HomeMy Public PortalAboutIdaho Pwr Franchise Agmnt IDAHO POWER COMPANY
P.O. BOX 70
BOISE, IDAHO 83707
STAN CRAVEN
District Manager
November 2, 1994
Gary P. Shimun
City Manager
City of McCall
216 East Park Street
P.O. Box 1065
McCall, ID
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 McCall'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:
Sectioll ~: 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 final 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-
ORI)INA~C[ NO.
WAN ORDINANCE IN ACCO~CE WITH IDAHO CODE 50-328 AND
50-329 GRANTING A NONEXCLUSIVE FRANCHISE TO IDAHO POWER
COMPANY, A CORPORATION AND TO ITS SUCCESSORS AND ASSIGNS,
TO CONSTRUCT, MAINTAIN AND OPERATE IN AND UPON THE
PRESENT AND FUTURE S~S, HIGHWAYS AND OTHER PUBLIC
PLACES WITHIN THE CORPORATE LIMITS OF THE CITY OFMCCAT.L
IDAHO, ELECTRIC UTILITY PROPERTY AND FACILITIES FOR
SUPPLYING ELECTRICITY AND ELECTRIC SERVICE TO TH~ CITY,
THE INHABITANTS THEREOF, AND OTHERS FOR A TERN OF TWENTY
YF. AI~; SUBJECTING SUCH ELECTRIC SERVICE TO REGULATION BY
PUBLIC AUTHORITY; PROVIDING FOR PAYMENT TO THE CITY OF
COMPENSATION FOR THE EXERCISE OF SAID FRANCHISE; AND
SPECIFYING OTHER T-~MITATIONS, TERMS AND CONDITIONS
GOVERNING THE EXERCISE OF SAID FRANCHISE.'
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF MCCALL ,
IDAHO, THAT:
~. The City of McCall , Idaho (hereinafter
called the 'City') hereby grants to IDAHO POWER COMPANY, a
corporation, and to its successors and assigns (hereinafter called
the 'Grantee') the right, privilege and franchise for a period of
ten ¢10) years from and after $~nuarv 1. 1995 , however,
with the right to amend by mutual agreement in accordance with
Section 15, to construct, maintain and operate in and upon the
present and future streets, alleys, highways and other public
places within the corporate limits of the City, electric utility
property and facilities for supplying electricity to the City, and
the inhabitants thereof, and to persons and corporations beyond the
limits of the City, subject to the terms and conditions hereinafter
specified. In the case of annexation of property to the corporate
limit, such area will be considered under this agreement, upon
effective date of ~he annexation. All such electric utility
property and facilities now maintained by the Grantee within the
corporate limits of the City shall be deemed covered by this
ordinance.
~. All of the Grantee's electric property and
facilities shall be constructed and at all times maintained in good
order and condition and in accordance with standard engineering
practices and all applicable safety codes and lawful governmental
regulations, including all construction standards presently in
effect in the City of McCall or adopted by the City d~r~ the
t~n (10) year term granted herein. The City shall have authority
at all times, in furtherance of the safety, convenience and welfare
of the public, to control by appropriate regulations the location,
elevation and manner of construc~ion and maintenance of the
Grantee's electric property and facilities on'the City streets,
alleys, highways and public places, subject to the provisions of
any state or federal law applicable thereto, and ~he Grantee shall
at all times conform with all such regulations.
~. Upon request cf the City ~he qran~ee shall
move their facilitie~ as necessary within ~he right of ~ay. This
cost viii be the responsibility of ~he grantee.
~TJ~_~. It shall be lawful for ~he Grantee to make
all needful or convenient excavations in any of the streets,
alleys, boulevards and thoroughfares of the City for the purpose of
erecting and laintaining the posts, poles, tower, or other supports
for its wires or for the purpose of laying, maintaining and
operating wires and other conductors underground for the purpose
aforesaid, or to repair and i~prove such electric power and light
system and to extend the sa~e as the growth of said City or the
needs of the inhabitants thereof may require; provided that when
the Grantee, or any person or corporation under the authority of
this franchise, shall disturb any of said streets, alleys, avanues,
boulevards, thoroughfares or public places for the purposes
aforesaid, he, it or they shall comply with the existing a~d future
ordinances of the City applicable thereto, and shall restore the
same to good order and condition as soon as practicable and without
unnecessary delay and failing to do so after five days' notice from
the City, or its duly authorized officer or officers, then the City
may place said street, alley, avenue, boulevard, thoroughfare or
public place in such condition at the cost and expense of the
Grantee, and said Grantee will forthwith pay the full cost and
expense thereof upon demand of the City. JLIX facilities
constructed under this ordinar~e shall be placed and maLn~lined at
such places and positions in or upon such public ways and public
places as shall not interfere with the passage of traffic and the
use of adjoining property, and shall confora to all &PPlicable
laws, rules and regulations. Grantee is required to apply for and
receive all peraits as may be required by the City for work in the
public way.
~TJ~_~. The City shall have the free right and
privilege to s~ri~ and Baintain wires for its aunicipal police md
fire ala~ syst~ u~n ~e ~les ~ o~er facilities erected ~d
~intain~ by ~e Grates bare,der. ~e City shall s~ing,
~intain .~d o~rate such wires at i~s o~ e~ense, risk and
...... g p s and xn such ma~er as not to ~se any
ad~l=~ona~ e~nse u~n Grantee of ~s sa~d ~les and facilities.
of ~'~r~-~~~s~ xn ~e max~=e~ce, o~ration or repair
, nd app~enances.
~F~J~_~. The Grantee shall at all t~es inde~nify and
hold the City, its officers, employees and agen%s, harmless from
any and all clalas, causes of action, expense or liability arising
out of, or in any way connected wi~h ~he construction, operation or
~aintenance of any of ~he Grantee's ~l~ctric
facilities bM ~r~ee and/or Gr~tee's ag~s, e~loyees or
represen~a~ives. ~r~ee shall provide an Xd~o p~lic
i~urance ce~ifi~e pro~ec~in~ ~e Ci~M ~der ~e Xd~o ~o~
cla~ a~a~u~e.
~J~. The electric service to be furniehed to the
public hereunder, and all rates and charges ~herefor, and all
regulation of the Grantee applicable thereto, shall at all rises be
subject to all rules, regulation and orders that ~ay be lawfully
prescribed by the Public Utility Commission of the State of Idaho
or by any o~her governmental authority now or hereafter having
Jurisdiction over such matters. During the tera of this franchise,
the Grantee shall continuously maintain facilities in the City for
convenience to its customers for the paylent of bille for electric
service during the usual office hours.
~~[_~. When neceeaary, in order to pezlit any duly
authorized person to move any building or other structure across or
along any street, alley, avenue, boulevard, or public place within
the City, the Grantee shall temporarily raise or remove its wires,
fixtures and appurtenances upon such street, i alley, avenue,
boulevard, thoroughfare or public place, upon seventy-two hours
written notice in advance from such person, such notice to bear the
approval of such official as the City Bay designate, at such time
and in such manner as Bay be necessary reasonably to accoB~odate
such moving, consistently with the maintenance of proper service to
the Grantee's customers; provided, however, ~J~at the cost to the
Grantee of such temporary raising or removal, and of any
interruption of the Grantee's service to its customers caused
thereby, shall first be paid or satisfactorily secured to the
Grantee by the owner or mover of such building or other structure.
~TJJiH_~. As compensation for the right, privilege and
franchise hereby granted, the Grantee shall pay to the City on or
before the 15th day of each January, April, July and October
following adoption of this ordinance an amount equivalent to three
percent (3%) of the Grantee's mGross Revenuesw for the preceding
quarter. The terB mGross Revenues' as used herein shall Bean and
be construed to be the amount of money actually collected fro, all
sources by the Grantee during the preceding quarter within the
corporate limits of the 'City. All sums which become delinquent
shall accumulate interest at the etatutory rate provided in Xdaho
Co4e Title 28, Chapter 22, Section 104(1). The accrual of interest
is not intended to waive or in any ~nner restrict City's ahility
to elect any procedure or method of collection permissible by law
to enforce all the ter~s and conditions of this ordinance or the
franchise agreement. Xn addition, where the ~ity determines by
audit, financial statement or other method, that grantee has
underpaid franchise fees and where lmayment was not received by the
city within the quarter ~wed, the grantee may be required to pay
3
all fees and interest due and an additional penalty of 25% of ~he
total Auount owed.
Such franchise fee nay be listed as a separate iteu on the
customer's utility bill.
SECTION 10. City agrees to follow the notice
requirements of 63-2224A prior to the approval and commencement of
this franchise agreement.
~TJ~_~. The Grantee shall keep accurate books of
account and the City shall have the right to inspect the sam et
all times during business hours, and from tine to time audit the
same for the purpose of determining such 'Gross Revenues.u Such
franchise compensation paynen~s will be accepted by the City in
lieu of and as payment for any license, privilege or occulMtion~ax
or fee for revenue or regulation now or hereafter to be imposed by
the City upon the Grantee during the tern of this franchise;
provided, however, that this section will not be interpreted or be
construed as in any manner exempting the Grantee froR paying the
usual and normal real and personal property taxes to any and all
taxing bodies within the boundaries of which the Grantee functions,
operates and owns property, and during the tern hereof the City
will not require the Grantee to pay to the City any additional
license, privilege or occupation tax or fee. The City may require
an auditorts negative assurance statement from Grantee.
~TJ~_~_~. In the event that a franchise fee paid by
another oft he City's franchise grantees exceedsthe&uountpaidby
Grantee herein, the franchise fee addressed in this Agreement Bay
be raised to that level at the discretion of the City.
SECTION 13. The Grantee shall have the right and
privilege, insofar as the city is able to grant the sane, in
accordance with National Arbo~ist Association standards, of the
trimming of all trees w~lch overnang ~he streets or lmblic places
in such a manner and to such extent as will prevent the branches or
limbs or other parts of such trees from touching or interfering
with its wires, poles and other fixtures and equipment; providing,
however, that no such trees will be ~:rimmed or cut back farther
than may be necessary to prevent such interference a~d to allow the
proper operation and maintenance of said line poles and fixtures.
However, except in an emergency, no trimming shall be undertaken
without giving the adjacent property owner notice that such
trLmming will be performed.
~T.L~iA. The Grantee shall Bain~ain and operate a
system for the distribution of electricity in'the City so as to
furnish what shall be known as a twenty-four hour service, but the
Grantee does not guarantee continuous and uninterrupted service
under the terms hereof and under no circumstances sh~ll the ~rantse
be held liable to or responsible by the City on account of
interruption or failure of service caused by stor~s, washouts,
accidents, floods, acts of God or the public enemy, war, strikes,
damages by the elements or damage to plant or equipment on account
of any circumstances beyond the control of the Grantee. However,
the Grantee does agree to use due diligence to ~aintain continuous
and uninterrupted service.
· ~J~2/_~. In the event of an a~end~ent to the laws,
rules or regulations of the City of McCall , the State of Idaho
or the Public Utility Conission of Idaho applicable to this
franchise, or for periodic review of any section of this agreement
the ter~s of this franchise and the rights and privileges hereby
conferred may be changed, altered, amended or iodified upon lutual
agreement between the City and the Grantee. In all cases, 60 days
notice shall be required on the part of City or Grantee to reopen
the agreement.
~[~__~. If a grantee willfully violates or fails to
comply with any of the provisions of this franchise, the City shall
give written notice to the grantee of the alleged non-compliance of
it's franchise. The grantee shall have forty-five (45) days from
the date of notice of non-compliance to cure such alleged default
or, if such default cannot be cured in forty-five (45) days, to
present to the City a plan of action whereby such default can be
promptly cured.
If such default continues beyond the applicable dates agreed to for
such cure, the City shall give the grantee written notice that all
rights conferred under this Ordinance and its franchise ~ay be
revoked or terminated by the Council after a public hearing. The
grantee shall be entitled to not less than thirty (30) days prior
notice of the date, time and place of the public hearing. The City
may elect, in lieu of the above and without any prejudice to any of
its other legal rights and remedies, to obtain an order fro~ the
district court having jurisdiction compelling grantee to co~ply
with the .pro.v.isio_.r~. o.f the franchise and recover damages and costs
incurred oy r~e cl=y oy reason of the grantee ts failure to co~ply.
· ~TJ~/. Sale, assignment or lease of this franchise
is prohibited without the express written consent of the City.
~F~TJ~_L~. Inasmuch as the Grantee has constructed and
ri_ow../.? .main.tainin_g and operating electric utility property and
raclli=les Ln and upon the streets, alleys, avenues, highways,
,b~__u_l_e~v~a_r_ds,_.th. oro.u_g.hfare? and public places .in the City under a
~a-~n~se wn~cn wl~ expire on Ju]v 1. 1994 , it is
hereby adjudged and declared that this ordinance is necessary for
~t~.e p_rese.r~.a, tion _.of the public peace, healths end safety, and
v-nererore ~ls ordinance shall take effect on January 1, 1995.
5
IDAHO POWER COMPANY
I.P.U.C. NO. 25, TARIFF NO.
SCHEDULE NO. 71
OVERHEAD AND UNDERGROUND
D~STRIBUTION LINE EXTENSIONS
(cont)
VIII. REFUNDS (Continued)
· "'RD REVISED
CANCELS
S[COND R[V)SED SHEET NO. 27E
IDAHO PUBLIC UTILITIES COM?~)SSION
APPROVED EFFECTIVE
JUN 1 4 '91 JUL 1 -'91
~ /~ ~ SECRETARY
If the Extension Allowance of an Additional Applicant covers all
applicable payments and still has a remaining balance, that surplus
will be refunded among Vested Interest holders on a Connected Load
basis until the surplus is exhausted or all Vested Interests are fully
refunded.
Vested Interest refund payments may be waived by notifying the Company
in writing.
Refund Limitation~
1. Refunds will only be made for connections during the first five years
following the completion date of the Line Extension or Upgrade
construction.
2. Refunds will not exceed lOQ ~ of the refundable portion of any
party's cash payment to the Company.
IX.
JAHO
LOCAL IMPROVEMENT DISTRICT~
Unless specifically provided for under this paragraph, a Local Improvement
District will be provided service under the general terms of this tariff schedule.
~ -n will; rovide a cost. estimate and feasibility.study..fOr-:a:.Local~
· improvement¥.Dt)tr~ct':w~thinX20~:days'::af~e~< rece~wng.the, reso]ut~on --from the
reqUestin~bV~rningbodY. The cost estimate will be based on Work Order Costs and
will not be considered binding on the Company if construction is not commenced
within six months of the submission of the estimate for reasons not within the
control of the Company. The~go~ern'ing~body~ssuing'~the..~esp~Utio~~l~-aY~he
for the'~costs~
reg~rdless:~of whe~heK:the Line.ExtensJon~or...the£onvers)on.acLua~Y~~-e-
After passage of the Local Improvement District ordinance, the Company will
construct the Line Extension or Conversion. Upon completion of the project the
Company will submit a bill to the Local Improvement District for the actual cost of
the work performed, including the costs of preparing the cost estimate and
feasibility stud), lf~Fth~-:-a~t~al..,CbSt'~is less than the estimated~bst~:thej:LPq~)/
ImprovementDtstrict'::Will..pay~..the._~gJdb~)--~Jbf-~: i~LIhe'~actU~l:~cpAtjj~x~edsJhe
estimated~cost,i~hejLocal~.improvement- Dtstr.ict.will.~pay,on)Y~t~st4mated/cost.
The governing body will pay the Company within 30 days after the bill has been
submitted.
A Local Improvement District will be eligible for an Extension Allowance for
any new load connecting for service upon the completion of the Line Extension. A
Local Improvement District will retain a Vested Interest in any Line Extension to
the Local ImprovementDistrict. A Local Improvement District may waive payments for
Vested Interest from Additional Applicants within the Local Improvement District.
Issued by IDAHO POWER COMPANY
Issued - May 20, 1991
Effective July 1, 1991
D. H. Jackson, Vice President, Distribution
1220 Idaho Street, Boise, Idaho
Association of Idaho Cities
3314 Grace Street, Boise, Idaho 83703
Telephone (208) 344-8594
Fax (208) 344-8677
November 3, 1994
To: Cities Served by Idaho Power
Fr: Scott McDonald
Re: Update
There are several attachments to which immediate attention should be paid. The first
document is the minutes of our last meeting with Idaho Power. We left this meeting
with the feeling that they would be willing to work with us on a compromise to an
election. We also made several changes to our draft ordinance at their request, which
is attached to the minutes. We have also sent the draft ordinance to Washington
Water Power and Utah Power and Light for their comments.
However, three days later, Idaho Power proceeded to hand out information on their
own at a seminar attended by several cities. Please note my subsequent memo to the
Board with supporting documentation. It is important that you review all of this
information.
We have identified thirteen cities so far whose franchises are either expired, or who
currently do not have a franchise with Idaho Power. Several of those cities have
tentatively agreed to look at the simultaneous passage of a franchise ordinance calling
for franchise fees. Based upon Idaho Power's actions, it is our conclusion that the
only way this will be settled is through the court process.
Some City Council's have decided to go ahead for renewal without the franchise fee
at this time. Please be aware that the City of Payette has language in their franchise,
approved by Idaho Power that allows the imposition of franchise fees in the future
(attached). If you are a city that is proceeding, we strongly urge you to get this
language in your agreement so that you do not eliminate this option in the future.
Finally, please note that if it is your intent to begin negotiations on a utility franchise,
the Idaho Code 50-341 does require than franchises go through the formal bidding
process. Please remember to do this prior to entering into any agreements.
We will be providing further information as the thirteen cities develop a strategy on
which to proceed.
~. Prmled On Flecyclec~ PaC.~ ~.
OFFICERS
President
Paul Agidlus
Mayor. Mosco~
Fiml Vice Pre.eat
Winston Goenng
Mayor. Nampa
Second Vice President
Kirk Hansen
Mayor, Soda Springs
Third Vice President
Brent Coles
Mayor. Bo,se
Legis~tive Cbairpersoa
Paula Fome3
Councilmember. Boise
Immediate Past President
Karen McGee
Councilmember. Pocatello
Executive Director
Scott B McDonald
DIRECTORS
James Hammond
Mayor. Posl Fails
Susan Johnson
Councilmember. Sandpoim
Lo~etla Eisele
Councilmember, Lewislon
Laura Booth
Councitmember, Orofino
Tad Freeman House
Mayor, Cascade
Bart Westberg
Councilmember. Wei~r
Max Yemngton
Counctlmem~er. Meridian
Ted EIhs
Ma3or. Garden Cit}
Chuck Ge,ka
Councilrnember. BuM
Daxid Adair
May or. Gooding
Grego~ .Xnderson
Councilmember. Pocalello
J. ~,'aher Ross
Ma}or, Preston
John Walker
Mayor. Challis
James F]amm
Councilmember. Rexb~rg
ACTIVE PAST PRESIDENTS
Dixie Reid
Councilmember. Coeur d'Aiene
Gram K~ngsfon:l
Ma} or. Meridian
Harold Sims
Mayor, Bonnets Fen3.
John O Co{am. Jr,
Ma3 or. Chubb~ck
Tim Ridinger
Mayor. Shoshone
Association of Idaho Cities
3314 Grace Street, Boise, Idaho 83703
Telephone (208) 344-8594
Fax (208) 344.8677
MINUTES
Idaho Power Franchise Meeting
October 19, 1994
The meeting was begun at 10 am at the Twin Falls City Hall. Cities represented included
Hollister, Hagerman, Buhl, Boise, Pocatello, Hailey, Ketchum, and Mountain Home. The fn'st part
involved discussions on other information that the cities should have in making their decision to
pursue a franchise fee with Idaho Power. This information includes:
1) What cities in Idaho have their own electric system and what revenues do they
see from that operation.
2) What franchise fees do the other electrical utilities pay in Idaho
3) Comparison of rates (kilowatt hours) paid in idaho versus regionally
After this and other information is compiled, it needs to be put in an information packet for the
cities.
During the second half of the meeting, representatives from Idaho Power were present. Rich
Hahn and Pat Harrington were present. The conversation dealt with Idaho Power's position
stating that an election of the people approving the franchise fee would be needed before they
would agree. The general discussion centered on a non-binding survey of the citizen's that would
be prepared by a third party. Information on the issue would be jointly prepared to be fair to
both groups and public meetings would also be held. Idaho Power representatives requested that
they get this proposal in writing including these points and that they would consider it.
The group then discussed the other wording changes requested by Idaho Power in the document.
A draft ordinance is attached reflecting these changes. The meeting was adjourned at 2:35 pm.
Printed on Recycled Pa,oer
10/25/94
ORDINANCE NO.
"AN ORDINANCE IN ACCORDANCE WITH IDAHO CODE 50-328 AND
50-329 GRANTING A NONEXCLUSIVE FRANCHISE TO IDAHO POWER
COMPANY, A CORPORATION ANDTO ITS SUCCESSORS ANDASSIGNS,
TO CONSTRUCT, MAINTAIN AND OPERATE IN AND UPON THE
PRESENT AND FUTURE STREETS, HIGHWAYS AND OTHER PUBLIC
PLACES WITHIN THE CORPORATE LIMITS OF THE CITY OF ,
IDAHO, ELECTRIC UTILITY PROPERTY AND FACILITIES FOR
SUPPLYING ELECTRICITY AND ELECTRIC SERVICE TO THE CITY,
THE INHABITANTS THEREOF, AND OTHERS FOR A TERM OF TEN
YEARS; SUBJECTING SUCH ELECTRIC SERVICE TO REGULATION BY
PUBLIC AUTHORITY; PROVIDING FOR PAYMENT TO THE CITY OF
COMPENSATION FOR THE EXERCISE OF SAID FRANCHISE; AND
SPECIFYING OTHER LIMITATIONS, TERMS AND CONDITIONS
GOVERNING THE EXERCISE OF SAID FRANCHISE."
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
IDAHO, THAT:
SECTION 1. The City of , Idaho (hereinafter
called the "City") hereby grants to IDAHO POWER COMPANY, a
corporation, and to its successors and assigns (hereinafter called
the "Grantee") the right, privilege and franchise for a period of
ten (10) years from and after , however,
with the right to amend by mutual agreement in accordance with
Section 15, to construct, maintain and operate in and upon the
present and future streets, alleys, highways and other public
places within the corporate limits of the City, electric utility
property and facilities for supplying electricity to the City, and
the inhabitants thereof, and to persons and corporations beYond the
limits of the City, subject to all ordinances and regulations of
the city and to the terms and conditions hereinafter specified. In
the case of annexation of property to the corporate limit, such
area will be considered under this agreement, upon effective date
of the annexation. All such electric utility property and
facilities now maintained by the Grantee within the corporate
limits of the City shall be deemed covered by this ordinance.
SECTION 2. Ail of the Grantee's electric property and
facilities shall be constructed and at all times maintained in good
order and condition and in accordance with standard engineering
practices and all applicable safety codes and lawful governmental
regulations, including all construction standards presently in
effect in the City of or adopted by the City during the
ten (10) year term granted herein. The City shall have authority
at all times, in furtherance of the safety, convenience and welfare
of the public, to control by appropriate regulations the location,
1
SECTION 6. The Grantee shall at all times indemnify and
hold the City, its officers, employees and agents, harmless from
any and all claims, causes of action, expense or liability arising
out of, or in any way connected with the construction, operation or
maintenance of any of the Grantee's electric utility property or
facilities by Grantee and/or Grantee's agents, employees or
representatives. Grantee shall provide an Idaho public liability
insurance certificate protecting the City under the Idaho tort
claims statute.
SECTION 7. The electric service to be furnished to the
public hereunder, and all rates and charges therefor, and all
requlation of the Grantee applicable thereto, shall at all times be
subject to all rules, regulation and orders that may be lawfully
prescribed by the Public Utility Commission of the State of Idaho
or by any other governmental authority now or hereafter having
jurisdiction over such matters. During the term of this franchise,
the Grantee shall continuously maintain facilities in the City for
convenience to its customers for the payment of bills for electric
service during the usual office hours.
SECTION 8. When necessary, in order to permit any duly
authorized person to move any building or other structure across or
along any street, alley, avenue, boulevard, or public place within
the City, the Grantee shall temporarily raise or remove its wires,
fixtures and appurtenances upon such street, alley, avenue,
boulevard, thoroughfare or public place, upon seventy-two hours
written notice in advance from such person, such notice to bear the
approval of such official as the City may designate, at such time
and in such manner as may be necessary reasonably to accommodate
such moving, consistently with the maintenance of proper service to
the Grantee's customers; provided, however, that the cost to the
Grantee of such temporary raising or removal, and of any
interruption of the Grantee's service to its customers caused
thereby, shall first be paid or satisfactorily secured to the
Grantee by the owner or mover of such building or other structure.
SECTION 9. As compensation for the right, privilege and
franchise hereby granted, the Grantee shall pay to the City on or
before the 15th day of each January, April, July and October
following adoption of this ordinance an amount equivalent to three
percent (3%) of the Grantee's "Gross Revenues" for the preceding
quarter. The term "Gross Revenues" as used herein shall mean and
be construed to be the amount of money actually collected by the
grantee from it's customers fp~r_l~iqht, heat, power and electri, c
eDerg¥ consumed during the preceding quarter within the corporate C~~
limits of the CiTy. All sums which become delinquent shall
accumulate interest at the statutory rate provided in Idaho Code
Title 28, Chapter 22, Section 104(1). The accrual of interest is
not intended to waive or in any manner restrict City's ability to
elect any procedure or method of collection permissible by law to
enforce all the terms and conditions of this ordinance or the
interruption or failure of service caused by storms, washouts,
accidents, floods, acts of God or the public enemy, war, strikes,
damages by the elements or damage to plant or equipment on account
of any circumstances beyond the control of the Grantee. However,
the Grantee does agree to use due diligence to maintain continuous
and uninterrupted service.
SECTION 14. In the event of an amendment to the laws,
rules or regulations of the City of , the State of Idaho
or the Public Utility Commission of Idaho applicable to this
franchise, or for periodic review of any section of this agreement
the terms of this franchise and the rights and privileges hereby
conferred may be changed, altered, amended or modified upon mutual
agreement between the City and the Grantee. In all cases, 60 days
notice shall be required on the part of City or Grantee to reopen
the agreement pursuant to this section. ~e
SECTION 15. If a grantee willfully violates or fails to
comply with any of the provisions of this franchise, the City shall
give written notice to the grantee of the alleged non-compliance of
it's franchise. The grantee shall have forty-five (45) days from
the date of notice of non-compliance to cure such alleged default
or, if such default cannot be cured in forty-five (45) days, to
present to the City a plan of action whereby such default can be
promptly cured.
If such default continues beyond the applicable dates agreed to for.
such cure, the City shall give the grantee written notice that all\
rights conferred under this Ordinance and its franchise may be\
revoked or terminated by the Council after a public hearing. The\
grantee shall be entitled to not less than thirty (30) days prior\~-~
notice of the date, time and place of the public hearing. The City\
may elect, in lieu of the above and without any prejudice to any of~
its other legal rights and remedies, to obtain an order from the /~DDC,
district court having jurisdiction compelling grantee to comply /~f.~j~--
with the provisions of the franchise and recover damages and cost~/D.
incurred by the City by reason of the grantee's failure to comply/ ;~
SECTION 16. Sale, assignment or lease of this franchise
is prohibited without the express written consent of the City.
Consent will not be withheld as long as the new owner, assignee or~
leasee agrees in writing to abide by the terms and conditions of/~
this franchise agreement and that there has been no prior default/
by Idaho Power.
SECTION 17. Inasmuch as the Grantee has constructed and
now is maintaining and operating electric utility property and
facilities in and upon the streets, alleys, avenues, highways,
boulevards, thoroughfares and public places in the City under a
franchise which will expire on , it is
hereby adjudged and declared that this ordinance is necessary for
the preservation of the public peace, health and safety, and
5
Association of Idaho Cities
3314 Grace Street, Boise, Idaho 83703
Telephone (208) 344-8594
Fax (208) 344-8677
October 28, 1994
TO:
FROM:
SUBJECT:
MEMORANDUM
AIC Legislative Committee/AIC Board
Scott B. McDonald, Executive Director
Electrical Franchise Fees
AIC and selected cities have met with representatives of
Idaho Power on three occasion to negotiate a model
franchise agreement that includes a 3% franchise fee.
The most recent negotiating session occurred on October
19 in Twin Falls. Changes to the ordinance were agreed
to in that meeting. There were some issues, however,
that both sides agreed to continue to work on to reach
resolution.
The use of an advisory ballot by the city residents is
the major stumbling block. Enclosed is the ballot
mailed by Idaho Power to Nampa rate payers in 1970. By
the third reading, the Nampa City Council lost support
for their franchise ordinance.
AIC firmly opposed the use of such an advisory ballot
during our meeting with Idaho Power. As a compromise, we
offered to cosponsor a mailing desribing the pros and
cons of franchise fees to citizens. The cities would
write the "pro" portion, and Idaho Power would write the
"con" portion. Additionally, if desired, a multiple
choice survey of several fiscal alternatives could be
professionally written and independently administered as
an alternative for the more populated cities.
On Friday, October 21, Idaho Power moved ahead
unilaterally with their own public information campaign
on franchise fees. (See enclosure entitled "Idaho Power
Information Sheet - Utility Franchise Fees"). This
action indicates that Idaho Power intends to ~ the
process of g~L~l~ Idaho code as it relates to cities
franchise authority. Their stated goal is to legislate
the following:
OFFICERS
P~ul
MayoL Moscow
Fir~ Vice PTeskiem
Winsto~
Ki~ Hsn~n
~ayor. ~ S~n~s
~ %'~ ~nt
~tive
~la F~)
C~ii~m~r,
Ka~
~ttve Dtr~
DIRECTORS
James Hammond
Mayor. Post Falls
Su~an Johnson1
Coun¢ dmcmber. Sandpoim
Lo~ ella Fi~'le
Counciimcmber. Lev,.istor~
Laura Booth
Councilmember. Orofino
Tad Freeman House
Mayor. Cascade
Bart We'qberg
Councilmcmber. Weiser
Max Ycrnngton
Coun¢llmember. McrMian
Ted Elhs
Ma.~ or. Garden C,~
Chuck Cse~k a
Councilmember. BuM
David Adair
Ma)or. Goodtng
Gregor%. Anderson
Councilmernber. Pocale]lo
.l. Waller Ros~
Ma.~ or. Pre~ton
John Walker
Mayor. Challi~
.lames Flarnm
Co~nciimernber. Rexbur$
ACTIVE PAST PRESIDENT
D~xie Reid
Councilmember. Coeur d'Alem
Grant Kingsford
Ma) or. Meridian
Harold Sim,
~ta.~ o~. Bonner~ Fen%,
.lohn O. Colanl..lt.
Ma) or. Chubbuck
Tim R~dinger
Ma.~ or. 5ho,hone
Enclosed is an opportunity for you
to express your opinion concerning a pro-
posed new tax which would apply only
to Nampa electric users.
SEVERN, RIPLEY, DOORN & HANSON
Certified Public A~c~untanm
P. O. BUx 446
Nam~a, Idaho 8365 i
Bulk Rate
U. ~. POSTAGE
PAID
I~Or/11Jt NO. 1 1
NAMPA, IDAHO
ERNEST E STARR
lSl~ TTH ST NO
NAHPA IDAHO 836~1
BUSINESS REPLY CARD
First Class Jl~rmit No. 21 Nampa, Idaho
SEVERN, RIPLEY, DOORN & HANSON
Certified Public Accountants
P.O. Box 446
Nampa, Idaho 83651
PRESS RELEASE
The annual cost for street lighting in our city' now costs in excess
of $123,000 per year. It is paid for with revenue fi.om property taxes.
Tax exempt property and those people who do not own property are
exempt fi.om participating in this cost. For this reason the city admin-
istration is planning to impose a 3% franchise fee on Idaho Power for
use of public streets and alleys for the transmission of their power.
This will be the same fee that is now being paid by Intermountain Gas
Company for the use of public rights-of-way. Because both companies
are competitors it has been unfair to charge the fee with one company
without charg~ing the other.
The revenue from the fee with Idaho Power will be used to pay for
the cost of street lighting. If there is any surplus it will be divided
equally between the budgets for the police and fire departments. This
will bring about a large saving to the real property owners in our city.
A residence that now pays a power bill of $25.00 will pay an additional
75¢ a month with the franchise fee. The bulk of the revenue would
come from the larger users such as business and industry. Tax exempt
property such as fraternal organizations would also pay their pro-
portionate share.
Practically everyone in the city benefits fi.om street lighting and
police and fire protection. This proposed fee would make it possible
for everyone to participate instead of leaving all the burden to the
people who pay property taxes.
Ernest E. Start
MAYOR
City of Nampa
EES:cmb
d3
Association of Idaho Cities
3314 Grace Street, Boise, Idaho 83703
Telephone (208) 344-8594
PRESS RELEASE
FOR I~RELEASE
October ~199~)
EleetricallY-~anchise Fees vs Property Tax
Contact: Scott McDonald
344-8594
Idaho cities are seeking to ease some of the burden placed on the property tax by requiring Idaho
Power to pay a fee to the cities as part of their franchise agreements. Public utility companies
doing business in a city usually do so under the terms of a franchise granted by the city. The
franchise normally states the obligations the utility has to the city in return for the privilege of
installing and maintaining utility equipment on public property.
The franchise fee is the compensation to be paid for this privilege and for the inconvenience and
expense to the city caused by the presence of this equipment on the public streets and in conduits
under the public ways. In cases where a franchise fee provision is not included in the agreement,
the city must mm to the property tax to cover expenses created by the presence of the utility.
Idaho Power's major competitor, Intermountain Gas, currently pays 3 percent of its gross receipts
to cities in the form of a franchise fee. For cities to continue imposing this fee on gas it must
impose the same fee on electrical services or be in violation of a provision of Idaho's constitution
requiring a uniformity upon persons and property. Idaho Power currently pays a franchise fee
of 3 percent of its receipts to the neighboring City of Ontario, Oregon. Idaho Power has never
paid a franchise fee to its Idaho cities.
It is Idaho Power's contention that Idaho Code is vague on the authority of cities to collect a fee
- attorneys for AIc and affected cities do not agree. As the 50 year franchise agreements expire
between many Idaho cities and Idaho Power, cities will be negotiating a 3 percent franchise fee
on the electric utility as part of the renewal process.
Cities contend that a franchise fee would spread the cost of utility maintenance within cities'
right-of-ways to a broader base of utility rate payer. The cost would be spread to all utility users
rather than having the expense fall solely on the property owners. There are a multitude of
government organizations who are exempt from paying any property taxes but benefit from city
services.
- more -
IDAHO POWER COMPANY
P.O. BOX 70
BOSL IDAHO 83707
Idaho Power Information Sheet
Utility Franchise Fees
Q: What is a franchise?
A: Muaici~ franchis~ authorize utaities
mzvice providers m ufflize a city's m'eets and alleys fm the
locazion of equipment and facilities. In Idaho Power's case,
this peanains m the electrical equipment _~ec_ex~,,'y to provide
~n ~ service. Franchise agreements may also restrict
the city's right to compete with a utility's service to city
Franchises don't grant Idaho Power the right to serve
cus~mers. The Idaho Public Utilities Commission grants that
Q: What is a franchise fee?
A: It's a fee or tax charged to the utility or business by
the city, usually based on a percentage of the service
provider's groas revenues within the city.
Q: Does Idaho Power pay
franchise fees in Idaho?
A: No. The company believes that under Idaho law,
cities are not authorized to impose franchise fees on electric
utilities such as Idaho Power. The company does not pay fees
under any of its existing Idaho franchise agreements, which
have been in place up to 50 years.
Q: Who would pay the fee?
A: Ultimately, the company's customers would. The
Idaho Public Utilities Commisaion has ruled that franchise
fees will be billed to a utility's customers within the ama or
locality in which the fee applies and appear as a separate item
on customers' bills.
Idaho Power would serve in an adminislzative role by
a:glocflng thc fees and turning the revcnue~ over to fl~e city.
Q: Does Idaho Power oppose
franchise fees?
A: Under certain terms and conditions, Idaho Power
would not oppose franchise fees. Chief among them is a pro-
vision to allow customers a voice in the imposition of such
fees.
Q: How would customers' voices
be heard?
A: Idaho Power supports providing all city resi-
dents an oppaxunity to vote on franchise fees at a public
ele~on. No frandtise fee should be imposed upon an
~ ufility's cus~mners without majority approval.
Q: Specifically, what conditions
does Idaho Power believe are
necessary?
A: Idaho Power would not oppose change~ to-state
law governing franchL~ fees if the legislation included
the following:
· Electric t~Lity fi-anchises fees must be approved
by a majority of city r~idents voting in an election.
· Franchise feea shall be set forth as a separate item
on each customer's electric utility bill.
· The fees shall not exceed 3 percent of the reve-
nues collected by an elecwic utility fi'om its customers
within the city limits.
· The Idaho PubLic Utilities Commission shag
review and approve all electric utility fi'anchise agree-
ments which include fees before they become effective.
· The tetrn of the fi'anchise agreement between the
elecu'ic utility and the city shall not be less than 20 nor
mom than 50 years.
Abse. m a change to state law, Idaho Pow~ would
be willing to consider a fi-anc~ise agreement with a city
provided it included these provisions.
Q: What can a customer do
about the franchise fee issue in
his or her community?
A: Idaho Power encourages ail of its customers to
learn as much as possible about the issue and share their
thoughts and ~ with their local represenmives and
government officials. Idaho Power employees welcome
your local Idaho Power office.
g AN OI~INANCE CRANTINC A NONEXCLUSIVE I~,ANCltlS~
t ~O~TION, ~D TO iTS SUCCESSORS ~D ASSi~, ~0 ~NSTRUCT~ ~I~ATN AND
.. OP~T~ IN ~D U~ON ~IE ~RESRNT
P~CES ~ITIIIN T~E CO~O~T~ LIHITS O~.THE CI~ O~ ~A~T~F.~ ~DAHO, ELECTRIC
~ILI~ PROPER~ ~D FACILITIES ~R SUPPLYING ~L~RlCi~ ~D ELECTRIC SERVICE
SU~E~I~O SUCH ELE~IC ~E~VICE
DITIO~S ~VE~ING THE ~CIS~
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