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HomeMy WebLinkAboutItem 22 - Oncor Franchise AgreementMEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: BRUNO RUMBELOW, CITY MANAGER MEETING DATE: AUGUST 19, 2025 SUBJECT: Oncor Electric Delivery Company LLC Electric Power Franchise Agreement RECOMMENDATION: City Council to consider the second reading of the ordinance of the franchise agreement granted to Oncor Electric Delivery Company LLC (Oncor) to amend the agreement and update franchise language. FUNDING SOURCE: N/A BACKGROUND: The original electric franchise agreement was approved in 1910 and granted to Texas Power and Light Company (a predecessor of Oncor). There have been subsequent agreement amendments to franchise fee calculations and amending rates. The most recent amendment was approved Aprii 17, 2007, and moved to quarterly fee payments. The 2007 franchise agreement expired in 2015, and we have been working with Oncor under those existing terms. This agreement has been in the review process with Oncor for several months and is materially the same as prior agreements. Updates are made to language, and the agreement sets the rate calculations. This agreement will expire on December 31, 2045. The proposed ordinance is attached and a first reading was held at the August 5, 2025 Council meeting, The ordinance has been reviewed by staff and the City Attorney and is recommended for approval. ORDINANCE NO.2025-042 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF GRAPEVINE, TEXAS, GRANTING TO ONCOR ELECTRIC DELIVERY COMPANY LLC, ITS SUCCESSORS AND ASSIGNS, AN ELECTRIC POWER FRANCHISE TO USE THE PRESENT AND FUTURE STREETS, ALLEYS, HIGHWAYS, PUBLIC UTILITY EASEMENTS, PUBLIC WAYS AND PUBLIC PROPERTY OF THE CITY OF GRAPEVINE, TEXAS, PROVIDING FOR COMPENSATION THEREFOR PROVIDING FOR AN EFFECTIVE DATE AND A TERM OF SAID FRANCHISE; PROVIDING FOR WRITTEN ACCEPTANCE OF THIS FRANCHISE; PROVIDING FOR THE REPEAL OF ALL EXISTING FRANCHISE ORDINANCES TO ONCOR ELECTRIC DELIVERY COMPANY LLC, ITS PREDECESSORS AND ASSIGNS; AND PROVIDING AN EFFECTIVE DATE WHEREAS, all constitutional and statutory prerequisites for the approval of this ordinance have been met, including but not limited to the Open Meetings Act and Chapter 211 of the Local Government Code; and WHEREAS, the City Council deems the adoption of this ordinance to be in the best interests of the health, safety, and welfare of the public. NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF GRAPEVINE, TEXAS: Section 1. That all matters stated hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety. Section 2. Grant of authority: That there is hereby granted to Oncor Electric Delivery Company LLC, its successors and assigns (herein called "Company"), the right, privilege and franchise to construct, extend, maintain and operate in, along, under and across the present and future streets, alleys, highways, easements held by the City to which the City holds the property rights in regard to use for utilities, public ways and other public property ( "Public Rights -of -Way" or "Rights -of -Way") of the City of Grapevine, Texas (herein called "City") electric power lines, with all necessary or desirable appurtenances (including underground conduits, poles, towers, wires, transmission lines, telephone and communication lines, and other structures for Company's own use), (herein called "Facilities") for the purpose of delivering electricity to the City, the inhabitants thereof, and persons, firms and corporations beyond the corporate limits thereof, for the term set out in Section 8. Section 3. Poles, towers and other structures shall be so erected as not to unreasonably interfere with traffic over streets, alleys and highways. Company's operations and activities within the Public Rights -of -Way in the City shall be subject to all City ordinances of general applicability, including the City's Right -of -Way Management ordinance, unless otherwise in conflict with any federal or state laws, rules, or regulations, or this franchise. City shall have the ability at any time to require Company to repair, remove or abate any distribution pole, wire, cable, or other distribution structure that is determined to be unnecessarily dangerous to life or property. After receipt of notice, Company shall either cure said dangerous condition within a reasonable time or provide City with a written explanation of why said condition is not unnecessarily dangerous to life or property. Section 4. The City reserves the right to lay, and permit to be laid, storm, sewer, gas, water, wastewater and other pipe lines, cables, and conduits, or other improvements and to do and permit to be done any underground or overhead work that may be necessary or proper in, across, along, over, or under Public Rights -of -Way occupied by Company. The City also reserves the right to change in any manner any curb, sidewalk, highway, alley, public way, street, utility lines (or in the case of utility line owned by Company, to require that change by Company), storm sewers, drainage basins, drainage ditches, and the like. City shall provide Company with at least thirty (30) days' notice when requesting Company to relocate facilities and shall specify a new location for such facilities along the Public Rights -of -Way. Company shall, except in cases of emergency conditions or work incidental in nature, obtain a permit, if required by City ordinance, prior to performing work in the Public Rights -of -Way, except in no instance shall Company be required to pay fees or bonds related to its use of the Public Rights -of -Way, despite the City's enactment of any ordinance providing the contrary. Company shall construct its facilities in conformance with the applicable provisions of the National Electrical Safety Code and all other applicable laws, rules and regulations. City -requested relocations of Company facilities in the Public Rights - of -Way shall be at the Company's expense; provided however, if the City is the end use Retail Customer (customer who purchases electric power or energy and ultimately consumes it) requesting the removal or relocation of Company Facilities for its own benefit as the end use Retail Customer (such as, for example, relocation of Company facilities in the Rights -of- Way due to the expansion of a City courthouse, building or park), or the project requiring the relocation is solely aesthetic/beautification in nature, it will be at the total expense of the City. Provided further, if the relocation request includes, or is for, the Company to relocate above- ground facilities to an underground location, City shall be fully responsible for the additional cost of placing the facilities underground. If any other corporation or person (other than City) requests Company to relocate Company facilities located in City Rights -of -Way, the Company shall not be bound to make such changes until such other corporation or person shall have undertaken, with good and sufficient bond, to reimburse the Company for any costs, loss, or expense which will be caused by, or arises out of such change, alteration, or relocation of Company's Facilities. The City will not request a relocation for a private party. The City will not request Oncor reimburse a private party for a private relocation. Ordinance No. 2025-042 2 If City abandons any Public Rights -of -Way in which Company has facilities, such abandonment shall be conditioned on Company's right to maintain its use of the former Public Rights -of -Way and on the obligation of the party to whom the Public Rights -of - Way is abandoned to reimburse Company for all removal or relocation expenses if Company agrees to the removal or relocation of its facilities following abandonment of the Public Rights -of -Way. If the party to whom the Public Rights -of -Way is abandoned requests the Company to remove or relocate its facilities and Company agrees to such removal or relocation, such removal or relocation shall be done within a reasonable time at the expense of the party requesting the removal or relocation. If relocation cannot practically be made to another Public Rights -of -Way, the expense of any right- of-way acquisition shall be considered a relocation expense to be reimbursed by the party requesting the relocation. Section 5. 5.1 Company shall, at its sole cost and expense, obtain, maintain, or cause to be maintained, and provide, throughout the term of this Franchise, insurance in the amounts, types and coverages in accordance with the following requirements. Such insurance may be in the form of self-insurance to the extent permitted by applicable law or by obtaining insurance, as follows: A. Commercial general or excess liability on an occurrence or claims made form with minimum limits of ten million dollars ($10,000,000) per occurrence and twenty million dollars ($20,000,000) aggregate. This coverage shall include the following- (1) Products/completed operations to be maintained for the warranty period. (2) Personal and advertising injury. (3) Contractual liability. (4) Explosion, collapse, or underground (XCU) hazards. B. Automobile liability coverage with a minimum policy limit of one million dollars ($1,000,000) combined single limit each accident or legal minimums which may increase during the term, whichever is greater. This coverage shall include all owned, hired and non -owned automobiles. C. Workers compensation and employer's liability coverage. Statutory coverage limits for Coverage A and five hundred thousand dollars ($500,000) bodily injury each accident, five hundred thousand dollars ($500,000) each employee bodily injury by disease, and five hundred thousand dollars ($500,000) policy limit bodily injury by disease Coverage B employers' liability are required. If legal minimums are greater amounts during the term of this franchise, then the Company shall provide legal minimums. Company must provide the City with a waiver of subrogation for worker's compensation claims. Ordinance No. 2025-042 3 D. Company must name the City, which includes all authorities, commissions, divisions and departments, as well as elected and appointed officials, agents, and volunteers, as an additional named insured under the coverage required herein, except Worker's Compensation Coverage. The certificate of insurance must state that the City is an additional named insured. E. Company will require its contractors and subcontractors to maintain, at their sole cost and expense, a minimum of three million dollars ($3,000,000) each occurrence or each accident general liability and automobile liability throughout the course of work performed. Also, contractors and subcontractors will be required to maintain statutory workers' compensation benefits in accordance with the regulations of the State of Texas or state of jurisdiction as applicable. The minimum limits for employers' liability insurance will be five hundred thousand dollars ($500,000) bodily injury each accident, five hundred thousand dollars ($500,000) each employee bodily injury by disease, five hundred thousand dollars ($500,000) policy limit bodily injury by disease. The Company will provide proof of its insurance in accordance with this Franchise within 30 days of the effective date of the Franchise and annually thereafter. Company will not be required to furnish separate proof when applying for permits. Section 6. A. IN CONSIDERATION OF THE GRANTING OF THIS FRANCHISE, COMPANY SHALL, AT ITS SOLE COST AND EXPENSE, INDEMNIFY AND HOLD THE CITY, AND ITS PAST AND PRESENT OFFICERS, AGENTS AND EMPLOYEES HARMLESS AGAINST ANY AND ALL LIABILITY ARISING FROM SUITS, ACTIONS OR CLAIMS REGARDING INJURY OR DEATH TO ANY PERSON OR PERSONS, OR DAMAGES TO ANY PROPERTY ARISING OUT OF OR OCCASIONED BY THE INTENTIONAL AND/OR NEGLIGENT ACTS OR OMISSIONS OF COMPANY OR ANY OF ITS OFFICERS, AGENTS, OR EMPLOYEES IN CONNECTION WITH COMPANY'S CONSTRUCTION, MAINTENANCE AND OPERATION OF COMPANY'S FACILITIES IN THE CITY PUBLIC RIGHTS -OF -WAY, INCLUDING ANY COURT COSTS, REASONABLE EXPENSES AND REASONABLE DEFENSES THEREOF. B. THIS INDEMNITY SHALL ONLY APPLY TO THE EXTENT THAT THE LOSS, DAMAGE, DEATH OR INJURY IS ATTRIBUTABLE IN WHOLE OR IN PART TO THE NEGLIGENCE OR WRONGFUL ACT OR OMISSION OF THE COMPANY OR ITS OFFICERS, AGENTS OR EMPLOYEES, AND DOES NOT APPLY TO THE EXTENT SUCH LOSS, DAMAGE, DEATH OR INJURY IS ATTRIBUTABLE IN WHOLE OR IN PART TO THE NEGLIGENCE OR WRONGFUL ACT OR OMISSION OF THE CITY OR THE CITY'S OFFICERS, AGENTS, OR EMPLOYEES OR ANY OTHER PERSON Ordinance No. 2025-042 4 OR ENTITY. THIS PROVISION IS NOT INTENDED TO CREATE A CAUSE OF ACTION OR LIABILITY FOR THE BENEFIT OF THIRD PARTIES BUT IS SOLELY FOR THE BENEFIT OF COMPANY AND THE CITY. C. IN THE EVENT OF JOINT AND CONCURRENT NEGLIGENCE OR FAULT OF BOTH COMPANY AND THE CITY, RESPONSIBILITY AND INDEMNITY, IF ANY, SHALL BE APPORTIONED COMPARATIVELY BETWEEN THE CITY AND COMPANY IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT, HOWEVER, WAIVING ANY GOVERNMENTAL IMMUNITY AVAILABLE TO THE CITY UNDER TEXAS LAW AND WITHOUT WAIVING ANY OF THE DEFENSES OF THE PARTIES UNDER TEXAS LAW. FURTHER, IN THE EVENT OF JOINT AND CONCURRENT NEGLIGENCE OR FAULT OF BOTH COMPANY AND THE CITY, RESPONSIBILITY FOR ALL COSTS OF DEFENSE SHALL BE APPORTIONED BETWEEN THE CITY AND COMPANY BASED UPON THE COMPARATIVE FAULT OF EACH. D. IN FULFILLING ITS OBLIGATION TO DEFEND AND INDEMNIFY CITY, COMPANY SHALL HAVE THE RIGHT TO SELECT DEFENSE COUNSEL, SUBJECT TO CITY'S APPROVAL, WHICH WILL NOT BE UNREASONABLY WITHHELD. COMPANY SHALL RETAIN DEFENSE COUNSEL WITHIN SEVEN (7) BUSINESS DAYS OF CITY'S WRITTEN NOTICE THAT CITY IS INVOKING ITS RIGHT TO INDEMNIFICATION UNDER THIS FRANCHISE. IF COMPANY FAILS TO RETAIN COUNSEL WITHIN SUCH TIME PERIOD OR IF WITHIN SUCH TIME PERIOD IT SHALL BE IMMEDIATELY NECESSARY TO PROTECT CITY'S INTEREST IN ORDER TO AVOID LEGAL DEFAULT OR SIMILAR PREJUDICE, CITY SHALL HAVE THE RIGHT TO RETAIN DEFENSE COUNSEL ON ITS OWN BEHALF, AND COMPANY SHALL BE LIABLE FOR ALL REASONABLE DEFENSE COSTS INCURRED BY CITY, EXCEPT AS OTHERWISE PROVIDED IN SECTION 5.13 AND 5.C. Section 7. This franchise is not exclusive, and nothing herein contained shall be construed so as to prevent the City from granting other like or similar rights, privileges and franchises to any other person, firm, or corporation. Any Franchise granted by the City to any other person, firm, or corporation shall not unreasonably interfere with this Franchise. Section 8. In consideration of the grant of said right, privilege and franchise by the City and as full payment for the right, privilege and franchise of using and occupying the said Public Rights -of -Way, and in lieu of any and all occupation taxes, assessments, municipal charges, fees, easement taxes, franchise taxes, license, permit and inspection fees or charges, street taxes, bonds, street or alley rentals, and all other taxes, charges, levies, fees and rentals of whatsoever kind and character which the City may impose or hereafter be authorized or empowered to levy and collect, excepting only the usual general or special ad valorem taxes which the City is authorized to levy and impose upon real and personal property, sales and use taxes, Ordinance No. 2025-042 5 and special assessments for public improvements, Company shall pay to the City the following A. A final quarterly payment was made on or before January 15, 2025 for the basis period of July 1, 2024 through September 30, 2024 and the privilege period of July 1, 2025 through September 30, 2025 in accordance with the provisions in the previous franchise. B. As authorized by Section 33.008(b) of PURA, the original franchise fee factor calculated for the City in 2002 was 0.002545 (the "Base Factor"), multiplied by each kilowatt hour of electricity delivered by Company to each retail customer whose consuming facility's point of delivery is located within the City's municipal boundaries for determining franchise payments going forward. Due to a 2006 agreement between Company and City the franchise fee factor was increased to a franchise fee factor of 0.002672 (the "Current Factor"), multiplied by each kilowatt hour of electricity delivered by Company to each retail customer whose consuming facility's point of delivery is located within the City's municipal boundaries on a quarterly basis. However, consistent with the 2006 agreement, should the Public Utility Commission of Texas at any time disallow Company's recovery through rates of the higher franchise payments made under the Current Factor as compared to the Base Factor, then the franchise fee factor shall immediately revert to the Base Factor of 0.002545 and all future payments, irrespective of the time period that is covered by the payment, will be made using the Base Factor. Company shall make quarterly payments as follows: Pavment Due Date April 15 July 15 October 15 January 15 Base Period Oct. 1- Dec. 31 Jan. 1 — Mar. 31 Apr. 1 — June 30 July 1 — Sept. 30 Privilege Period (Following Pmt) Oct.1 — Dec 31 Jan 1 — Mar. 31 Apr. 1 — June 30 Jul. 1 — Sept. 30 1. The first payment hereunder shall be due and payable on or before April 15, 2025 and will cover the basis period of October 1, 2024 through December 31, 2024 and the privilege period of October 1, 2025 through December 31, 2025. If this franchise is not effective prior to the first quarterly payment date, Company will pay any payments due within 30 days of the effective date of this agreement. The final payment under this franchise is due on or before April 15, Ordinance No. 2025-042 6 2045 and covers the basis period of October 1, 2044 through December 31, 2044 and the privilege period of October 1, 2045 through December 31, 2045; and 2. After the final payment date of April 15, 2045, Company may continue to make additional quarterly payments in accordance with the above schedule. City acknowledges that such continued payments will correspond to privilege periods that extend beyond the term of this Franchise and that such continued payments will be recognized in any subsequent franchise as full payment for the relevant quarterly periods. C. A sum equal to four percent (4%) of gross revenues received by Company from services identified as DD1 through DD24 in Section 6.1.2 "Discretionary Service Charges," in Oncor's Tariff for Retail Delivery Service (Tariff), effective 1/1/2002, that are for the account and benefit of an end -use retail electric consumer. Company will, upon request by City, provide a cross reference to Discretionary Service Charge numbering changes that are contained in Company's current approved Tariff. 1. The franchise fee amounts based on "Discretionary Service Charges" shall be calculated on an annual calendar year basis, i.e. from January 1 through December 31 of each calendar year. 2. The franchise fee amounts that are due based on "Discretionary Service Charges" shall be paid at least once annually on or before April 30 each year based on the total "Discretionary Service Charges", as set out in Section 7.C., received during the preceding calendar year. The initial Discretionary Service Charge franchise fee amount will be paid on or before April 30, 2025 and will be based on the calendar year January 1 through December 31, 2024. The final Discretionary Service Charge franchise fee amount will be paid on or before April 30, 2046 and will be based on the calendar year of January 1, 2045 through December 31, 2045. 3. Company may file a tariff or tariff amendment(s) to provide for the recovery of the franchise fee on Discretionary Service Charges. 4. City agrees (i) to the extent the City acts as regulatory authority, to adopt and approve that portion of any tariff which provides for 100% recovery of the franchise fee on Discretionary Service Charges; (ii) in the event the City intervenes in any regulatory proceeding before a federal or state agency in which the recovery of the franchise fees on such Discretionary Service Charges is an issue, the City will take an affirmative position supporting the 100% Ordinance No. 2025-042 7 recovery of such franchise fees by Company and; (iii) in the event of an appeal of any such regulatory proceeding in which the City has intervened, the City will take an affirmative position in any such appeals in support of the 100% recovery of such franchise fees by Company. 5. City agrees that it will take no action, nor cause any other person or entity to take any action, to prohibit the recovery of such franchise fees by Company. 6. In the event of a regulatory disallowance of the recovery of the franchise fees on the Discretionary Service Charges, Company will not be required to continue payment of such franchise fees. Section 9. This Ordinance shall become effective upon Company's written acceptance hereof, said written acceptance to be filed by Company with the City within sixty (60) calendar days after final passage and approval hereof by City. The right, privilege and franchise granted hereby shall expire on December 31, 2045. Section 10. This Ordinance shall supersede any and all other franchises previously granted by the City to Company, its predecessors and assigns. Section 11. In order to accept this franchise, Company must file with the City Secretary its written acceptance of this franchise ordinance within sixty (60) calendar days after its final passage and approval by City. Section 12. It is hereby officially found that the meeting at which this Ordinance is passed is open to the public and that due notice of this meeting was posted by the City, all as required by law. PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF GRAPEVINE, TEXAS on First Reading this the 5th day of August, 2025. PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF GRAPEVINE, TEXAS on Second Reading this the 19th day of August, 2025. APPROVED: William D. Tate Mayor ATTEST: Tara Brooks City Secretary Ordinance No. 2025-042 8 APPROVED AS TO FORM: Matthew C.G. Boyle City Attorney Ordinance No. 2025-042