HomeMy WebLinkAboutSCG - So Cal Gas - Southern California Gas Company - 2010-05-03 1 .b,Y.Slea CPA
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1619)6962281(M
A Sempra Energy ut111tye (619)6963060(F)
March 20,2017
City Clerk
City of Huntington Beach
P.O.Box 711
Huntington Beach,CA 92648
Dear Sir or Madam:
Enclosed is the certified Franchise Payment Statement for the year ending December 31,2016,from the Southern
California Gas Company as required by the City of Huntington Beach under Ordinance No.3880. Also enclosed are
the summary schedules supporting the above statement.The balance due of$298,946.00 will be submitted on March
31,2017.
Please note,on April 21,2016 the California Public Utilities Commission("CPUC")approved Decision 16-04-026
(the"Decision')which"direct[ed]that a uniform methodology be used by the Pacific Gas and Electric Company,
Southern California Edison Company,San Diego Gas&Electric Company and Southern California Gas Company to
calculate municipal surcharge remittancesil.Pursuant to the Decision and order of the CPUC,SoCalGas has
modified its Municipal Public Lands Use Surcharge remittance calculation methodology to be"consistent with the
methodology currently used by the Pacific Gas and Electric Company and the Southern California Edison
Company"2.The change affects all SoCalGas Municipal Public Lands Use Surcharge payments made after July 1,
2016.
The following banking information will be used to process your EFT payment:
Bank Name: Union Bank of California
ABA Number: 021052053
Account Number: 43831854
For banking informaton changes,please contact Eric Marler,at(619)696-4147 or Emarler@sempra.com.For
franchise statement questions,please contact Geoffrey Danker,Franchise Fees&Planning Manager,at(213)244-
3363 or Gdanker@semprautilities.com.
Sincerely,
Enclosures
c. Janet Lockhart-City of Huntington Beach X
cc: Director of Finance-City of Huntington Beach
City Treasurer-City of Huntington Beach
Finance Dept.-City of Huntington Beach j
CPUC Decision 16-04-026,April 21,2016,p.2.The Derision is mailable attMp:lldocs.epos.mgov/Public dDorelPuNish G000IM 160o(165/160165217.PDF J
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i �f 320/2017
SOUTHERN CALIFORNIA GAS COMPANY
Franchise Payment Statement
City of Huntington Beach under Ordinance No.3880
Year Ending December 31,2016
Gross operating receipts atrributable to the area
within the City of Huntington Beach and credited to the following
accounts prescribed by the Public Utilities Commission
Final
Account Computation
No Description Amounts
480 Residential Revenue $ 27,224,291A0
481 Commercial Revenue $ 5,318,736.55
482 Industrial Revenue $ 856,583.70
483 Sales for Resale $ 0.00
484 Electric Generation Revenue $ 821,921.48
486 NGV Revenue $ 394,484.17
Miscellaneous Service Receipts $ 237,800.69
State Regulatory Surcharge $ 32,704.05
Subtotal $ 34,886,521.74
Less: Uncollectible Bills $ 68,445.17
Gross Receipts $ 34,818,076.57
(1) Franchise amount at 2% pursuant to Sec 3.(a).2.(ii) $ 696,361.53
(2) Franchise amount pursuant to Sec 3.(a).2.(i) $ 243,419.90
Franchise amount due(greater of(1)or(2)) $ 696,361.53
Add: Municipal Public Lands
Use Surcharge(Sec 3.(a).3) 463,822.73
Total Due for 2016 $ 1,160,184.26
Less Amounts Previously Paid:
First Quarter $314,248.58
Second Quarter $167,960.22
Third Quarter $379,029.46
Total Payments 861,238.26
Balance Due for 2016 $ 298,946.00
A_2200_CA(HuntingtonBeach)_FranchlseFees_Q4_2016_2.xlsm 3/20/2017
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SOUTHERN CALIFORNIA GAS COMPANY
City of Huntington Beach
Municipal Public Lands Use Surcharge Due
pursuant to CA Public Utilities Code§6360 et seq
Year ending December 31,2016
Weighted
Electric Total Avg.Cost Total
Billed Residential Commercial Industrial Generation Volume of Gas Imputed
Month (DTH) (DTH) (DTH) (DTH) (DTH) ($1DTH) Value
January 7,219.10 13,820.00 83.40 661,906.00 $683,028.50 $2.68 $1,829,648.80
February 6,288.10 12,147.60 106A0 333,362.70 $351,904.50 $2.68 $941,675.31
March 3,585.10 10,753.60 65.90 64,002.60 $78,407.20 $2.61 $204,943.79
17,092.30 36,721.20 255.40 1,059,271.30 1,113,340.20 $2,976,267.90
Amount due @ 2%of above $59,526.36
Billed Electric
Month Residential Commercial Industrial Generation Total
April 222.84 511.73 2.60 5,728.59 $6,465.76
May 173.23 448.69 2.73 1,541.42 $2.166.07
June 205.45 595.69 3.46 20,020.72 $20,825.32
July 190.73 571.74 3.11 50,146.73 $50,912.31
August 215.06 659.30 3.28 88,809.39 $89.687.03
September 238.63 712.23 3.93 91 $1130,127.90
October 223.08 703.78 3.41 65,006.07 $65.936.34
November 268.85 829.80 4A3 31,846.57 $32,949.35
December 246.42 867.43 4.18 20,513.88 $21,631,91
1,984.29 5,900.39 30.83 382,786,48 $390,701,99
Annual Municipal Public Lands Use Surcharge Collected $463.823.39
Less Annual Municipal Surcharge Bad Debt ($0.66)
Net Annual Municipal Public Lands Use Surcharge Collected $463,822.73
Less Municipal Surcharge Paid for 01 to 03 ($329,709.75)
Municipal Public Lands Use Surcharge Due $134,112.98
3202017 3:31 PM
CERTIFICATION
I, the undersigned, say:
I am Director, Corporate Tax for Sempra Energy and its subsidiary
Southern California Gas Company. I am duly authorized to prepare and file
the foregoing statement on its behalf; and I hereby verify that the same is
true and correct to the best of my knowledge and belief.
I certify (or declare) under penalty of perjury that the foregoing is
true and correct.
Executed on March 20, 2017, at San Diego, California.
James Asay
Director, Corporate Tax
If additional information is required, please address inquiries to:
Southern California Gas Company
ATTN: State and Local Tax
488 Eighth Ave. / HQ08N1
San Diego, CA 92101
pt .,
May 24 2010
The Honorable City Council
City of Huntington Beach
Dear Council
In compliance with the terms of Section _ of Ordinance No 3880 entitled An
Ordinance of the City Council of the City of Huntington Beach granting to Southern
California Gas Company, its Successors and Assigns, the franchise to construct, maintain
use pipes and appurtenances for transmitting and distributing gas for any and all purposes in,
along, across upon and under the public streets and places within the City of Huntington
Beach , said Ordinance having been adopted on the 17th day of May 2010 Southern
California Gas Company hereby accepts said franchise and agrees to comply with the
terms and conditions thereof
Yours respectively
By
Michael Gd lagher SVP Operations
By
Secretary
Approved
doe Cityacpt
11/08/94
Council/Agency Meeting Held:_ 0 ho
Deferred/Continued to-
16
Approved ❑ Co di ion II Approved ❑ Denied City erk Signatu,e
Council Meeting Date: May 3, 2010 Department ID Number: FN 10-016
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City tince
Members
SUBMITTED BY: Fred A. Wilson, City Admin
PREPARED BY: Bob Wingenroth, Director o �
SUBJECT: Approve an Ordinance and Franchise Agreement between the City of
Huntington Beach and the Southern California Gas Company
(SoCalGas)
Statement of Issue:
The 1991 Settlement Franchise with SoCalGas expired on December 31, 2009. Since that
time, SoCalGas has been operating within the City of Huntington Beach under a Revocable
License approved by the City Council. The approval of this Ordinance and Franchise
Agreement will establish the fees and obligations of the parties for a period of 25 years.
Financial Impact:
The following table outlines the revenues that the city would have received annually under
the former 1991 Settlement Franchise agreement, the current Model Franchise agreement,
and the Agreement proposed by staff:
Description Settlement Franchise Model Franchise Proposed Franchise
Annual Revenue's $1,500,000 $850,000 $1,700,000
LGain/ Loss - $ 650,000 $200,000
'Based on 2009 volume and price
As seen in the table, approval of the action will preserve the revenue of the former
Settlement Franchise agreement and will actually enhance revenue by $200,000 annually. If
the action is not approved, revenue will decrease by $650,000 annually.
Recommended Action: Motion to:
Approve Ordinance No. 3,g8n An Ordinance of the City of Huntington Beach granting a
gas pipeline franchise to the Southern California Gas Company.
Approve and authorize the Mayor and City Clerk to execute an agreement granting to
Southern California Gas Company, its Successors and assigns, the Franchise to construct,
maintain, and use pipes and appurtenances for transmitting and distributing gas for any and
all purposes in, along, across, upon, and under the public streets and places within the City
a: W
REQUEST FOR COUNCIL ACTION
MEETING DATE: 5/3/2010 DEPARTMENT ID NUMBER: FN 10-016
of Huntington Beach.
Alternative Action(s):
Do not approve and direct staff accordingly.
Analysis:
The former SoCalGas Franchise agreement was established in 1990 as part of a Court
settlement between SoCalGas and the city. As a result, the franchise fee was among the
highest in SoCalGas territory. In general terms, the agreement paid the city a two percent
(2%) fee on the sale of gas to end-users, such as residential customers. In addition, the
agreement paid the city a one and one half percent (1.5%) fee on the value of gas sold to
non end-users, such as the electric plant (the electric plant converts natural gas into
electricity for sale to end-users). This agreement expired on December 31, 2009.
In anticipation of the expiration of the twenty-year franchise agreement with SoCalGas," the
parties entered into discussions in an effort to develop a new Franchise Agreement. These
discussions have been ongoing since early 2009. After nearly a year of discussions, it
became apparent that SoCalGas would not agree to retain their Settlement Franchise.
Instead, they would agree to the Model Franchise Agreement, which is in effect in the
majority of cites in SoCalGas territory. The Model Franchise Agreement provides a lower
overall fee to the city. In general terms, the agreement would pay a one percent (1%) fee on
the sale of gas to end-users, such as residential customers. In addition, the agreement
would pay a one percent (1%) fee on the value of gas sold to non end-users, such as the
electric plant. Using 2009 price and volume data, the Model Franchise would reduce city
revenue by about $650,000 annually, a 40% reduction.
During the negotiation discussions, SoCalGas representatives proposed an alternative that
would preserve city revenues. SoCalGas also pledged their assistance working with the
California Public Utilities Commission (CPUC) to achieve this proposal. The proposal has
the following components:
® SoCalGas would pay the City 1% on all sales, in accordance with SoCalGas Model
Franchise
® SoCalGas customers in Huntington Beach will pay 1% Surcharge (broken out on
their bill); this would be a new charge
® Total Fees would be:
2% of sales to end-user
2% on the imputed value of gas sold to non end-users
® Huntington Beach revenue (2009 volume & price) - $1.7 million
® Small gain (13%) in revenue to the General Fund - $200,000
An estimate of the monthly increase on customer bills is presented in the following table:
Customer Category Rate Impact per Month*
Residential 65,063 customers $0.33
Commercial 1,746 customers $2.37
Industrial 262 customers $2.50
Electric Generation 2 customers $19,012
REQUEST FOR COUNCIL ACTION
MEETING DATE: 5/3/2010 DEPARTMENT ID NUMBER: FN 10-016
Information provided by SoCalGas; based on 2009 volume and prices. The impact on each customer and
customer class will vary depending on individual usage and the Commission's final decision.
If approved by the City Council, the CPUC process would likely have the following steps and
timeframes:
l May 2010 — SoCalGas initiates process with the CPUC and works with their Public
Advisor on bill insert language. SoCalGas would then distribute a "Notice to
Customers of Proposed Rate Increase" to their Huntington Beach customers.
® June 2010 — Customers may file written protests with the CPUC.
® July/November 2010 — The CPUC works with an Administrative Law Judge to
evaluate the actions and customer protests. The Administrative Law Judge may
hold formal evidentiary hearings. If hearings are held, they will be open to the
public.
® December 2010/June 2011 — The Administrative Law Judge will issue a decision
and the CPUC decision will be finalized.
Environmental Status:
Not applicable.
Strategic Plan Goal:
Maintain financial viability and our reserves
Attachment Us :
1. Ordinance No. 3880 An Ordinance of the city of Huntington Beach granting a gas
pipeline franchise to the Southern California Gas Company.
2. An agreement granting to Southern California Gas Company, its successors and assigns,
the Franchise to construct, maintain, and use pipes and appurtenances for transmitting and
distributing gas for any and all purposes in, along, across, upon, and under the public
streets and places within the City of Huntington Beach.
j ATTACHMENT # 1
ORDINANCE NO. 3880
AN ORDINANCE GRANTING TO SOUTHERN CALIFORNIA GAS COMPANY,ITS
SUCCESSORS AND ASSIGNS, THE FRANCHISE TO CONSTRUCT, MAINTAIN AND
USE PIPES AND APPURTENANCES FOR TRANSMITTING AND DISTRIBUTING GAS
FOR ANY AND ALL PURPOSES IN, ALONG, ACROSS,UPON, AND UNDER THE
PUBLIC STREETS AND PLACES WITHIN THE CITY OF HUNTINGTON BEACH.
The City Council of the City of Huntington Beach does hereby ordain as follows:
SECTION 1. The City of Huntington Beach hereby grants a gas pipeline franchise to
Southern California Gas Company.
SECTION 2. The franchise is granted in accordance with the terms and conditions set
forth in the attached Pipeline Agreement between the City of Huntington Beach and Southern
California Gas Company to construct, maintain and use pipes and appurtenances for transmitting
and distributing gas for any and all purposes in, along, across,upon, and under the public streets
and places within the City of Huntington Beach which agreement is incorporated herein by this
reference.
SECTION 3. Charter Sections 550(a) and 615 requires that a franchise shall be granted
by ordinance.
SECTION 4. This ordinance shall become effective 30 days after this adoption.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 17th day of May , 2010.
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May
ATTEST: INITIATED AND APPROVED:
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02
City Clerk Director of ub]'ic Works
REVI D APPROVED: APPROVED AS TO FORM:
k-vit Administrator ity Attorney
Ord. No. 3880
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, JOAN L. FLYNN,the duly elected, qualified City Clerk of the City of
Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby
certify that the whole number of members of the City Council of the City of Huntington
Beach is seven; that the foregoing ordinance was read to said City Council at a regular
meeting thereof held on May 3,2010, and was again read to said City Council at a
regular meeting thereof held on May 17,2010, and was passed and adopted by the
affirmative vote of at least a majority of all the members of said City Council.
AYES: Coerper, Hardy, Green, Bohr
NOES: Carchio, Dwyer, Hansen
ABSENT: None
ABSTAIN: None
I,Joan L.Flynn,CITY CLERK of the City of Huntington
Beach and ex-officio Clerk of the City Council,do hereby
certify that a synopsis of this ordinance has been
published in the Huntington Beach Fountain Valley
Independent on May 27,2010.
In accordance with the City Charter of said City
Joan L. Flynn,Ci, Clerk Clerk and ex-officio Jerk
Senior Deputy City Clerk of the City Council of the City
of Huntington Beach, California
ATTACHMENT #2
AN AGREEMENT GRANTING TO SOUTHERN CALIFORNIA GAS COMPANY, ITS
SUCCESSORS AND ASSIGNS, THE FRANCHISE TO CONSTRUCT, MAINTAIN AND USE
PIPES AND APPURTENANCES FOR TRANSMITTING AND DISTRIBUTING GAS FOR ANY
AND ALL PURPOSES IN, ALONG, ACROSS, UPON, AND UNDER THE PUBLIC STREETS
AND PLACES WITHIN THE CITY OF HUNTINGTON BEACH
This Franchise Agreement (Agreement) adopted by ordinance of the City of Huntington
Beach is made and entered into by and between the City of Huntington Beach, a municipal
corporation of the State of California hereinafter referred to as ' City" and Southern California Gas
Company, a , hereinafter"Grantee '
SECTION 1 DEFINITIONS
Whenever in this Agreement the words or phrases hereinafter in this section defined
are used, they shall have the respective meaning assigned to them in the following definitions
(unless, in the given instance the context wherein they are used shall clearly import a different
meaning)
(a) The word "Grantee" shall mean Southern California Gas Companv, and its
lawful successors or assigns,
(b) The word "City" shall mean the City of Huntington Beach, a municipal
corporation of the State of California, in its present incorporated form or in any later reorganized,
consolidated, enlarged or reincorporated form,
(c) The word "streets" shall mean the public streets, ways alleys and places as
the same now or may hereafter exist within the City, including state highways, now or hereafter
established within the City, and freeways hereafter established within the City,
(d) The word franchise shall mean and include any authorization granted
hereunder in terms of a franchise, privilege, permit license or otherwise to construct, maintain and
use pipes and appurtenances for the business of transmitting and distributing gas for all purposes
under, along, across or upon the public streets, ways alleys and places in the City, and shall include
and be in lieu of any existing or future City requirement to obtain a license or permit for the
privilege of transacting and carrying on a business within the City Any proposed
telecommunication facilities not related with gas utility services or other non-gas system uses must
be approved by the City under a separate franchise or other applicable permit
(e) The phrase "pipes and appurtenances" shall mean pipes, pipelines, mains,
services, traps, vents, cables conduits, vaults manholes, meters, appliances, associated
communications infrastructure, attachments, appurtenances, and any other property located or to be
located in, upon, along, across, or under the streets of the City, and used or useful in the transmitting
and/or distributing of gas,
(f) The word "gas" shall mean natural or manufactured gas, or a mixture of
natural and manufactured gas,
(g) The phrase "construct, maintain, and use" shall mean to construct, erect,
Page 1 of 7
09 2035 003/46006
install lay, operate, maintain, use, repair, or replace and
(h) The phrase "gross annual receipts" shall mean gross operating receipts
received by Grantee from the sale of gas to Grantee's customers less uncollectible amounts and less
any refunds or rebates made by Grantee to such customers pursuant to California Public Utilities
Commission ("CPUC") orders or decisions
SECTION 2 PURPOSE AND TERM
(a) That the right, privilege and franchise, subject to each and all of the terms
and conditions contained in this Agreement, and pursuant to the provisions of Division 3, Chapter 2
of the Public Utilities Code of the State of California, known as the Franchise Act of 1937, be and
the same is hereby granted to Grantee to construct, maintain and use pipes and appurtenances for
transmitting and distributing gas for any and all purposes, under, along, across or upon the streets of
the City for a twenty-five (25) year term from and after the effective date hereof(January 1, 2010)
(b) Early Termination In the event the CPUC has not approved Grantee's
application for imposition of a surcharge for payment of the franchise fee in the manner provided
for in Section 3(a)(2) within eighteen (18) months of the effective date of this Agreement, or if the
CPUC has denied Grantee's application as filed, then at the request of either party, the parties shall
meet and confer to determine the proper compensation for the remaining term of this franchise If
no agreement on compensation is reached by the parties prior to a date that is twenty-one (21)
months after the effective date of this franchise Agreement, then this Agreement and the franchise
granted herein shall terminate and be of no further force and effect
(c) City shall have the right to terminate this franchise by ordinance, at any time
should any of the following events occur (i) the Grantee fails to comply with any material
provision hereof or (ii) the City purchases (through its power of eminent domain or otherwise) all of
the franchise property of Grantee The Grantee shall be given ninety (90) days written notice prior
to the beginning of any termination proceeding
SECTION 3 CONSIDERATION
(a) The Grantee shall pay to the City at the times hereinafter specified in lawful
money of the United States, a total annual franchise fee commencing as of January 1 2010, that is
equal to the sum of three (3) plus either one (1) or two (2) below (whichever is then in effect) as
follows
1 The higher of
(i) Two percent (2%) of the gross annual receipts of the Grantee
derived from the use operation or possession of this franchise or
(11) One percent (1%) of the gross annual receipts of the Grantee
derived from the sale, transmission or distribution of gas, within the limits of the
City under this franchise
2 Grantee shall apply to the CPUC with the City's concurrence for
authority to implement a franchise fee surcharge to be charged solely on the City's ratepayers to
recover an additional one percent(1%) of gross annual receipts for a total payment to the City based
on two percent (2%) of gross annual receipts from the sale, transmission, or distribution of gas
Page 2 of 7
09 2035 003/46006
within the limits of the City as described in Section 1(11) above After receipt of CPUC approval
acceptable to Grantee, Grantee shall calculate and pay the City as of the first day of the quarter
immediately following receipt of such approval, the higher of the following two formulas instead of
the payment pursuant to Section 1 above
(t) Two percent (2%) of the gross annual receipts of the Grantee
derived from the use, operation or possession of its franchise, or
(n) Two percent (2%) of the gross annual receipts of the Grantee
derived from the sale, transmission, or distribution of gas, within the limits of the
City under this franchise
3 In addition to either Section 1 or Section 2 above (whichever is then
in effect), Grantee shall also pay Grantor an In Lieu Fee which is that certain fee described in the
"Municipal Lands Use Surcharge Act," Chapter 2 5 of Division 3 of the California Public Utilities
Code
(b) The franchise fee shall be paid in four installments The first three
installments shall be based on the total gross receipts of the preceding calendar quarter employing
the formula of subsection a 1 (ii) or a 2 (n) above (whichever is then in effect), plus the amount of
the In-Lieu Fee of Section a 3 for the preceding calendar quarter The final installment shall be a
true up installment using the applicable formula from either subsection a 1 or a 2 above (whichever
is then in effect) plus the In-Lieu Fee under Section a 3 above plus any adjustment, if applicable, as
provided in Section (c) for the total franchise fee Each installment shall be paid to the City on or
prior to the twenty-fifth (25th) day of the second month following the respective quarter for which
payment is made, except for the final quarterly true up payment for the year, which shall be paid on
or prior to March 31 st For example, the installment for the first quarter of the year (January
through March) shall be paid to the City no later than May 251h
(c) Any overpayment shall be recovered by Grantee by setoff against future
installments, or, if the franchise has been terminated such overpayment, or the balance thereof, shall
be payable by City to Grantee upon submission of a written claim, under penalty of perjury, to the
City Clerk within two years of the overpayment Such claim must clearly establish claimant's right
to the refund by written records showing entitlement thereto
(d) The Grantee shall file with the City Clerk within three (3) months after the
expiration of the calendar year, or fractional calendar year, following the date of the granting
hereof, and within three (3) months after the expiration of each and every calendar year thereafter, a
duly verified statement showing in detail the total gross annual receipts and Surcharge Payment of
such Grantee during the preceding calendar year or such fractional calendar year, from the sale of
gas within the City
(e) In the event the legislature amends Division 3, Chapter 2, of the Public
Utilities Code during the term of this Franchise whereby the City is allowed by change in the Act to
increase the amount that may be charged to the Grantee, then the City may implement the allowed
increased payment together with all other associated changes to the Act by amending this
Agreement by ordinance and consistent with the City's Charter The changes, including the
payment of the increased fee amount, shall be applicable as of the first day of the month following
the effective date of such amendment
Page 3 of 7
09 2035 003/46006
SECTION 4 OTHER FRANCHISES
This grant is made in lieu of all other gas utility franchises owned by the Grantee, or
by any successor of the Grantee to any rights under this franchise, for transmitting and distributing
gas within the limits of the City, as said limits now or may hereafter exist, and the acceptance of the
franchise hereby granted shall operate as an abandonment of all such gas utility franchises within
the limits of this City, as such limits now or may hereafter exist, in lieu of which this franchise is
granted This Grant after its effective date also supersedes the Revocable License executed by the
parties in December 2009
SECTION S OBLIGATIONS OF GRANTEE
(a) All facilities or equipment of Grantee shall be constructed, installed and
maintained in accordance with and in conformity with all of the ordinances, rules and regulations
heretofore, or hereafter adopted by the legislative body of this City in the exercise of its police
powers and not in conflict with the paramount authority of the State of California, and as to state
highways, subject to the provisions of the general laws relating to the location and maintenance of
such facilities
(b) If any portion of any street shall be damaged by reason of defects in any of
the pipes and appurtenances maintained or constructed under this grant, or by reason of any other
cause arising from the operation or existence of any pipes and appurtenances constructed or
maintained under this grant, Grantee shall at its own cost and expense, immediately repair any such
damage and restore such portion of such damaged street to as good condition as existed before such
defect or other cause of damage occurred
(c) The Grantee shall pay to the City, on demand, the cost of all repairs to public
property made necessary by any operations of the Grantee under this franchise
(d) Except for such losses or damages caused by the sole negligence or willful
misconduct of City and any officers and employees, grantee shall indemnify, save, and hold
harmless, City and any officers and employees thereof against and from all damages, judgments,
decrees costs and expenditures which City, or such officer or employee may suffer, or which may
be recovered from or obtainable against City or such officer or employee, for or by reason of, or
growing out of or resulting from the exercising by Grantee of any or all of the rights or privileges
granted hereby, or by reason of any act or acts of Grantee or its servants or agents in exercising the
franchise granted hereby, and Grantee shall defend any suit that may be instituted against City, or
any officer or employee thereof, by reason of or growing out of or resulting from the exercise by
Grantee of any or all of the rights or privileges granted hereby, or by reason of any act or acts of
Grantee, or its servants or agents, in exercising the franchise granted hereby
SECTION 6 REMOVE OR RELOCATE FACILITIES
(a) City shall have the right for itself to lay, construct erect, install, use, operate,
repair replace, remove relocate or maintain below surface or above surface improvements of any
type or description in, upon, along, across, under or over the streets of the City
Page 4 of 7
09 2035 003/46006
Further City shall have the right to change the grade, width or location of any street
or improve any street in any manner, including but not limited to the laying of any sewer storm
drain, drainage facility, or construct and install any pedestrian tunnel, traffic signal, street lighting
facility or other public improvement, provided, however, that nothing herein is intended to expand
or limit the duty of Grantee to relocate at its expense under CPUC Section 6297 or common law If
such work shall require a change in the position or location of any Grantee's facilities or equipment,
Grantee, at its sole expense, within ninety (90) days after written notice from the Public Works
Director, shall commence the work of doing any and all things to effect such change in position or
location in conformity with the Public Works Director's written instructions Grantee shall proceed
promptly to complete such required work
(b) Irrespective of any other provision of this Agreement, Grantee's right to
construct maintain, and use, or remove pipes and appurtenances thereto shall be subject at all times
to the right of the City, in the exercise of its police power to require the removal or relocation of
said pipes and appurtenances thereto at the sole cost and expense of Grantee, except (1) as the law
may otherwise provide or, (2) except where Grantee s right to possession is pursuant to instruments
evidencing right-of-way, easements or other interest in real property, or (3) except where the
removal or relocation is made at the request of the City on behalf of or for the benefit of any private
developer, CalTrans or other third party
(c) In the event that the City is made aware of a project developed by a
governmental agency, water company private party or the City that would be located within five
hundred feet of a regulator station or other major gas facilities City shall notify Grantee and initiate
discussions among the implicated parties in order to assess potential economic and community
impacts and facilitate coordinated and economically reasonable outcomes
(d) In the event the use of any franchise property is discontinued, Grantee shall
promptly notify the Public Works Director of any material discontinuance and remove from the
street all such discontinued property, unless the Public Works Director permits such property to be
abandoned in place in accordance with the requirements of the Public Works Director (subject to
applicable requirements of the CPUC) After abandonment, at the option of City, Grantee shall
submit to the Public Works Director, an instrument, reasonably approved by the City and Grantee,
transferring to the City the ownership of such franchise property
SECTION 7 TRANSFER OR SALE OF FRANCHISE
Grantee of the franchise granted hereby shall file with the City Administrator and the
City Council within thirty (30) days after any sale, transfer, assignment or lease of this franchise or
any part thereof, or of any of the rights or privileges granted thereby, written evidence of the same
certified thereto by the Grantee or its duly authorized officers This franchise may not be
transferred (voluntarily, involuntarily, or by operation of law), leased, or assigned by Grantee
except by consent in writing of the City Council which shall not be unreasonably withheld or
unreasonably conditioned and unless the transferee or assignees thereof shall covenant and agree to
perform and be bound by each and all of the terms hereof, provided, however that the foregoing
shall not apply to any sale transfer assignment or lease of this franchise, or any part thereof, or of
any of the rights or privileges granted thereby, that has been authorized by the CPUC or Grantee's
inclusion of the franchise as security under a mortgage, deed of trust or other security Agreement
securing the repayment of bonds or notes Grantee shall file with the City Clerk and City
Page 5 of 7
09 2035 003/46006
Administrator of the City within thirty (30) days after any sale, transfer, assignment, or lease of this
franchise, or any part hereof, or any of the rights or privileges granted hereby, written evidence of
the same certified thereto by the Grantee or its duly authorized officers
SECTION 8 FORFEITURE
This franchise is granted upon each and every condition herein contained Nothing
shall pass by the franchise granted hereby to Grantee unless it be granted in plain and unambiguous
terms Each of said conditions is a material and essential condition to the granting of the franchise
If Grantee shall fail, neglect or refuse to comply with any of the conditions of the franchise granted
hereby, and if such failure, neglect or refusal shall continue for more than thirty (30) days after
written demand by the City Administrator for compliance therewith, then City, solely by act of the
City Council, in addition to all rights and remedies allowed by law, thereupon may terminate the
rights privilege, and franchise granted in and by this Agreement, and all the rights, privileges and
the franchise of Grantee granted hereby shall thereupon be at an end Thereupon and immediately
Grantee shall surrender all rights and privileges in and to the franchise granted hereby No
provision herein made for the purpose of securing the enforcement of the terms and conditions of
the franchise granted hereby shall be deemed an exclusive remedy or to afford the exclusive
procedure for the enforcement of said terms and conditions but the remedies and procedure
outlined herein or provided, including forfeiture shall be deemed to be cumulative
SECTION 9 ACQUISITION AND VALUATION
The franchise granted hereunder shall not in any way or to any extent impair or
affect the right of the City to acquire the property of the Grantee hereof either by purchase of
through the exercise of the right of eminent domain, and nothing herein contained shall be
construed to contract away or to modify or to abridge, either for a term or in perpetuity, the City's
right of eminent domain in respect to the Grantee, nor shall this franchise ever be given any value
before any court or other public authority in any proceeding of any character in excess of the cost to
the Grantee of the necessary publication and any other sum paid by it to the City therefor at the time
of the acquisition thereof
SECTION 10 PUBLICATION COSTS
The Grantee shall pay to the City a sum of money sufficient to reimburse it for all
publication expenses incurred by it in connection with the granting thereof, such payment to be
made within thirty (30) days after the City shall have furnished such Grantee with a written
statement of such expenses
SECTION 11 EFFECTIVE DATE
The franchise granted hereby shall not become effective until the effective date of
the Ordinance adopting this Agreement and written acceptance thereof shall have been filed by the
Grantee with the City Clerk When so filed, such acceptance shall constitute a continuing
Agreement of the Grantee that if and when the City shall thereafter annex or consolidate with
additional territory, any and all franchise rights and privileges owned by the Grantee therein shall
likewise be deemed to be abandoned within the limits of the additional territory
Page 6 of 7
09 2035 003/46006
SECTION 12 WRITTEN ACCEPTANCE
After the publication of the Ordinance adopting this Agreement the Grantee shall
file with the City Clerk a written acceptance of the franchise hereby granted, and agree to comply
with the terms and conditions hereof
SECTION 13 PUBLICATION
The City Clerk shall certify to the adoption of this Agreement, and within fifteen
(15) days after its adoption, shall cause the same (with a list of the councilmembers voting for and
against) to be published in the Huntington Beach Independent, a newspaper of general circulation
published and circulated in the City
SECTION 14 AUDIT OF RECORDS
The City Treasurer, or any certified public accountant, or qualified person designated
by the City, at any reasonable time during business hours may make an examination at the
Grantee's office of its books, accounts and records, germane to and for the purpose of verifying the
data set forth in the statement required by Section 3(b)
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by
and through their authorized officers on A14c.,/ Z�_-3 20LO
SOUTHERN CALIFORNIA GAS COMPANY CITY OF HUNTINGTON BEACH, a
By municipal corporation of the State of California
print ame Ma or
ITS (circle one)Chatrman/PresidentNice President
AND Jity Cler
BY INITIATED AND APPROVED
print name
ITS (circle one Secretary/Chief Financial Officer sst Director of Publ c Works
Secretary reasure
REVIE ND APPROVED
tijy Administrator
jAPPROVED A TO FORM
6 Ct y Attorney �� o
Page 7 of 7
09 2035 003/46006
4/30/2010
SoCalGas Franchise
Agreement
May 3, 2010
SoCal Gas Franchise -
Former Franchise Agreement
► Franchise established in 1990; agreed upon as part
of a Court settlement
► Our franchise fee was among the highest in SoCal
Gas territory
► Fees were:
2% of sales to end-users
1 .5% on the imputed value of gas sold to non end-users
► HB revenue in 2009 - $1 .5 million
► Agreement expired December 31 , 2009
4/30/2010
General Fund budget reductions
► Reduced budget by about $20 million over
the last 18 months
► Nearly 100 vacancies citywide and eliminated
40 part-time positions
► Service impacts in every area including:
• Police
• Lifeguards
• Libraries
• Slurry seal
::i�
S®Cal Gas Model Franchise
► With former franchise expired, our franchise
reverts to the standard agreement
► Fees would be:
1% of sales to end-user
1% on the imputed value of gas sold to non end-users
► HB revenue (2009 volume & price) - $850,000
► Annual loss of revenue to the General Fund -
$650,000; a reduction of 40%
2
4/30/2010
Examples of services that
$650,000 supports:
4 Police Officers
4 Firefighters
All branch libraries and all
acquisitions (i.e. books,
subscriptions)
o Art Center
s
Proposal: Work with SoCal Gas &
PUC to preserve revenue
► SoCal Gas would pay us 1% on all sales, in accordance
with SoCal Gas Model Franchise
► SoCal Gas customers in HB would pay 1% Surcharge
(broken out on their bill); this would be a new charge
► Total Fees would be:
2%of sales to end-user
2%on the imputed value of gas sold to non end-users
► HB revenue (2009 volume & price) - $1 .7 million
► Small gain (13%) in revenue to the General Fund -
$200,000
3
4/30/2010
Summary of the Fees :
SoCal Gas Model
Description Prior Franchise Franchise Proposal
Fee on sales 2% 1% 2%
to end users
Fee on the
imputed value of
gas sold to non 1.5% 1% 2%
end-users
Total Revenue* $1,500,000 $850,000 $1,700,000
on 2009 volume and prices
Impact of adding 1 % Surcharge on
average customer bill:
Description Rate Impact/Month*
Residential (65,063 customers) $0.33
Commercial (1,746 customers) $2.37
Industrial (262 customers) $2.50
Electric Generation (2 customers) $19,012
*Information provided by SoCal Gas;
based on 2009 volume and prices
4
4/30/2010
Tentative timeline:
► May- SoCal Gas initiates process with the CPUC and
works with their Public Advisor on bill insert
language, then distributes Notice of Rate Increase to
HB customers
► .June- Protests of application due to the CPUC
► July/November- CPUC works with Administrative Law
.Judge with goal of positive final decision
► December- Expected final decision by Administrative
Lawjudge
► The final decision may be delayed until the following
.June to allow for public hearings and legal arguments
5
�J
CITY OF HUNTINGTON BEACH
Interdepartmental Communication
TO: HONORABLE MAYOR and CITY COUNCIL MEMBERS
FROM: JENNIFER MCGRATH, City Attorney
DATE: May 3, 2010
SUBJECT: Agenda Item 12 B) 5/3/10 Meeting
LATE COMMUNICATION
A clerical error occurs on page 3 of tonight's Agenda Item 12 B), the Agreement Granting to
Southern California Gas Company, Its Successors and Assigns, the Franchise to Construct,
Maintain, and Use Pipes and Appurtenances for Transmitting and Distributing Gas for Any and
All Purposes In, Along, Across, Upon, and Under the Public Streets and Places Within the City
of Huntington Beach. Please remove that page 3 and replace it with the page 3 attached to this
communication.
_T you.
r
NNIFER MCGRATH,
City Attorney
/K
Attachment as above
c: Fred Wilson, City Administrator
Paul Emery, Deputy City Administrator
Bob Hall, Deputy City Administrator
Joan Flynn, City Clerk
46821 7::1,/
within the limits of the City as described in Section 1(ii) above. After receipt of CP/the
proval
acceptable to Grantee, Grantee shall calculate and pay the City as of the first day oquarter
immediately following receipt of such approval, the higher of the following two formulas instead of
the payment pursuant to Section 1 above:
(i) Two percent (2%) of the gross annual rec pts of the Grantee
derived from the use, operation or possession of its franchise; o
(ii) Two percent (2%) of the gross annual receipts of the Grantee
derived from the sale, transmission, or distribution of ga , within the limits of the
City under this franchise.
3. In addition to either Section 1 or Section 2 above (whichever is then
in effect), Grantee shall also pay Grantor an In-Lieu Fee which is hat certain fee described in the
"Municipal Lands Use Surcharge Act," Chapter 2.5 of Division of the California Public Utilities
Code.
(b) The franchise fee shall be paid i four installments. The first three
installments shall be based on the total gross receipts of t e preceding calendar quarter employing
the formula of subsection a.l.(ii) or a.2.(ii) above (whichever is then in effect), plus the amount of
the In-Lieu Fee of Section a.3 for the preceding calendar quarter. The final installment shall be a
true-up installment using the applicable formula from ither subsection a.1 or a.2 above (whichever
is then in effect) plus the In-Lieu Fee under Section -.3. above plus any adjustment, if applicable, as
provided in Section (c) for the total franchise fee. Each installment shall be paid to the City on or
prior to the twenty-fifth (251h) day of the secon month following the respective quarter for which
payment is made, except for the final quarterly rue-up payment for the year, which shall be paid on
or prior to March 31 st. For example, the nstallment for the first quarter of the year (January
through March) shall be paid to the City no ater than May 25th
(c) Any overpayment shall be recovered by Grantee by setoff against future
installments, or, if the franchise has b n terminated such overpayment, or the balance thereof, shall
be payable by City to Grantee upo submission of a written claim, under penalty of perjury, to the
City Clerk within two years of the verpayment. Such claim must clearly establish claimant's right
to the refund by written records showing entitlement thereto.
(d) The Gratee shall file with the City Clerk, within three (3) months after the
expiration of the calendar year, or fractional calendar year, following the date of the granting
hereof, and within three (;(months after the expiration of each and every calendar year thereafter, a
duly verified statement showing in detail the total gross annual receipts and Surcharge Payment of
such Grantee during thl preceding calendar year, or such fractional calendar year, from the sale of
gas within the City.
(e) In the event the legislature amends Division 3, Chapter 2, of the Public
Utilities Code during the term of this Franchise whereby the City is allowed by change in the Act to
increase the amount that may be charged to the Grantee, then the City may implement the allowed
increased payment together with all other associated changes to the Act by amending this
Agreement consistent with the City's Charter. The changes, including the payment of the increased
fee amount, sLll be applicable as of the first day of the month following the effective date of such
amendment. �1 J � � �`.,
Page 3 of 7
09-2035.003/46006
filk
Huntington Beach Independent ho; hecn adludLcd a nc%%spaper of gcnentl
111cuLuion in Huntinyton Heuch 111(1 (h ('ounto h}' I)CCICe of thc• Superiot
Court of Oranac County. Statc of C',ililonua undrt datC(,f Au". 24. 1994, ca,c
A50479 `
PROOF OF
PUBLICATION
PIT10
f
,
STATE OF CALIF � 1A � HUNTINGTONBEACHLEGAL NOTICE
ORDINANCE NO.3880 ,
SS. Adopted by the
City Council on
COUNTY OF ORANGE. ) � MAY 17,2010
".AN; ORDINANCE.
I am the Citizen of the United States and a SOUTHERN ICALIFORNIA
resident of the County aforesaid; I am over SU CES,ORSANY AND AS
SIGNS,,THE FRANCHISE i
the age of eighteen years, and not a party 'TO CONSTRUCT,-MAIN-
to or interested in the below entitled matter. "AND APPUUSE
ENANCES
FOR TRANSMITTING AND
I am a principal clerk of the HUNTINGTON DISTRIBUTING GAS FOR
;ANY AND ALL PUR-
BEACH INDEPENDENT, a newspaper of tPoSES ,IN, ALONG, ,
ACROSS, U N,,'AND ,
general circulation, printed and published in UNDER THE PUBLIC
STREETS AND PLACES .
the City of Huntington Beach, County of WITHIN, THE CITY OF
Orange, State of California, and the iSYNOPSISONBEACH"
fTHE 1991 SETTLEMENT
attached Notice is a true and complete copy FRANCHISE WITH
as was printed and published on the y SOUTHERN CALIFORNIA
GAS COMPANY (SOCAL-
f GAS) EXPIRED. ON DE-
following date(s):
iCEMBER 31, 2009.
(SINCE THAT, TIME,
-SOCALGAS HAS BEEN
June 10 2010 OPERATING WITHIN THE,
CITY TH
I E CITY OF HUN-
�TNGTON,,BEACH'HUN-
'TNGTON BEACH UNDER
A`REVOCABLE LICENSE
`APPROVED-BY THE CITY
;COUNCIL. THE_APPROV
AL OF'THIS bRDINANCE
'AND FRANCHISE
'AGREEMENT- ESTAB-
LISHES THE FEES -AND
I declare, under penalty of perjury, that the OBLIGATIONS. OF THE
!PARTIES:FOR A'PERIOD
foregoing is true and correct. ':OF25YEARS.
PASSED-AND ADOPTED
j by,the City Council of I
the.City of Huntington
Beach"at a regular.
Executed on June 11, 2010 3 17 2010t nb''the ollheld owin"
Y g`.,
roll call vote: ' t
at Costa Mesa, California AYES- Coerper;Hardy,
Green,Bohr .
NOESi Carchio,'
Dwyer,Hansen .
ABSTAIN: None
ABSNT: None
THEE FULL.TEXT OF THE
�....,. ORDINANCE IS AVAIL-
Signat ABLE IN THE CITY
CLERK'S OFFICE. -
'This ordinance is effec-
tive 30 days after
adoption.
CITY.OF
HUNTINGTON BEACH
2000 MAINSTREET
HUNTINGTON BEACH,
CA 92648
714-536-5227
JOAN L.,FLYNN,
CITY.CLERK
-*This synopsis was
originally .published 5/
27/10; however, . the
dote tally was incorrect.
Published .Huntington,
',Beach Independent June
110,2010 062-827