Subject to the terms and conditions hereinafter set forth, Atmos
Energy Corporation, a Texas and Virginia corporation with its principal
office in the City of Dallas, Dallas County, Texas (hereinafter referred
to as "Atmos"), is hereby granted the nonexclusive franchise and rights
to conduct in the city the business of acquiring (by purchase, lease,
or otherwise), maintaining, constructing, laying, repairing, removing,
replacing, installing, operating, and disposing of (by sale, lease,
or otherwise) a gas system, as hereinafter defined, for the sale,
transportation, and distribution of natural gas within the municipal
boundaries of the city and to the residents and businesses located
therein for light, heat, power, and any other purpose during the term
set forth below. Such franchise and rights shall include, but not
be limited to, the right to use the present and future streets, roads,
highways, alleys, public ways, and other real property owned by or
under the control of the city for purposes of maintaining, constructing,
laying, repairing, removing, replacing, installing, and operating
any and all components of the gas system, subject to reasonable regulation
regarding location and streets, together with access, at all times
and from time to time, to such streets, roads, highways, alleys, public
ways, and other real property during the term hereof.
(Ordinance 2013-31 adopted 5/28/13; Ordinance 2018-24 adopted 6/26/18; Ordinance
2023-12 adopted 6/27/2023)
For purposes of this division, the following terms shall have
the meanings set forth below:
Any and all pipelines, as hereinafter defined, meters, valves,
compressors, anti-corrosion items, facilities, structures, machinery,
equipment, and appurtenances of any kind that Atmos, in its sole discretion,
may deem necessary or advisable for the exercise of the franchise
and rights granted to Atmos herein.
Any and all above-ground and below-ground pipes, including,
but not limited to, mains, distribution lines, secondary lines, laterals,
and other pipes, that have been, are being, or are intended to be
used at any time in, or in connection with, the sale, transportation,
or distribution of natural gas within the city, subject to subsection
(g) of section 4-20-35.
(Ordinance 2013-31, art. I, adopted 5/28/13; Ordinance 2018-24 adopted 6/26/18; Ordinance
2023-12 adopted 6/27/2023)
Unless earlier terminated in accordance with the terms and provisions
hereof, the term of the franchise and rights hereby granted to Atmos
shall be for a period of five (5) years, commencing on the effective
date hereof as defined in subsection (f) of section 4-20-38 below.
The termination of this agreement shall extinguish all rights, duties,
obligations and liabilities of Atmos and city under this franchise,
except all rights, duties, liabilities, and obligations accrued prior
to such termination, including the payment of franchise fees, shall
survive termination.
(Ordinance 2013-31, art. II, adopted 5/28/13; Ordinance 2018-24 adopted 6/26/18; Ordinance
2023-12 adopted 6/27/2023)
In addition to the franchise and rights granted herein to Atmos,
the city acknowledges that Atmos has, and hereby grants to Atmos,
the following rights and powers:
(1)
Right to contract.
Atmos may enter into separate
gas service contracts with industrial or other consumers in the city
whose average consumption of gas generally is substantially in excess
of the average consumption by residential or commercial consumers
or whose service requirements generally are substantially different
from the average service requirements of residential or commercial
consumers. Such contracts may provide, to the extent permitted by
law, for rates different from the rates applicable to such residential
and commercial consumers. City does not abrogate any of its authority
by state law, common law or city charter to regulate the rates or
service of Atmos and its activities, or to require a franchise.
(2)
Discontinuance of service.
Atmos may discontinue
service to any residential or commercial consumer for any lawful reason,
including, but not limited to, such consumer's failure to pay,
when due, any indebtedness owed by such consumer to Atmos.
(3)
Reconnection charges.
In addition to any and all
other proper charges, Atmos may charge and collect from any residential
or commercial consumer whose service has been discontinued by Atmos
a reasonable reconnection or similar charge for recommencing service
to such consumer.
(4)
Adoption of rules.
From time to time during the
term hereof, Atmos may, subject to any and all valid and applicable
statutes, ordinances, rules, and regulations of any federal or state
governmental authority or agency, make and enforce reasonable rules
pertaining to Atmos' business and operations, including, but
not limited to, requiring any residential or commercial consumer to
execute and deliver a written contract or amendment to an existing
written contract prior, and as a condition, to the initial commencement,
recommencement, or continuation of service to such consumer. Atmos
shall comply with all applicable rules and regulations of the Railroad
Commission of Texas or successor regulatory authority including, but
not limited to, the Commission's rules governing customer deposits.
(5)
Removal of gas system.
Atmos may remove all or
any portion of the gas system upon the termination by the city, pursuant
to section 4-20-37 of this division, of the franchise and rights granted
hereby, subject to the right of the city, if any, to acquire the system
by means of eminent domain.
(6)
Consumer preferences.
Atmos may give preference
to residential consumers over other consumers during periods in which
the total volume of gas available for distribution to and within the
city is insufficient, for any reason whatsoever, to adequately supply
all residential and commercial consumers.
(Ordinance 2013-31, art. III, adopted 5/28/13; Ordinance 2018-24 adopted 6/26/18; Ordinance
2023-12 adopted 6/27/2023)
(a)
Franchise fee.
(1)
As consideration for the grant of the franchise and rights herein
and for the use by Atmos of the streets, roads, highways, alleys,
public ways, and other real property owned or controlled by the city,
Atmos shall pay to the city, within thirty (30) days after the end
of each calendar quarter, a franchise fee equal to five percent (5%)
of Atmos' gross receipts derived from the sale, transportation,
and distribution by Atmos of natural gas within the city limits during
the preceding calendar quarter. Additionally, Atmos shall pay to the
city, within thirty (30) days after the end of each calendar quarter,
a franchise fee equal to five percent (5%) of the value of gas transported
by Atmos Energy for transport customers through the gas system of
Atmos within the city (excluding the value of any gas transported
to another gas utility in city for resale to its customers within
city), with the value of such gas to be established by utilizing Atmos'
monthly Weighted Average Cost of Gas charged to industrial customers
in the West Texas division, as reasonably near the time as the transportation
service is performed. For purposes of calculating the franchise fee
payable to the city, gross receipts shall include fees collected pursuant
to the franchise agreement. At any time during the term of this franchise,
the city may increase the franchise fee payable hereunder, subject
to and in accordance with all of the following terms and conditions:
(A)
The city may increase the franchise fee only if the franchise
fee, as so increased, constitutes a charge for Atmos' use of
the city's streets, roads, highways, alleys, public ways, and
other real property that is reasonable and lawful. Such increase must
be adopted by the governing body of the city at a public hearing that
is held no earlier than thirty (30) days following the delivery to
Atmos by the city, in person or by certified or registered mail, of
a written notice stating the reason for, and the date, time, and place
of, such hearing.
(B)
The franchise fee may not be increased pursuant to this subsection (a)(1) more than one time in any five-year period during the term of this franchise.
(C)
The franchise fee may not be increased at any one time by an
amount exceeding one-half of one percent (1/2 of 1%) of Atmos'
gross receipts derived from the sale, transportation, and distribution
by Atmos of natural gas within the municipal boundaries of the city;
and the total franchise fee payable hereunder may not be increased
during the term hereof to an amount exceeding the lesser of (i) five
percent (5%) of such gross receipts; or (ii) the percentage of gross
receipts payable by any electric utility doing business within the
city pursuant to a franchise granted by the city.
(2)
Nothing in subsection (a)(1) above shall preclude, or be deemed to preclude, Atmos and the city from agreeing to an increase in the franchise fee in excess of the limitations imposed in such subsection.
(3)
The franchise fee shall constitute the only amount for which
Atmos shall be obligated to pay to the city or other party in exchange
for the use of streets and right-of-way in the city and the approval
of the franchise agreement.
(5)
If Atmos fails to pay when due (as provided in subsection (a)(1) above) any payment provided for in this section, Atmos shall pay such amount plus interest at the then current prime rate from such due date until payment is received by city.
(6)
If Atmos should at any time after the effective date of this
division agree to a new municipal franchise ordinance, or renew an
existing municipal franchise ordinance, with another municipality
in Atmos' West Texas Division, which municipal franchise ordinance
is adopted in a manner that, if applied to the city, would result
in a franchise fee greater than the amount otherwise due city under
this division, then the franchise fee to be paid by Atmos to city
pursuant to this division may, at the election of the city, be increased
so that the amount due and to be paid is equal to the amount that
would be due and payable to city were the franchise fee provisions
of that other franchise ordinance that are material to its franchise
fee applied to city. The city acknowledges that the exercise of this
right is conditioned upon the city's acceptance of all terms
and conditions of the other municipal franchise that are material
to the franchise fee. The city may request waiver of such terms and
Atmos may grant, in its sole reasonable discretion, such waiver.
(b)
No obstruction of public property.
Atmos shall
not, unnecessarily or for any unreasonable period of time, obstruct
or interfere with the public use of any of the streets, roads, highways,
alleys, public ways, or other real property owned or controlled by
the city.
(c)
Repair of damages.
Atmos shall repair any and
all damages caused by Atmos, its developers, agents or contractors,
to any streets, roads, highways, alleys, city water and sewer lines,
public ways, or other real property owned or controlled by the city
and shall restore, as nearly as practicable, such property to substantially
its condition immediately prior to the incident causing such damage,
except to the extent that such damage arose as a result of the negligence
of the city, or a third party, their agents, representatives or employees.
Atmos shall commence such repairs immediately upon completion of the
work or activity in which Atmos was involved at the time the damage
occurred and shall complete such repairs as promptly as possible.
Atmos shall maintain the repairs to the satisfaction of the city for
one year after the date the surface of such street, road, highway,
alley, public way, or other real property was broken for such construction
or maintenance work, after which time, responsibility for the maintenance
shall become the duty of the city. The city may, from time to time,
adopt reasonable ordinances regulating such work. The duty to repair
shall not create a cause of action in any third party and Atmos shall
have a right of subrogation against anyone, except the city, that
might have contributed to the damage.
(d)
Conduct of work and activities.
Atmos shall use
reasonable care in conducting its work and activities in order to
prevent injury to any person and unnecessary damage to any real or
personal property.
(e)
Use of alleys.
Atmos shall attempt to utilize
the alleys of the city insofar as is reasonably practicable in conducting
its work and activities hereunder. Notwithstanding the foregoing,
however, Atmos may, when reasonably necessary, utilize the streets
and any other public ways owned or controlled by the city to perform
such work and activities. Atmos will attempt to avoid open cut of
streets except where reasonably necessary. Atmos shall not, after
the effective date of this Franchise Agreement, cause or permit to
be placed any gas lines over city water or sewer lines by its developers,
agents or contractors that could cause the city additional time and
expense to reach its line in case of the need to repair or relocate.
In the event such gas lines are so placed, at the request of the city,
Atmos shall have such gas lines relocated away from the city water
and sewer lines.
(f)
Service and supply.
Atmos shall use reasonable
care to furnish good and reliable service and an adequate supply of
natural gas in accordance with industry standards.
(g)
Installation of underground pipelines.
Atmos shall,
when reasonably practicable, install all pipelines under-ground at
such depth and in such manner so as not to interfere with the existing
pavement, curbs, gutters, or underground wires, cables, or water or
sewer pipes owned or controlled by the city.
(h)
No discrimination between consumers.
Subject to
Atmos' rights set forth in section 4-20-34 of this division,
Atmos shall not discriminate against any consumer with respect to
charges for natural gas or services rendered under substantially the
same circumstances to other consumers of the same classification.
(i)
Changes in gas system.
(1)
Atmos shall, upon written request from the city, change the
location, position, route, or depth of any pipeline or other component
of the gas system if and when such change becomes reasonably necessary
because of a change in the grade of any street, road, highway, alley,
public way, or other real property owned or controlled by the city
or because of any change in the location of, or in the manner of maintaining,
constructing, laying, repairing, removing, replacing, installing,
or operating any pavement, curbs, gutters, or underground wires, cables,
or water or sewer pipes owned or controlled by the city. The city's
written request for such change must set forth, in detail, all of
the essential elements and specifications of the requested change.
(2)
Atmos may seek payment from any governmental entity or agency,
person, or party, other than the city, of any amount to which Atmos
may be entitled because of such change in location, position, route,
or depth or because of the abandonment of any pipeline or other component
of the gas system regardless of whether such pipeline or component
is wholly or partially located in any public or private way or right-of-way.
(j)
Service to new areas.
If during the term of this
franchise the boundaries of the city are expanded, the city will promptly
notify Atmos in writing of any geographic areas annexed by the city
during the term hereof ("annexation notice"). Any such Annexation
Notice shall be sent to Atmos by certified mail, return receipt requested,
and shall contain the effective date of the annexation, maps showing
the annexed area and such other information as Atmos may reasonably
require in ascertaining whether there exist any customers of Atmos
receiving natural gas service in said annexed area. To the extent
there are such Atmos customers therein, then the gross revenues of
Atmos derived from the sale and distribution of natural gas to such
customers shall become subject to the franchise fee provisions hereof
effective on the first day of Atmos' billing cycle immediately
following Atmos' receipt of the Annexation Notice. The failure
by the city to advise Atmos in writing through proper Annexation Notice
of any geographic areas which are annexed by the city shall relieve
Atmos from any obligation to remit any franchise fees to city based
upon gross revenues derived by Atmos from the sale and distribution
of natural gas to customers within the annexed area until city delivers
an Annexation Notice to Atmos in accordance with the terms hereof.
In no event shall Atmos be required to add premises for the purposes
of calculating franchise payment prior to the earliest date that the
same premises are added for purposes of collecting sales tax.
(k)
Schedule of rates.
Atmos shall, at all times,
keep on file with the city a schedule setting forth current residential
and commercial rates for natural gas and services rendered to customers
within the city. Nothing contained in this division, however, shall
adversely affect Atmos' right to apply for an increase in all
or any of its rates at any time and from time to time during the term
hereof and to a lawful and equitable decision with respect to any
such application.
(l)
Rebates.
Atmos shall not grant, directly or indirectly, any rebate, in the form of money or any other thing of value, to any consumer in order to circumvent the rate schedule filed with the city pursuant to subsection (j) of this section.
(m)
Maps of gas system.
Atmos shall have available
a map or maps showing the current location of all pipelines and other
components of Atmos' natural gas distribution facilities located
in the city. Atmos shall have available electronic or digital maps
or maps in another suitable format showing the alignment and location
of its lines in the city. All maps provided by Atmos shall be deemed
confidential and will be provided solely for the city's use.
The city agrees to maintain the confidentiality of any non-public
information obtained from Atmos to the extent allowed by law. The
city shall provide notice to Atmos of any request for release of information
previously deemed confidential or designated by Atmos as proprietary
or confidential non-public information prior to releasing the information
so as to allow Atmos adequate time to pursue available remedies for
protection.
(n)
Bond for removal of gas system.
Atmos shall, upon
electing to remove all or any portion of the gas system in accordance
with section 4-20-34(5) of this division, file with the secretary
of the city a bond in a reasonable amount and with a proper and adequate
surety, securing Atmos' obligation to promptly repair, at Atmos'
sole expense, any damage to any real property owned or controlled
by the city caused by Atmos' removal of all or any portion of
the gas system and to restore such property to substantially the same
condition it was in immediately prior to the incident causing such
damage.
(Ordinance 2013-31, art. IV, adopted 5/28/13; Ordinance 2014-39, sec. 1, adopted 7/22/14; Ordinance 2018-24 adopted 6/26/18; Ordinance 2023-12 adopted 6/27/2023)
(a)
Use of city property.
The right of Atmos hereunder
to use any streets, roads, highways, alleys, public ways, and other
real property owned or controlled by the city shall in no way affect
the right of the city or its agents to maintain, construct, lay, repair,
remove, replace, install, or operate any pavement, curbs, gutters,
or underground wires, cables, or water or sewer pipes owned by the
city and located on or near such streets, roads, highways, alleys,
public ways, and other real property.
(b)
Inspection of books and records.
The city may,
at its sole expense and, upon reasonable prior notice, at any reasonable
time during normal business hours, inspect and copy any of Atmos'
books and records, wherever located, pertaining to and directly affecting
the rights of the city arising under or by virtue of this division.
(c)
Liability and indemnification.
(1)
Atmos shall indemnify and hold the city harmless from any and
all loss sustained by the city on account of any suit, judgment, execution,
claim, or demand whatsoever against the city resulting from Atmos
construction, operation, or maintenance of the gas system, except
to the extent such suit, judgment, execution, claim or demand arose
as a result of the negligence of the city, its agents, representatives
or employees.
(2)
Atmos shall pay, and by its acceptance of this franchise specifically agrees that it will pay, all reasonable expenses incurred by the city in defending itself with regard to all damages and penalties mentioned in subsection (1) above to the extent such damages and penalties did not arise as a result of negligence of the city, its agents, representatives or employees. These expenses shall include all reasonable out-of-pocket expenses, such as attorney's fees.
(3)
Atmos shall carry throughout the length of the term of this
franchise personal and property damage liability insurance with responsible
insurance companies eligible to do business in the state; provided,
however, that Atmos may instead meet the insurance requirements of
this division by a formal plan of self-insurance maintained in accordance
with sound accounting and risk-management practices. The amount of
such insurance to be carried for liability due to property damage
shall be five hundred thousand and no/100 dollars ($500,000.00) as
to any one occurrence; and against liability due to injury to or death
of person, one million and no\100 dollars ($1,000,000.00) as to any
one person, and ten million and no\100 ($10,000,000.00) as to any
one occurrence.
(4)
The certificate of insurance showing compliance with this section
shall be filed with the city secretary within sixty (60) days following
the passage and approval of this franchise. Atmos shall not operate
its gas system without maintaining the required insurance.
(d)
Notice.
Either Atmos or any person acting on behalf
of Atmos shall not commence any non-emergency work in or about city
property or public rights-of-way without the provision of advance
notice to city. This includes obtaining a no-charge right-of-way permit
for all major construction, including but not limited to, the installation
of new gas main lines and/or upgrading existing gas main. The submittal
of a site plan, schedule, and any traffic-control plans for the proposed
major construction work within the city right-of-way.
(Ordinance 2013-31, art. V, adopted 5/28/13; Ordinance 2018-24 adopted 6/26/18; Ordinance
2023-12 adopted 6/27/2023)
(a)
Termination of franchise and rights.
In the event
of a substantial breach by Atmos of any material provision of this
division, the city may terminate the franchise and rights granted
to Atmos hereunder, provided, however, that such termination shall
not be effective unless and until the procedures described below have
been followed:
(1)
The city must deliver to Atmos, by certified or registered mail,
a written notice signed by the mayor, attested by the secretary, and
sealed with the official seal of the city. Such notice must fairly
and fully set forth in detail each of the alleged acts or omissions
of Atmos that the city contends constitutes a substantial breach of
any material provision hereof, designate which of the terms and conditions
hereof the city contends Atmos breached, and specify the date, time,
and place at which a public hearing will be held by the governing
body of the city for the purpose of determining whether the allegations
contained in the notice did in fact occur, provided, however, that
the date of such hearing may not be less than thirty (30) days after
the date of such notice.
(2)
Within ten (10) days following the adjournment of the public hearing described in subsection (1) above, the city must deliver to Atmos, by certified or registered mail, a written notice signed by the mayor, attested by the secretary, and sealed with the official seal of the city, setting forth the acts and omissions of Atmos described in the first notice that the governing body of the city determines to have in fact occurred and (ii) the specific terms and conditions of this division listed in the first notice that the governing body of the city determines to have in fact been breached by such acts or omissions of Atmos.
(b)
Compliance fee.
In lieu of terminating the franchise and rights granted herein pursuant to subsections (a)(1) and (2) of this section, the city may, in the event of a substantial breach by Atmos of any material provision of this division, give Atmos the option of paying a compliance fee of five hundred dollars ($500.00) per day for each breach by Atmos hereof, provided, however, that the city shall first have furnished to Atmos the notices and right to public hearing and opportunity to cure described in subsection (a) of this section. The compliance fee shall be terminated when the breaches have been substantially cured.
(Ordinance 2013-31, art. VI, adopted 5/28/13; Ordinance 2018-24 adopted 6/26/18; Ordinance
2023-12 adopted 6/27/2023)
(a)
Force majeure.
Notwithstanding anything expressly
or impliedly to the contrary contained herein, in the event Atmos
or city is prevented, wholly or partially, from complying with any
obligation or undertaking contained herein by reason of any event
of force majeure, then, while so prevented, compliance with such obligations
or undertakings shall be suspended, and the time during which Atmos
or city is so prevented shall not be counted against Atmos or city
for any reason. The term "force majeure", as used herein, shall mean
any cause not reasonably within Atmos' control and includes,
but is not limited to, acts of God, strikes, lock-outs, wars, terrorism,
riots, orders or decrees of any lawfully constituted federal, state,
or local body, contagions or contaminations hazardous to human life
or health, fires, storms, floods, wash-outs, explosions, breakages
or accidents to machinery or lines of pipe, inability to obtain or
the delay in obtaining rights-of-way, materials, supplies, or labor
permits, temporary failures of gas supply, or necessary repair, maintenance,
or replacement of facilities used in the performance of the obligations
contained in this division. In the event Atmos or city claim force
majeure, they shall give notice to the other as soon as reasonably
practicable and no more than 30 days after the event occurs. The party
claiming force majeure shall use reasonable efforts to mitigate the
effects of such force majeure.
(b)
Other ordinances.
Except to the extent otherwise
expressly provided herein, the franchise and rights granted hereby
and the operations and activities performed by Atmos pursuant hereto
shall be subject to all valid ordinances and regulations of the city
and any valid amendments thereto insofar as, and only insofar as,
such ordinances and regulations (i) do not shorten the term hereof
or terminate, abrogate, or materially and adversely affect the franchise
and rights granted to Atmos hereby; or (ii) do not conflict with or
are not inconsistent with the terms and provisions contained in this
division, such conflicting or inconsistent ordinances hereby being
repealed to the extent of such conflict or inconsistency. However,
the restrictions included herein shall not in any way restrict the
authority of the city to adopt and to enforce the ordinances that
are for the purpose of public health, safety and the general welfare
of the city.
(c)
Amendments.
This division and the franchise and
rights granted herein may be amended only by written agreement of
the city and Atmos to such amendment.
(d)
Severability.
In the event any part of this division
is determined to be invalid or illegal for any reason whatsoever,
such invalidity or illegality shall not affect the validity or legality
of this division as a whole or of any part hereof.
(e)
Binding effect.
This division shall extend to,
be binding upon, and inure to the benefit of, the parties hereto and
their respective successors and assigns.
(f)
Effective date.
This division shall become effective
on the date on which this division is finally adopted by the city
in accordance with law, and Atmos shall file with the secretary of
the city a letter stating that Atmos accepts this division as adopted
and agrees to comply with and be bound by all of the terms and conditions
hereof. A true and correct copy of this division as finally adopted
shall be attached to such letter and by reference made a part thereof,
and the letter shall be addressed to the Mayor and the governing body
of the city, dated, and executed by an authorized officer of Atmos.
Upon this division becoming effective, this division shall supersede
any and all prior ordinances of the city, including but not limited
to Ordinance 2018-24 and subsequent amendment, Ordinance 2023-12,
regarding the subject matter of this division.
(g)
Section and other headings.
The section and other
headings contained in this division are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
division.
(Ordinance 2013-31, art. VII, adopted 5/28/13; Ordinance 2014-39, secs. 2-3, adopted 7/22/14; Ordinance 2018-24 adopted 6/26/18; Ordinance 2023-12 adopted 6/27/2023)
