Title
AN ORDINANCE TO REPEAL ORDINANCE 1881 AND AMEND THE FRANCHISE BETWEEN THE CITY OF COMMERCE CITY AND PUBLIC SERVICE COMPANY OF COLORADO d/b/a XCEL ENERGY
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Presenter: Greg Graham, Assistant City Attorney
Recommended City Council Action:
Passage of ordinance on second reading
Summary Statement:
The proposed ordinance approves the "Third Amendment to Franchise Agreement," which extends the term of the City's 1986 franchise agreement with Xcel energy until a new franchise is approved by a vote of qualified City electors at the November 2012 election. This Amendment will preserve the funds currently accumulated in the 1% underground fund as well as ensure continued payment by Xcel of the Franchise Fee. The Amendment also removes from the 1986 Franchise Agreement language forcing Xcel to initiate annexation procedures for certain Xcel-owned property within or adjacent to City boundaries. The "Third Amendment to Franchise Agreement," must be adopted to ensure there is no gap in the rights and obligations of the parties between expiration of the 1986 Franchise Agreement and the effective date of the 2012 Franchise Agreement.
Next Steps: Once the ordinance approving and adopting the Third Amendment to Franchise Agreement is passed on 2nd reading, staff will prepare an ordinance to approve the 2012 franchise agreement between Xcel and a resolution setting the matter and ballot language for the November 2012 election.
Expenditure Required: None
Source of Funds: N/A
Policy Issue: Failure to adopt this amendment to the 1986 franchise agreement may result in loss of the funds currently accumulated in the 1% underground fund as well as ongoing franchise fee payments from Xcel. Xcel is currently withholding underground funds critical to completion of certain Parks and Public Works projects.
Alternative: If the City Council does not approve this amendment, and Xcel fails to release accumulated underground fund monies, the City Council should consider calling an executive session for legal advice regarding the City's options.
Background Information:
• The City's 1986 Franchise Agreement with Xcel Energy expired on May 13, 2011. City Staff have been negotiating with various representatives of Xcel Energy on a new Franchise Agreement since the fall of 2010, but negotiations were more difficult than anticipated, in part because Xcel's legal and non-legal representation changed on separate occasions.
• Since May 2011, the City Council has passed three (3) ordinances approving extensions to the 1986 Franchise Agreement; however, Xcel failed to execute the third (3rd) of these extensions, and argues that such extension was, therefore, never valid.
• Regardless, such third extension would have expired in March, and Xcel has been honoring its obligations under the 1986 franchise agreement (in particular, continuing to pay the franchise fee and not, to our knowledge, depleting the underground fund).
• However, because Xcel failed to execute such third amendment, this new amendment will be titled "Third Amendment to Franchise Agreement," because, in keeping with contract amendment nomenclature, once executed and adopted, this new amendment will, in fact, be the third amendment to the 1986 Franchise Agreement.
• Xcel and City Staff have reached agreement on the language of a new franchise agreement (the “2012 Franchise Agreement”), which, if adopted by the City Council, will go into effect upon certification of the vote approving a grant of franchise to Xcel at the November 2012 election. However, this new amendment must be passed first to ensure there is no gap in the rights and obligations of the parties between expiration of the 1986 Franchise Agreement and the effective date of the 2012 Franchise Agreement.