receipts taxes are referred to as
"incremental amounts").
(a) Inconsideration 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.
Subject to any reduction in payments as provided in this section,
EGSI shall pay on August 1 of each year an amount equal to a
$0.0021524 charge per kilowatt hour("kWh") multiplied times the
number of kilowatt hours delivered by EGSI to each retail
customerwhose consuming facility's point of deliverywas located
within the City's boundaries during the twelve month period from
July 1 to June 30 preceding the August payment. It is agreed that
the payment to be paid on August 1, 2006 will be paid within
twenty (20) days of this Agreement being accepted by EGSI.
(b) In addition to the payments set out in Subsection 10(a), and
subject to the provisions of Subsection 10(g), EGSI shall pay on
or before the 15'h day of May,August, November and February an
amount equal to a$0.0010137 charge per kilowatt hour multiplied
times the number of kilowatt hours delivered by EGSI during the
preceding calendar quarter ending March, June, September, and
December, to each retail customer whose consuming facility's
point of delivery was located within the City's boundaries. The first
quarterly payment due under this subsection will be due on
November 15, 2006 for the preceding quarter ending September
30.'
(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 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 10(b) including any
increase due to the escalator provided for in Subsection
10(l), over and above the franchise fees calculated under
the previous franchise agreement, as modified by Section
Prior to the passage of this Amendment, EGSI paid the incremental payments owed for February
2006 through June 2006.
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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. This section is intentionally left blank in that at the time of
this Amendment, the Franchise and quarterly payments
had already become effective.
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(b), 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.
Priorto EGSI's reduction in franchise payments,EGSI shall
provide the City 30 days for a one-time opportunityto 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 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.
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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 forthe costof 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 eitherthe City or EGSI, regarding the
validity of the new Franchise agreement or the corresponding
surcharge, regardless if such 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
Subsection 10(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 and quarterly payments provided for in Subsection 10(b)
shall no longer be applicable or effective for the purpose of
calculating the franchise payment:
L 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 ofthis Franchise agreement
(which rate is reflected in Subsection 10(a)) 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 and quarterly payments 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 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 10(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 franchisefees
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
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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 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 is 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.
Q) At the time of each 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) All payments made under this Franchise shall be exclusive of and
in addition to ad valorem taxes. Any and all such payments made
by Company pursuant to this Section 10 shall be credited on any
amount imposed, levied or assessed against Company bythe 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
§283.0551M. 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 forthe
Company's collection 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 orderapproving
the corresponding surcharge, subject to acceptance by the
Company, in its sole discretion, as provided in Section 18(a).
SECTION 2.
That all provisions of the Franchise,exceptfor Section 10 as amended herein, shall remain
in full force and effect and shall not be affected by the passage of this ordinance.
SECTION 3.
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) 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 day of , 2006.
Passed second reading on the day of���t 0!C)C�,( " , 2006.
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Passed third and final reading on the day of f�'O V U , 2006.
Passed this the day of klo Er , 2006.
Approved h s the day of V O U �'I �} , 2006.
- Mayor Guy N. Goodson -
SECTION 4.
This agreement shall become effective upon EGSI's acceptance, in writing (in the form
provided below) of the ordinance.
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 ,2006, Ordinance No.
amending Franchise Number 04-068 granted to Entergy Gulf States, Inc. and the same
shall constitute and be a binding contractual obligation of EGSI and the City.
Entergy Gulf States, Inc.
By:
Title:
r==`Entergy
Entergy Gulf States,Inc.
350 Pine Street
P.O.Box 2951
Beaumont,TX 77704
Joseph F.Domino
President and CEO-Texas
December 6, 2006
Mayor Guy Goodson
City of Beaumont
P. O. Box 3827
Beaumont, Texas 77704-3827
To the Honorable Mayor and City Council:
Entergy Gulf States, Inc. acting by and through the undersigned authorized officer,
hereby accepts in all respects on this the 6th day of December, 2006, Ordinance No. 06-
058 amending Franchise Number 04-068 granted to Entergy Gulf States, Inc. and the
same shall constitute and be a binding contractual obligation of Entergy Gulf States, Inc.
and the City
Entergy Gulf States, Inc.
By:
F. Domino
Title: President and CEO-Texas
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