AGENDA #4b
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Franchise for Public Service Gas Company, Inc. – First Reading
DATE: November 22, 2004
The attached ordinance would approve, on first reading, a new franchise for Public Service Gas Company for provision of a natural gas utility system within the Town of Chapel Hill. Under State law (N.C.G.S. Sec. 160A-76(a)), adoption will require the Council to vote again at a subsequent meeting.
BACKGROUND
State law allows the Town to require franchises for utility companies that use public rights-of-way or Town-owned property. The local franchising process sets forth certain terms for the use of the Town’s facilities and how equipment may be located and relocated. Provisions to protect the Town from liability related to a franchise holder’s operations are included in the local franchise. Other issues such as rates are subject to federal and State regulation.
The Town entered into a 50-year franchise with Public Service Company of North Carolina in 1953 for provision of a natural gas utility system. We were contacted several months ago with a request to negotiate a new franchise. Town representatives assisting me during the negotiations included George Small, Town Engineer; Bruce Heflin, Public Works Director and later Assistant Town Manager; and Ralph Karpinos, Town Attorney.
DISCUSSION
Attached is the proposed new franchise that is the result of negotiations and exchange of drafts that have taken place over the past several months. It includes provisions similar to recently negotiated franchises between Public Service and other North Carolina municipalities.
Key points of the proposed franchise include:
· The franchise would be for a ten year term with provisions for automatic two year renewals up to an additional ten years unless either party gives notice requesting renegotiation.
· The Company would have the right to use the public rights-of-way for installation and operation of its services and would agree to use due care in construction activities and to restore the disturbed rights-of-way upon completion of any work.
· The Company would assume liability for any damages resulting from their failure to use due care in exercising the rights granted by the franchise agreement.
· The franchise would not be exclusive.
· The franchise would be subject to applicable State and local laws and ordinances.
If the Council approves this franchise on first reading, it would be back on the Council’s agenda for second reading on its next meeting, December 6, 2004.
RECOMMENDATION
We believe that the attached franchise ordinance will allow the Town and Public Service Gas Company to continue a good working relationship and recommend enactment of this Ordinance on first reading.
AN ORDINANCE GRANTING TO PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED, A SUBSIDIARY OF SCANA CORPORATION, ITS SUCCESSORS AND ASSIGNS, THE RIGHT TO USE AND OCCUPY THE PUBLIC WAYS OF THE TOWN OF CHAPEL HILL, NORTH CAROLINA, FOR THE CONSTRUCTION, OPERATION AND MAINTENANCE OF A GAS UTILITY SYSTEM AND ALL NECESSARY MEANS FOR TRANSMITTING AND DISTRIBUTING GAS WITHIN SAID TOWN FOR A PERIOD OF TEN YEARS (2004-11-22/O-1)
WHEREAS, Public Service Company of North Carolina, Incorporated (the Company) proposes to continue to construct, operate and maintain a Gas Utility System and all necessary means for transmitting and distributing gas within the Town of Chapel Hill, North Carolina (the “Town”),
NOW, THEREFORE, BE IT ORDAINED by the Town Council of the Town of Chapel Hill, North Carolina as follows:
SECTION 1. DEFINITIONS.
Whenever and wherever used in this Ordinance the following words and names shall have the following meanings:
(a) TOWN COUNCIL shall mean the Town Council of the Town of Chapel Hill, North Carolina, as now or hereafter constituted.
(b) COMPANY shall mean Public Service Company of North Carolina, Incorporated, a subsidiary of SCANA Corporation, its successors and assigns.
(c) TOWN shall mean the Town of Chapel Hill, North Carolina, including its present and future Town limits.
(d) TOWN MANAGER shall mean the Town Manager of Chapel Hill or his designee.
(e) DEPARTMENT OF TRANSPORTATION shall mean the North Carolina Department of Transportation or its successors.
(f) GAS shall mean natural gas, mixed gas and substitute fuels carried over the Company’s facilities as authorized by the North Carolina Utilities Commission.
(g) GAS SYSTEM shall mean all facilities or the Company in the Town used for the transmission or distribution of Gas within the Town.
(h) FERC shall mean any reference made to the Federal Energy Regulatory Commission or its successor.
(i) COMMISSION shall mean the North Carolina Utilities Commission or any successor body lawfully constituted.
(j) PUBLIC WAY OR WAYS shall mean any public street, avenue, road, alley, lane, bridge or other public right-of-way within the Town over which the Town as of the application time has jurisdiction or exercises control.
(k) GOOD UTILITY PRACTICES shall mean the practices, methods and acts engaged in or approved by a significant portion of the gas industry during the relevant time period or other practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result consistent with reliability, safety, expedition, requirements of governmental agencies having jurisdiction, and at the lowest reasonable cost; the term Good Utility Practices is not intended to be limited to the optimum practices, methods or acts to the exclusion of all others, but rather to constitute a spectrum of acceptable practices, methods or acts.
SECTION 2. Grant of Authority
The right, power and authority is hereby granted and vested in the Company to lay, maintain and operate gas mains, pipes and services on, along, across, and under the streets, alleys, bridges, rights-of-way, and other public ways; and to use those facilities to conduct a gas business. This grant of authority by the Town to the Company is for all street, alleys, bridges, rights-of-way and other public ways over which the Town, as of the applicable time, has jurisdiction or exercises control. Use of Town-owned property other than public ways is subject to a separate lease agreement that contains terms and conditions normally found in leases and easements between the Company and private landowners.
SECTION 3. Conditions on Use of Public Ways
(a) No street, alley, bridge, right-of-way or other public place used by the Company shall be obstructed longer than necessary during its work of construction or repair, and shall be restored to the same good order and condition as when said work was commenced. No part of any street, alley, bridge, right-of-way, or other public place of the Town, including any public drain, sewer, catch basin, water pipe, pavement or other public improvement, shall be damaged. However, should any such damage occur due to the Company's failure to use due care that arises out of the Company, the Company’s agents, or contractors omissions or negligence, the Company shall repair the same as promptly as possible to the same good order and condition that existed prior to the work, and, in default thereof, the Town, after written notice to the Company, may make such repairs and charge the reasonable cost thereof and collect the same from the Company. The Company shall indemnify, defend and save the Town harmless from all liability or damage (including judgment, decrees, and legal court costs) resulting from the Company’s failure to use due care in the exercise of the privileges hereby granted or of its rights under this Agreement. This indemnity provision shall extend to cover the Town should the Company’s agents and contractors fail to use due care.
(b) Any disturbance (other than emergency response) of property within or affecting public ways, as may be necessary for the installation and/or connection of services by the Company, or its agents or contractors must receive prior approval of the Town Manager or Manager’s designee and shall be subject to inspection and street cut fees as provided by the Town Code of Ordinances, including amendments thereto. The Company shall notify the Town Manager’s office 24 hours in advance of the start of construction (other than emergencies) that may damage or otherwise disrupt the normal function of any existing public infrastructure, including but not limited to the obstruction of the normal flow of traffic and/or storm water runoff.
(c) If at any time during the period of this Agreement the Town determines that the Company’s facilities and/or equipment are in conflict with or can reasonably be expected to conflict with existing or new public streets or other Town facilities, or any modifications thereof; the Company, upon a minimum of 180 calendar days’ written notice by the Town, shall remove and/or relocate as necessary the Company’s facilities and/or equipment at the Company’s expense. The Town shall cooperate with the Company, to the extent practicable, to identify alternative locations for the relocated facilities and/or equipment. Where and to the extent that funds are made available to the Town by third parties in connection with the removal and/or relocation of the Company’s facilities and/or equipment, then the Town shall ensure that the Company receives a pro rata share of those funds to the extent allowed by law.
SECTION 4. The Company’s Other Obligations
(a) The Company hereby agrees to indemnify, defend and hold harmless the Town, its officers, boards, commissions and employees against any and all claims and liabilities arising from the Company’s activities or Gas System, including reasonable attorneys’ fees and court costs.
(b) The Company shall identify and maintain a person employed by the Company who will serve as the Company’s liaison with the Town, and who shall be readily accessible to Town Personnel.
SECTION 5. Service
(a) The Company shall, before entering upon any street, alley, highway, right-of-way or other public place for the purpose of construction or installing any mains, pipes or other apparatus of the gas system, notify the Town Manager or Manager’s designee, in writing or other acceptable means, of the proposed construction or installation and shall, file with the Town sufficient plans and specifications showing the nature, timeframe and extent of the proposed construction or installation.
(b) The Company may supply any form of gas containing approximately one thousand (1,000) BTU's per cubic foot, and its obligation in respect thereto shall continue only so long as it is able to obtain an adequate supply of such gas satisfactory for service hereunder; provided, however, that in the supply of such gas the Town shall enjoy equal rights with respect to other areas served by the Company.
(c) All work upon the streets and public places of the Town shall be done under the general supervision of the Town, and all sidewalks or streets pavements or street surface or any other public infrastructure which may be damaged, displaced or otherwise disturbed by reason of such work shall be properly replaced by the Company, its successors and assigns, to the reasonable requirements of the Town
(d) The Company shall, as to all other conditions and elements of services not fixed herein, be and remain subject to the rules and regulations of the Commission, Department of Transportation and FERC or its successors, applicable to gas service in the Town.
SECTION 6. Nonexclusive Grant and Term
The gas franchise granted by this ordinance is not exclusive. The Town may grant the same or similar rights and privileges to other certified persons or companies at any time, provided that any such grants shall be made under terms and conditions which do not materially impair the exercise of the rights and privileges granted to the Company under this franchise.
Upon ratification and acceptance this franchise shall constitute a contract between the Town and the Company, and shall be in force and effect for an initial term of ten (10) years, unless the franchise is revoked or otherwise expires prior to that time pursuant to the terms of the Gas Franchise Agreement. Thereafter, the franchise shall automatically renew in two year increments, up to an additional ten (10) years, unless either party gives the other notice two years in advance of its intention not to renew the Gas Franchise Agreement beyond the next two year renewal increment.
SECTION 7. Franchise Not Waiver of Law
The franchise is subject to the constitution and laws of the State of North Carolina, and is not a waiver of any present or future law or regulation. This franchise is not a limitation upon the authority of the Town to adopt any law or regulation.
SECTION 8. Regulations, Safety and Customer Service
(a) In the event any provision of this franchise is in conflict with any rule of the Commission or FERC, so that the Company cannot reasonably comply both with the provisions of this franchise and any rule of the Commission or FERC, then the Company is required to comply with such Commission or FERC rule instead of the conflicting provision of this franchise.
(b) Otherwise, the Company shall comply with all applicable ordinances and regulations of the Town.
(c) Gas utility service is not guaranteed free from interruptions, supply failure or outages by reasons of force major, act of God, strike, vandalism, terrorism, breakdown, accident or other happening beyond the control of the Company. The Company will restore service using all applications of Good Utility Practices.
(d) The Company shall maintain and operate its Gas System in compliance with both State and federal maintenance and safety regulations.
Section 9. Police Powers.
In accepting the franchise, the Company acknowledges that its rights granted in the Ordinance and otherwise regarding its operations in the Town’s corporate limits are subject to the police powers of the Town to adopt and enforce general ordinances necessary to protect the safety and welfare of the public, and it agrees to comply with all applicable general laws and ordinances enacted by the Town pursuant to such police powers.
SECTION 10. Commission Rules and Rates
The Company may from time to time declare, make and enforce such rules and regulations as shall have been fixed or allowed by the Commission as to the sale or distribution of Gas to any of its customers in the Town.
The rates to be charged for Gas at all times shall be such rates as are fixed or allowed by the Commission, including such rates as shall be negotiated by the Company with certain industrial or commercial customers pursuant to authority granted by the Commission.
SECTION 11. Plat of Gas System
The Company shall maintain maps or plats of its Gas System within the area covered by this franchise. Such maps or plats shall be maintained in the Company’s offices, and the Town shall have access to the same during any regular business hours of the Company. The Company shall upon reasonable notice provide such assistance as the Town may require to determine the actual field locations of the Company’s facilities when such locations must be determined for a valid public purpose.
SECTION 12. Bankruptcy, Successors, Assigns
In the event the Company is adjudged bankrupt or its assets are placed in the hands of a receiver or other court officer, either voluntarily or involuntarily, or the Company reorganizes, merges or consolidates with any other Company, or the properties and business of the Company are foreclosed or sold to satisfy any lien or indebtedness or obligation of the Company, then the interest, rights and remedies of the Town in respect to said properties and operations shall not be affected or prejudiced, and any receiver, assignee, trustee, purchaser or successor, whether by operation of law or otherwise, so succeeding to or representing the interest or position of the Company, shall be bound by this Ordinance and the terms and provisions hereof and shall be bound to carry out and perform the obligations and duties imposed upon the Company by this Ordinance. Likewise, if the Company reorganizes, merges or consolidates with any other Company, then the Town is bound by this Ordinance.
Section 13. Revocation
In the event the Company violates or fails to comply with the provisions of this ordinance and within sixty (60) days after receipt of written notice from the Town, the Company failed to cure or remedy, or to have begun reasonable measures to cure or remedy any such violation, failure or default, then the Chapel Hill Town Council may cause the Company to appear at a hearing before the Chapel Hill Town Council in thirty (30) days. If at such hearing the Chapel Hill Town Council should determine that the Company’s violation, failure or default has been substantial, repeated or flagrant, then upon such determination the Chapel Hill Town Council may revoke and terminate this franchise; provided, however, that the Company may file with the Town within ten (10) days after such determination the Company’s election to appeal to the proper North Carolina court, and in that event the Town and Company agree that such court shall hear and determine de novo whether there has been substantial, repeated or flagrant violation, failure, or default by the Company of the terms, conditions, or obligations of this Ordinance. Violation or default which cannot be corrected by the Company shall not be grounds for revocation and termination, unless such violation or default shall be determined to be material and continuing.
SECTION 14. Severability, Third Party Rights
Should a court of competent jurisdiction declare any part, term or provision of this Ordinance illegal, unauthorized or in conflict with any law of the United States or the State of North Carolina, or to be in conflict with any valid rule or regulation duly promulgated by any agency or regulatory body of the United States or the State of North Carolina, the remaining portions or provisions of this Ordinance shall not be affected thereby.
The rights hereunder in this Ordinance accrue exclusively to the parties, their successors and assigns. It is the express intent of the parties that this franchise shall not create any rights in third parties.
Section 15. Disposition of Gas System Upon Termination of Franchise and this Agreement.
Upon the termination of the Franchise and this Agreement, for any reason, and upon the Town’s request, the Company shall have one year from such a request to remove all above ground components of the Gas System. The Town reserves any rights it has under existing law regarding disposition of the Gas System upon termination of the Franchise and this Agreement. If, during the term of the Franchise, the Company abandons any main lines in the Gas System in the Town’s corporate limits, the Town may, at no charge, utilize the abandoned main as a conduit for fiber or wires used by the Town for its telecommunications needs, provided such use of any abandoned mains does not impair the Company’s operations.
SECTION 16. Effective Date, Term, Adoption
This Ordinance shall be effective from and after the ____ day of ____________, 2004, provided the Company shall have executed the written acceptance hereof at the end of this Ordinance, and shall exist in force for a period of ten (10) years hereafter and continue in force. Thereafter, the franchise shall automatically renew in two year increments, up to an additional ten (10) years, unless either party gives the other notice, two years in advance, of its intention not to renew the Gas Franchise Agreement beyond the next two year renewal increment.
All other Ordinances and clauses of Ordinances in conflict herewith are hereby repealed. Enacted by the Town Council the ____ day of ____________, 2004.
________________________________
Kevin C. Foy, Mayor
ATTEST:
APPROVED AS TO FORM
_______________________________
Joyce A. Smith, Town Clerk
________________________________
Ralph D. Karpinos, Town Attorney
SECTION 17. Acceptance by Company
Public Service Company of North Carolina, Incorporated, does hereby accept and approve the foregoing Ordinance and all its terms and conditions, and in consideration of the benefits and privileges granted to it does hereby agree to abide by, carry out, observe and perform all the obligations and undertakings therein provided to be carried out and performed by it.
This the _______ day of ___________, 2004.
PUBLIC SERVICE COMPANY
OF NORTH CAROLINA, INCORPORATED
By: __________________________________
Jerry W. Richardson, President & COO
ATTEST:
_______________________________ Its: Assistant Secretary
Judy S. Czerwinski
(Corporate Seal)
The Town Clerk shall deliver to the Company an executed or conformed copy of this Ordinance and the Company’s written acceptance of the agreement thereof, certified as follows:
“Certified to be a true and exact copy of an ordinance duly enacted by the Town Council of the Town of Chapel Hill, North Carolina, on the ____ day of _________, 2004, and the acceptance thereof by Public Service Company of North Carolina, Incorporated the ______ day of _________, 2004.”
(Town Seal) _______________________________
Town Clerk
Town of Chapel Hill, North Carolina