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HomeMy Public PortalAboutLetter - Shimun 1994POWER P041VEI IDAHO POWER COMPANY P.O. BOX 70 BOISE, IDAHO 83707 November 2, 1994 Gary P. Shimun City Manager City of McCall 216 East Park Street P.O. Box 1065 McCall, ID STAN CRAVEN District Manager Re: Idaho Power Franchise Agreement with City of McCall Dear Mr. Shimun: Idaho Power has reviewed the proposed franchise agreement forwarded by the City of McCall. Idaho Power would prefer to follow its standard one -page franchise agreement for Idaho cities, which clearly and concisely covers the important elements of a franchise. Nonetheless, we believe that an agreement can be reached based on your proposed franchise form, with several modifications. The city of McCa11's proposed franchise agreement appears to be based on Idaho Power's existing franchise agreement with the city of Ontario, Oregon, with a number of revisions added by McCall. In this regard, it is important to note that the Ontario ordinance represents a finalized agreement negotiated by Ontario and the Company, after give and take from both sides. Considering this fact, Idaho power is reluctant to agree to additional concessions in the franchise agreement, which is evenly balanced to begin with. It should be also noted that, with respect to franchise fees, the Ontario ordinance was executed under Oregon's statutes and regulations, which expressly authorize Oregon cities to impose franchise fees upon electric utilities (see Oregon Revised Statutes §§ 221.410 - 221.470 and Oregon Administrative Rules § 860-22-040). With this in mind, the Company has the following comments on the McCall franchise agreement: Section 1: The McCall franchise ordinance states a term of ten years. The Ontario ordinance states a term of 20 years, which is the maximum franchise term in Oregon. The Company's franchise agreements in Idaho follow a standard 50 -year term, which is the maximum term for new franchises in Idaho. Idaho Power would recommend a 20 to 50 year franchise term for the McCall ordinance. Telephone (208) 324-2993, Fax (208) 324-1224 Sections 2. 3 & 4: These sections all include new language regarding the city's regulation of Idaho Power's facilities and operations. Idaho Power is concerned that this expanded language could infringe upon the existing authority of the Idaho Public Utilities Commission over the Company's operations. (Section 7 of the franchise agreement does acknowledge the authority of the Idaho Commission, but it refers only to Idaho Power's electric service and the rates and charges therefor. This does not cover the full extent of Idaho Power's operations that may be subject to the jurisdiction of the Idaho Commission.) To avoid a conflict with the Idaho Commission's authority, Idaho Power requests that McCall remove its new language in Sections 2, 3, & 4, as highlighted on the enclosed pages. This would leave the original language of the Ontario agreement, which provides appropriate guidelines for city regulation of Idaho Power facilities. Section 6: Idaho Power wishes to delete the city's new indemnification language and retain the standard liability provision set forth in the Ontario franchise agreement. That provision reads: The Grantee shall at all times indemnify and hold the City, its officers, employees and agents, harmless from any and all expense or liability arising from or by reason of any negligent act or omission of the Grantee, its representatives or employees, in the construction, operation or maintenance of any of the Grantee's electric utility property or facilities. Sections 9. 10. 11 & 12: Idaho Power wishes to delete these sections regarding franchise fees. Idaho Power does not pay franchise fees to cities in Idaho as proposed in the McCall ordinance. This is based on Idaho Power's position that Idaho cities do not have the right to unilaterally impose franchise fees on electric utilities such as Idaho Power. Idaho Power would accept a franchise fee which is approved by a vote of the citizens of the city, since the citizens would be responsible for paying the franchise fee as a separately itemized surcharge on their electricity bills. Section 15: Idaho Power is willing to accept McCall's additional wording in this section. However, we would like to add clarifying language to the fmal sentence, so it would read "In all cases, 60 days' notice shall be required on the part of City or Grantee to reopen the agreement under this Section." Section 16: Idaho Power wishes to delete this new section regarding termination of the franchise agreement. Idaho Power believes that the city has sufficient authority to require Company compliance under the terms of the Ontario franchise agreement without resorting to the extreme remedy of termination. Section 17: Idaho Power wishes to delete this new section which would require the formal consent of the city for any sale, assignment or lease of the franchise agreement. Such a consent requirement could create a substantial burden on the Company if required for a corporate restructuring, merger, etc. (For instance, city approval would have been required for -2- Idaho Power's transfer of its state of incorporation from Maine to Idaho in 1989, under the language of Section 13). Your October 13, 1994 letter also addresses the removal of existing above ground distribution lines and the discontinuance of placing new distribution lines above ground. Idaho Power's policy is to relocate existing overhead facilities underground at the expense of the requesting party. Similarly, with respect to locating new facilities underground, Idaho Power requires that the requesting party pay the differential in cost between the underground facilities and Idaho Power's standard overhead facilities. Accordingly, if the city of McCall were to request that Idaho Power bury new facilities or existing overhead facilities, the city would be required to pay the related costs in advance. (This would be different from a city zoning ordinance requiring that distribution facilities be placed underground by developers, in which case the developer would pay the additional costs of underground facilities). Idaho Power's policy for underground facilities has been applied elsewhere in its service territory and was previously approved by the Idaho Public Utilities Commission in a case involving the city of Ketchum. Please call me at (208) 324-2993 if you would like to discuss this matter further. Sincerely, Stan Craven SC:mmb -3-