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HomeMy WebLinkAboutMINUTES - 07162013 - C.15RECOMMENDATION(S): FIX a public hearing for August 6, 2013 at 9:30 a.m. on Ordinance No. 2013-19, establishing regulations for granting pipeline franchises in County rights of way, and Resolution No. 2013/305, establishing pipeline franchise fee amounts, as recommended by the Transportation, Water and Infrastructure Committee. FISCAL IMPACT: Revenue from pipeline franchises is deposited into the County General Fund. BACKGROUND: This Board order fixes a public hearing on Ordinance No. 2013-19, which would establish regulations for granting pipeline franchises in County rights of way, and Resolution No. 2013/305, which would establish pipeline franchise fee amounts. The County’s pipeline franchise ordinance was originally adopted in 1964, and was last amended in 1992. The County currently has 22 active franchises governed by one of four franchise-granting options. Existing franchises were granted under the existing County pipeline franchise ordinance (Ordinance No. 92-64, which is uncodified) and, for those franchises granted prior to 1964, pursuant to a separate ordinance granted for a specific franchisee. The two other methods used by the County to grant a franchise are pursuant to the California Public Utilities Code. Eleven franchises have expired or require that the Board of Supervisors approve a transfer to the new owner of the pipelines. The franchise owners of the expired franchises have been notified by the County that their franchises will continue under the same terms and conditions as their original franchises, until the County adopts a new franchise ordinance. For the last several years, County staff has looked into the possibility of updating the County’s existing pipeline franchise ordinance. Public Works staff and the County’s franchise consultant, Francisco & Associates, have surveyed several other cities and counties that issue pipeline franchises to determine their current APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 07/16/2013 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:John Gioia, District I Supervisor Candace Andersen, District II Supervisor Mary N. Piepho, District III Supervisor Karen Mitchoff, District IV Supervisor Federal D. Glover, District V Supervisor Contact: Carrie Ricci, 925-313-2235 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: July 16, 2013 David Twa, County Administrator and Clerk of the Board of Supervisors By: June McHuen, Deputy cc: C. 15 To:Board of Supervisors From:Julia R. Bueren, Public Works Director/Chief Engineer Date:July 16, 2013 Contra Costa County Subject:Fix a Public Hearing Date for the Pipeline Franchise Ordinance and Fee Resolution rate structures and franchise requirements. Based on that survey, a draft ordinance was prepared. Below is a summary of some of the key provisions of the County’s proposed pipeline franchise ordinance and franchise fee resolution: 1. Reduce the length of franchise agreements from 20 to 10 years. This will provide the County with more flexibility to ensure that pipeline companies are under the most current franchise ordinance and fees. 2. Require a $5,000 security/administration deposit that will be used to pay County administrative costs, staff time, legal and consulting fees incurred in connection with processing the franchise application and administering the pipeline franchise, and to provide non-routine services such as transferring a franchise, replacing surety bonds, etc. 3. Increase surety bonds from $15,000 to 100% of the initial annual franchise fee, rounded up to the nearest $1,000 with a minimum surety bond of $25,000. The surety bonds are to ensure that the franchisee observes and performs each term and condition in the franchise. 4. Require pipeline companies to inspect and test its pipelines as required by the State Fire Marshal, or other state or federal agency with jurisdiction over the pipeline or by any applicable law, and must make the results available for inspection by the Public Works Department. 5. Require pipeline companies to provide the County with a pipeline emergency plan as required by applicable laws, to be updated whenever it acquires, constructs, lays, removes or abandons any facilities under a franchise. 6. Require single limit liability insurance in the amount of $10,000,000. 7. Clarify the annual franchise fees based on the following categories: (a) Public Utility Not Transmitting Oil or Oil Products. If a grantee is a public utility and is not transmitting oil or oil products, the grantee shall pay to the County two percent of the grantee’s gross annual receipts that arise from the use, operation or possession of the franchise. This payment shall in no event be less than one percent of the grantee’s gross annual receipts derived from sales within the County, in accordance with California BACKGROUND: (CONT'D) Public Utilities Code Section 6231. (b) Public Utility Transmitting Oil or Oil Products. If a grantee is determined by the Public Utilities Commission to be a public utility transmitting oil or oil products, the grantee will be charged an annual fee, based on the internal diameter of the pipeline, in an amount calculated pursuant to California Public Utilities Code Section 6231.5. (c) Non-Public Utility Franchises Transmitting Industrial Gas, Oil or Oil Products. If a grantee is a non-public utility operating a pipeline system transmitting industrial gas, oil or oil products, the County will establish on an individual basis in the resolution granting the franchise the annual franchise payment for the pipeline franchise, including the extension, renewal, or continuation of a previously granted franchise. The annual franchise payment will be: (1) an amount equal to a specified percentage agreed to by the applicant and the County of the gross annual receipts of the applicant arising from the use, operation, or possession of the franchise; or (2) an amount agreed to by the applicant and the County; or (3) an amount computed by multiplying the sum of one-half of the nominal internal diameter of the pipe, expressed in inches, by the number of lineal feet of the pipe within the public streets, ways, alleys, or other public places within the unincorporated portion of the County. (d) Other Pipeline Franchises. If a grantee is awarded a pipeline franchise for any pipeline other than those specified in subsections (a), (b), or (c), or for the extension, renewal, or continuation of a previously granted franchise, the grantee shall pay to the County two percent of the grantee’s gross annual receipts that arise from the use, operation or possession of the franchise. This payment shall in no event be less than one percent of the grantee’s gross annual receipts derived from sales within the County, in accordance with California Public Utilities Code Section 6231. PG&E franchises that are calculated based on 2% of gross annual receipts will remain the same because they are franchises granted under the Broughton Act (now Public Utilities Code sections 6001-6017), which continue until surrendered or forfeited for violation of their terms. The County General Fund received fees totaling $4,018,985 for fiscal year 2011-2012 from all franchisees. The amount varies from year to year because the PG&E franchise fees are based on gross annual receipts and gas and electric surcharges. The annual franchise fees will increase approximately $60,000 annually as a result of the proposed new ordinance. Approximately $40,000 in franchise fees are used each year to pay for administrative costs, which include staff costs for Public Works, County Counsel, and franchise consultant fees. 8. In addition to the application deposit and the annual franchise payment, a grantee shall also pay an abandonment fee in order to abandon in place all or part of its facilities upon approval by the Board of Supervisors. 9. The proposed ordinance includes modified provisions for franchisees that use their facilities to transport only potable water, including, (i) instead of filing a pipeline emergency plan with the Public Works Department, the franchisee may file a certification annually declaring that it has prepared and filed the required pipeline emergency plan with the Public Utilities Commission, (ii) a liability insurance minimum of $5,000,000 instead of $10,000,000, (iii) a reduced bond amount requirement, and (iv) not requiring the franchisee to pay a pipeline abandonment fee. These exceptions are based on the lower risk presented by the product being transported in the pipes compared to other products, and the potential for rate increases to the franchisees end customers. On September 4, 2012, and January 2, 2013, Public Works staff sent drafts of the proposed ordinance to all companies that have a current franchise agreement and/or pay the County an annual franchise fee. The companies have had an opportunity to provide comments in writing or meet with Public Works staff to discuss their comments and concerns. The Public Works Department received comments from Chevron, Calpine, Phillips66, Praxair, Kinder Morgan and Golden State Water. Staff has had conference calls and/or meetings with Calpine, and Golden State Water. Based on the comments, meetings and conference calls, some revisions were made to address their concerns. The draft pipeline franchise ordinance and fee resolution were presented to the Transportation, Water and Infrastructure Committee (TWIC) on May 2, 2013 and June 12, 2013. At the June 12, 2013 TWIC meeting, the committee recommended moving this item to a public hearing at a Board of Supervisors meeting. CONSEQUENCE OF NEGATIVE ACTION: County staff will continue to use an outdated pipeline ordinance that lacks appropriate provisions to protect the County from risks, and miss an opportunity to increase revenue by increasing franchise fees. CHILDREN'S IMPACT STATEMENT: Not applicable.