At the April 7, 2020, Council meeting, staff will be recommending that the City Council adopt a Resolution 2020-XX pursuant to A.R.S. Section 9-502 finding that the grant of a franchise to Unisource Energy Systems is beneficial to the community, calling for an August 4, 2020, special election, and submitting the question to the qualified electors as to whether or not the franchise shall be granted. 

Unisource Energy Services (UES) is a natural gas company and an Arizona public service corporation. UES is regulated by the Arizona Corporation Commission, per the Arizona Constitution, Art. 15, Section 3. UES has a franchise to use City right-of-way (ROW) and public utility easements (PUEs) for its natural gas transmission and distribution pipelines and facilities. The existing franchise is expiring in October 2020.  UES requests that a new 25-year franchise be considered for approval at the August 4, 2020, special election.   Per the Arizona Constitution, Art. 13, Section 4, only the voters may approve a franchise, and a franchise may not exceed 25 years. UES will be paying its fair share of the election costs.

UES pays a franchise fee of 2% of its gross receipts for gas sold in Flagstaff.  UES also collects and remits local transaction privilege tax under the utilities category.  As such, UES is a revenue resource for the City.

The proposed franchise is attached.  It may be adjusted prior to Council approval on April 7, 2020.  

The proposed franchise includes the following:

• grant to use ROW and PUE for gas pipelines and transmission facilities;
• provisions outlining when City vs. UES pays for utility relocation costs for capital projects;
• requirements that UES comply with City permitting and engineering standards for work in ROW and PUE;
• indemnification and insurance requirements;
• rates and charges to be established by the Arizona Corporation Commission;
• franchise fee equal to 2% of revenues, excluding regularly assessments and taxes;
• fee is in lieu of payment of permits for work in ROW for the gas pipelines and transmission facilities;
• 25-year term;
• franchise is contingent on voter approval.

 

Schedule:

• March 10:  Work Session;
• April 7:  Council may adopt Resolution 2020-XX finding that proposed franchise benefits the community, submit question to voters;
• June-July:  Public outreach; publicity pamphlets; publish proposed franchise in newspaper for 30 days;
• August 4:  Special election;
• By October:  Declare election results and execute franchise if approved.