Chapter A365 Gas Franchise

DISTRIBUTED or DISTRIBUTION

Editor's Note: This ordinance also repealed former Ch. A365, Gas Franchise, adopted 4-3-1990 by Ord. No. 2621.

§ A365-1 Definitions.

As used in this ordinance, the following words and phrases shall have the following meanings:

CALCULATED VALUE

The total transport gas measured in dekatherms (Dth), delivered to a transport gas consumer for a billing period, multiplied by the settlement price, to arrive at the value of the transport gas transported by the grantee for that transport gas consumer.

CITY

The City of El Reno, Oklahoma, a municipal corporation.

CONSUMER

Any individual person, corporation, company, partnership, firm, unincorporated association, trust, municipality, or public or private entity located within the municipal corporate limits of the City and serviced by the grantee through any use of the public ways.

DEKATHERM or Dth

A measurement of natural gas equal to 1,000,000 British thermal units ("Btu's"), or one MMBtu, on a dry basis. Btu's shall be computed on a temperature base of 60° F. and a pressure base of 14.73 psia.

All sales, distribution, or transportation of natural gas to any consumer or user located within the municipal corporate limits of the City by the grantee or by others through the grantee's distribution system.

DISTRIBUTION SYSTEM

A system of works, pipes, pipelines, apparatus, machinery, structures, appliances and appurtenances as are reasonably necessary for the transportation, distribution or sale of gas to consumers.

FRANCHISE

The rights and privileges granted by the City to a grantee under Subsection A of § A365-2 of this ordinance.

FRANCHISE FEE or FRANCHISE FEES

The sum of fees to be paid to the City by the grantee under § A365-11 of this ordinance, at Subsection A(1), as consideration for the use of the public ways and shall be inclusive or in lieu of any permit fees, lane closure fees and similar fees or charges for construction, installation, maintenance or restoration work on the distribution system with the public ways.

GRANTEE

ONE Gas, Inc., a corporation acting by and through its Oklahoma Natural Gas Company division, and its successors and assigns.

GROSS RECEIPTS

Any and all compensation derived by the grantee directly from the distribution of natural gas to a consumer for any use, including residential, industrial and commercial purposes, and shall include without limitation revenues from any operation or use of any or all of the distribution system by the grantee or others. Gross receipts shall not include revenues received by the grantee from consumers as franchise fee reimbursement nor volumetric rate fees collected by the grantee and remitted to the City in accordance with § A365-11A(2) pursuant to an ordinance enacted by the City according to § A365-3B(1) hereof, nor shall gross receipts include revenues from incidental charges or miscellaneous fees not directly generated by the distribution of natural gas to consumers, such as, by way of example, connection and disconnection fees, reconnection fees, customer project contributions, returned check charges, delayed or late payment charges, temporary service charges, and other such charges.

INSTALL, OPERATE AND MAINTAIN

To acquire, erect, construct, install, extend, repair, remove, relocate, replace, or otherwise operate and maintain.

PUBLIC WAYS

Any street, alley, avenue, boulevard, lane, park, parkway, sidewalk, driveway, utility easement, public right-of-way, and any other public ways, places, areas, or grounds within the municipal corporate limits of the City as now constituted or as may be added or extended hereafter.

SETTLEMENT PRICE

The settlement price for natural gas futures contracts traded on the New York Mercantile Exchange (NYMEX), or any successor exchange or index, on the 15th day of each month as published daily in The Wall Street Journal or a comparable national daily financial news publication on the following business day (or the next day in which a settlement price is published) for each month of the twelve-month period immediately following.

TRANSPORTATION TARIFF ARRANGEMENT

Any arrangement between the grantee and a consumer pursuant to which natural gas owned by any party other than the grantee shall be transported, distributed or sold through any portion of the grantee's distribution system and under one of the grantee's tariffs or special contract for delivery to the consumer.

TRANSPORT GAS

All natural gas transported by the grantee pursuant to a transportation tariff arrangement or by other agreement, but not sold by the grantee through the grantee's distribution system to any consumer or user located within the municipal corporate limits of the City.

TRANSPORT GAS CONSUMER

A consumer which uses transport gas.

VOLUMETRIC RATE

Four percent of the calculated value of transport gas as determined by the grantee in accordance with the provisions of this definition. The Volumetric Rate Calculation Form incorporated herein as Exhibit "A"[1] shall be used for the calculation of the volumetric rate, provided that if the City enacts an ordinance as described in § A365-3B(1) below, the four-percent multiplier labeled "4% Bundled Franchise Fee Rate" set forth on Exhibit "A" shall be completed by the grantee and filed with the City Clerk of the City upon the grantee's acceptance of this franchise and annually by each July following acceptance. The calculation filed upon the grantee's acceptance of this franchise shall be effective from the date of such filing through and including December 31 of the next succeeding calendar year. The calculation filed by the grantee on July 31 in years following the year of acceptance of this franchise shall be effective on January 1 of the next succeeding calendar year through and including December 31 of such calendar year. The calculation shall be subject to review by the City for mathematical correctness, and the City shall notify the grantee in writing within 45 calendar days after submission if the City deems such calculation to be incorrect. The volumetric rate calculation shall be based on the average of the average settlement prices for the twelve-month period beginning in July of the immediately preceding year and ending in June immediately preceding the July 31 calculation. The average settlement prices for each month during said twelve-month period shall be calculated by adding the settlement prices for such month and the previous 11 months as published and dividing by 12. The average settlement prices for each of the 12 months shall then be summed and divided by 12 to determine the average of the average settlement prices and then multiplied by 4% to obtain the volumetric rate, provided, in the event the then-current average of the average settlement prices as calculated above and entered on the Volumetric Rate Calculation Form, attached as Exhibit "A" (see line designated on Exhibit "A" as "settlement price average"), exceeds the index price for ONEOK Gas Transportation, L.L.C., that is listed in the issue of Platts "Inside FERC Gas Market Report" published on the first business day of the respective month ("Platts index price"), then the Platts index price shall be used to calculate the volumetric rate for that delivery month in lieu of the average of the average settlement prices entered on the Volumetric Rate Calculation Form (Exhibit "A") (i.e., for that respective delivery month, the volumetric rate shall be determined by taking the Platts index price and multiplying that price by 4% or the then-applicable increased percentage determined in the same manner set out in § A365-11A(2) of this franchise).

VOLUMETRIC RATE FEE or VOLUMETRIC RATE FEES

The fee or fees based on the volumetric rate to be collected and remitted to the City by the grantee as required by § A365-11A(2) of this franchise upon the enactment of an ordinance as described in § A365-3B(1).

§ A365-3 Franchise assignment, sale or lease.

Editor’s Note: Exhibit “A” is included as an attachment to this chapter.

§ A365-2 Grant of franchise.

The City hereby grants to the grantee for the term of 25 years from the passage and voter approval of this ordinance, commencing upon the filing of a written acceptance by the grantee, the right to enter upon the public ways to install, operate and maintain a distribution system along, across, over and under the public ways for the privilege of transporting, distributing and/or selling gas to consumers and the public generally within the municipal corporate limits of the City.

The ordinance shall have the effect of and shall be a contract between the City and the grantee and shall be the measure of the rights and liabilities of the City as well as the grantee.

The franchise granted by this ordinance is not exclusive, and nothing herein shall be construed to divest the City of its control and regulation of the public ways.

Conditions for assignment, sale, lease or other transfer; exceptions.

The grantee shall not have the right to assign, sell, lease, or otherwise transfer in any manner whatsoever to any third party not affiliated with the grantee the rights and privileges granted under this ordinance except as hereinafter provided. Any assignment, sale, lease, or other transfer by the grantee of the franchise granted herein to any third party not affiliated with the grantee shall be ineffective and void unless:

(a)

The proposed assignment, sale, lease or transfer shall be in writing; and

(b)

The prospective assignee, buyer, lessee or other transferee shall agree in writing to accept and become responsible for full performance of all conditions, covenants, obligations, and liabilities contained in this ordinance; and

(c)

Such writing shall be submitted to the City Clerk of the City.

This Subsection A shall not apply to any arrangement which is in compliance with the provisions of Subsection B of this section. This section shall not apply to the use of any portion of the grantee's distribution system for the transportation, distribution or sale to any consumer purchasing, receiving and using natural gas outside the municipal corporate limits of the City.

After the operative date of this ordinance, the grantee shall have the right to enter into or continue to operate pursuant to any transportation tariff arrangement or to enter into or continue any arrangement by which natural gas owned by any party other than the grantee shall be transported, distributed or sold through any portion of the grantee's distribution system for delivery to any consumer located within the municipal corporate limits of the City, subject to the following:

Should the City, by separate ordinance, require persons transporting gas pursuant to a transportation tariff arrangement to pay compensation to the City for use of the public ways in connection with the sale of transport gas, said compensation shall be calculated as a volumetric rate fee and collected and remitted by the grantee as provided in § A365-11A(2) of this ordinance;

§ A365-4 Use and repair of public ways.

The transport gas consumer shall have obtained a license from the City, if the City shall have a licensing ordinance in effect, for the use of the public ways in connection with such transport of natural gas, and the City shall have notified the grantee in writing of such license.

The grantee's distribution system shall be erected, placed, and laid or otherwise installed, operated and maintained in such a manner as will, consistent with reasonable necessity, least interfere with other public uses of the public ways.

Before the grantee shall excavate or disturb the surface of any public way, except in the case of emergency, at least 48 hours' advance notice shall be given to the City's Engineer, Public Works Director or other proper authority designated in writing by the City. After such excavation or disturbance, the grantee shall, with due diligence and dispatch, place the public way in a condition in compliance with the City's reasonable standards and specifications.

Upon the grantee's failure to commence or complete any construction, maintenance or restoration work required by this ordinance with due diligence and dispatch, the City may cause such work to be done after written notice to the grantee, given so as to afford the grantee an opportunity to commence and complete such work within a reasonable time. The cost of such construction, maintenance or restoration incurred by the City upon the grantee's failure shall then be charged to and collected from the grantee.

The City reserves the right to make and enforce reasonable regulations concerning the construction of the grantee's distribution system located within, along, across, over, or under the public ways and to reasonably designate where the distribution system's works and pipelines shall be placed, so long as such regulations are not unreasonable nor in conflict with this ordinance, the laws of the State of Oklahoma and the United States or the orders, rules or regulations of the Oklahoma Corporation Commission or other regulatory authority having jurisdiction over the grantee.

§ A365-5 Regulation of service.

The distribution system of the grantee shall at all times be installed, operated and maintained in accordance with accepted good practice and in such condition as will enable the grantee to furnish adequate and continuous service as required by the orders, rules and regulations of the Corporation Commission of Oklahoma or other regulatory authority having jurisdiction. The requirements set forth in this section shall not relieve the grantee of any other obligations set forth herein.

In the event that the Corporation Commission of Oklahoma or other state regulatory authority shall be deprived of the authority to regulate the grantee, then the City shall have the authority to set rates, terms and conditions of service for transportation, distribution or sale of natural gas by the grantee within the municipal corporate limits of the City.

§ A365-6 Depth of pipelines.

After the operative date of this franchise, the grantee's main or lateral lines installed or replaced in public ways shall be installed or replaced at depths which comply with all applicable state and federal rules and regulations establishing minimum safety standards for the design, construction, maintenance and operation of pipelines. Depth shall be measured from the lower of existing grade or proposed future grade as set forth on plans or other specifications existing at the time such lines are installed or replaced. For installation or replacement, the grantee shall comply with the City's reasonable requirements for compacting fill material under roadways, sidewalks or other structures within the public way.

§ A365-7 Duty to move or alter lines.

The City reserves the right to lay or permit to be laid cables, electric conduits, water, sewer, gas or other pipelines, and to do or permit to be done any underground work deemed necessary and proper by the City, along, across, over or under the public ways. In permitting such work to be done, the City shall not be liable to the grantee for any damage to the grantee's pipeline unless the City or its agents or contractors are negligent in causing said damage.

Whenever, by reason of establishing a grade or changes in the grade of any street or in the location or manner of construction of any public way, cables, electric conduits, water, sewer, gas or other underground structures, it shall be deemed necessary by the City to alter, change, adapt or conform any portion of the grantee's distribution system located in the public ways, such alterations or changes shall be made within a reasonable time by the grantee, as ordered in writing by the City, without claim for reimbursement or compensation for damages against the City; provided, however, that this section is not intended to require the grantee to alter, change, adapt or conform any portion of its distribution system without reimbursement or compensation where the right to locate the same, whether by private right-of-way grant, utility easement or otherwise, was acquired prior to its location in the public way.

If the City shall require the grantee to adapt or conform its distribution system or in any way to alter, relocate or change its property to enable any other person, firm, corporation or entity (whether public or private), other than the City, to use the public ways, the grantee shall be reimbursed by the person, firm, corporation or entity desiring or occasioning such change for any and all loss, cost or expense occasioned thereby.

"Person," "firm," "corporation," and "entity," as used in Subsection C of this section, shall not include departments of the City, or any trust or authority formed by or for the benefit of the City for public utility purposes, but shall include any other agency or authority of the City, whether acting in a governmental or nongovernmental capacity, including, but not limited to, any urban renewal authority, or any other agency or authority, which as a part of its program clears whole tracts of land within the municipal corporate limits and relocates citizens for the purpose of urban development or similar aims.

§ A365-8 Indemnification of City.

The grantee shall indemnify, become responsible for and forever save harmless the City from any and all damages, judgments, reasonable costs and expenses, including attorney fees, which the City may suffer or incur, or which may be legally obtained against the City, for or by reason of the negligent use, repair or occupation of any public way within the municipal corporate limits of the City by the grantee pursuant to the terms of this ordinance or resulting from the tortious exercise by the grantee of any of its privileges or by reason of its carrying on its business in the City (except where such damages, judgments, reasonable costs and expenses, including attorney fees, result from the tortious acts of the City or its agents or contractors); provided, however, that in the event of such claim or claims being prosecuted against the City, the grantee shall have the right to defend against the same, and to settle or discharge same in such manner as it may see fit, and the City shall give prompt written notice to the grantee of the presentation or prosecution of such claims.

§ A365-9 Grantee's rules and regulations.

The grantee shall have the right to make and enforce such reasonable rules and regulations as it may deem necessary for the extension of its facilities, the sale of its gas and the prudent conduct of its business, provided that such rules and regulations shall neither be in conflict with the laws of the State of Oklahoma, with the orders, rules or regulations of the Corporation Commission of Oklahoma or other regulatory authority having jurisdiction, nor with the ordinances and regulations of the City insofar as they are consistent with the jurisdiction of the Corporation Commission of Oklahoma or such other regulatory authority.

§ A365-10 Inspection of records.

The grantee shall permit the City or its agents to inspect, during regular business hours, the books, papers and records kept by the grantee in the ordinary course of business and pertaining to the natural gas business carried on by it in the City, such as plats, maps and atlases identifying the grantee's pipelines in the City, and the books and records necessary to verify the amounts of the payments provided for in § A365-11 hereof. Notwithstanding the obligation herein, the grantee shall have the right to request the reasonable protection of proprietary information and to provide redacted documents or require the City or its agents to enter into such agreements pertaining to confidentiality as may reasonably protect the proprietary information of the grantee but which do not unreasonably frustrate the purposes of this section. The City shall promptly notify the grantee in writing of areas newly annexed into or de-annexed from the corporate limits of the City, and the grantee shall update its records for the purpose of payment of franchise fees as soon as reasonably practicable after receiving such notice.

§ A365-11 Consideration for franchise: franchise fee.

In consideration for the rights and privileges enjoyed under this franchise, the grantee agrees to pay the City as follows:

The grantee shall pay the City a franchise fee the sum of which is equal to 4.25% of the gross receipts received by the grantee, per billing period, from the transportation, distribution, and sale of natural gas for domestic, commercial or industrial consumption within the municipal corporate limits of the City.

[Amended 6-14-2016 by Ord. No. 9097]

In the event that the City, pursuant to § A365-3B of this ordinance, requires persons transporting gas pursuant to a transportation tariff arrangement to pay compensation to the City for use of the public ways in connection with the sale of transport gas, said compensation shall be calculated as a volumetric rate fee for such transport gas, which shall be the sum equal to the then-current volumetric rate multiplied by the number of Dth of transport gas reported or distributed through the grantee's facilities within the municipal corporate limits of the City by the grantee or by any third party to transport customers for consumption within the City. The grantee will in that event collect such volumetric rate fees from persons transporting gas pursuant to a transportation tariff arrangement and remit the same to the City.

In the event a customer of the grantee does not pay a monthly bill from the grantee in full, the grantee shall prorate its payments of remissions to the City for sums due on that particular bill so that the amount actually paid by the customer to the grantee on the bill is distributed to the grantee for the natural gas commodity and transportation or distribution service and to the City for sums due on the bill in proportion to the percentage of the total bill actually paid by the customer. In the event the grantee actually collects any outstanding amounts due on a past due, unpaid or partially paid monthly bill to a customer, then the grantee shall pay the City its proportionate share of sums due to the City on such bill.

All sums due from the grantee under this section shall be payable monthly on or before the 25th day of each month for the preceding calendar month, which sums shall be in lieu of all other franchise, license, or occupation taxes or fees, which may be levied or attempted to be levied on the grantee by the City.

The City Council may waive the volumetric rate fee or any part thereof due from a transport gas consumer, but such waiver shall only be granted if:

The transport gas consumer could otherwise obtain its energy needs from another source that would not be subject to the fees imposed in § A365-11A(2) above and sufficient evidence is produced by the transport gas consumer so as to substantiate such alternative source; and

Such alternative source, including all other fees, would be less than the cost of utilizing the grantee to furnish and transport the gas or transport alone, as the case may be.

In the event the grantee shall hereafter accept any franchise from any city in the State of Oklahoma having a population in excess of 15,000 according to the most recent federal census which provides for the payment to such city in excess of the franchise fee provided herein, then the grantee shall forthwith and without demand inform the grantor's governing body of such occurrence. Thereafter, at the sole discretion of grantor's governing body and pursuant to such process as it deems appropriate, the grantee may be directed by the grantor's governing body to pay to the grantor such increased rate applicable to the class of service affected.

In the event the accounting rendered to the City by the grantee is found to be incorrect, then payment to the City or reimbursement to the grantee, as the case may be, shall be made on the corrected amount, it being agreed that the City may accept the amount offered by the grantee, but the acceptance thereof by the City shall not be deemed a settlement of such item if the amount is in dispute or later found to be incorrect. The grantee shall have no obligation, however, to make payment upon transport gas for which the grantee has not been paid. The grantee shall provide notice to the City of such delinquent accounts within 90 days, and the City shall hold the grantee harmless from the cost or liability for the collection of franchise fees on such delinquent accounts.

The City agrees that the franchise fee percentage rate set forth in § A365-11A(1) and (2) of this ordinance shall in no event exceed the percentage rate hereafter approved to calculate any fee paid to the City by any other person or entity for use of the public ways if such fee or volumetric rate is based in any way on the amount of revenues or gross receipts from the transportation, distribution, or sale of natural gas or electric energy, excluding any municipally owned electric utility, by such other person or entity to ultimate consumers within the City. If at any time after the effective date of this ordinance the fee or rate required to be paid by another utility distribution company is less than the percentage rate set forth in Subsection A(1) or (2) of § A365-11, then the percentage rate set forth in Subsection A(1) or (2) of § A365-11 of this ordinance shall be reduced to equal such lesser percentage rate on the date such lesser percentage rate becomes effective and without any further action by the City or the qualified electors residing therein.

§ A365-12 Conditions of franchise.

This contract, franchise, grant and privilege is granted and accepted under and subject to all applicable laws and under and subject to all of the orders, rules, and regulations now or hereafter adopted by governmental bodies now or hereafter having jurisdiction.

§ A365-13 Invalidity of ordinance.

If any clause, sentence, or section of this ordinance shall be held to be invalid, it shall not affect the remaining portions of this ordinance, which shall remain valid and effective as if such invalid provision did not exist, although the parties shall be entitled to a judicial interpretation or construction of this ordinance to address the validation of such provision by minimal amendment thereof. Further, should any governmental body now or hereafter having jurisdiction determine that the grantee shall not be permitted to collect in whole or in part the compensation due the City by others for transport gas as set forth in Subsection B(2) of § A365-3 and Subsection A(2) of § A365-11 of this ordinance, the grantee shall thereafter have no obligation to make such payment to the City, in which event Subsection B(2) of § A365-3 and Subsection A(2) of § A365-11 shall be of no force and effect.

§ A365-14 Election required.

This ordinance shall not become operative until it shall be approved by a majority of the qualified electors voting thereon residing within the municipal corporate limits of the City at an election called for that purpose, and a special election is hereby called for the purpose of submitting to the qualified electors residing in said City the question of approval or disapproval of this ordinance, which election shall be held on May 12, 2015, between the hours prescribed by law.[1] The Mayor of the City is hereby authorized and directed to issue a proper and lawful call and proclamation of such special election to be held on such date as aforesaid for said purpose, and the City Council is hereby directed to give due and lawful notice of such election and submission of said question to the electors of said City as prescribed by law and the ordinances of the City.

§ A365-15 Acceptance; operative and effective date; emergency.

Editor's Note: This ordinance was approved at the special election held on 5-12-2015.

In the event this ordinance is approved by a majority vote of said electors voting thereon at said election,[1] the grantee shall file with the City Clerk, within 30 days after the official canvass of the votes and declaration by the City Council of the results thereof, a written acceptance. This ordinance shall become operative on the date of filing of such acceptance.