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SIERRA VISTA — Voters could determine this November if a franchise agreement between the city and Southwest Gas Corp. will be renewed.
City Clerk Jill Adams said at Monday’s City Council work session that all franchise agreements have to be approved by the majority of the city’s voters.
Council members will vote whether to place the initiative on the ballot. This action most likely would occur at the City Council’s second meeting in August.
Adams said the biggest change in the revised franchise agreement involves the franchise fee Southwest Gas pays to the city to use the city’s right of way to accommodate the company’s infrastructure.
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In 1982, when the agreement was last voted on, the fee was set at 2 percent. The agreement expired in 2007.
After looking at the market and agreements in other communities, a 2 percent increase will be applied to bring the total up to 4 percent.
Also, in recent years, Southwest Gas has begun adding a 1 percent fee for relocation of lines.
“It’s a 1 percent fee, but what it does is it allows the customers in Sierra Vista to avoid relocation costs in other parts of our service territory,” Southwest Gas representative Dave Naugle said.
The funds collected from this 1 percent fee will only be used for relocation of lines in Sierra Vista. If, at the end of the year, the funds are not used, they will go into the city’s general fund for its use.
This practice helps Southwest Gas avoid raising its rates across a large geographical territory. Thus, Sierra Vista customers will not pay for relocation costs in other service areas such as Phoenix.
Essentially, customers will see a 3 percent increase on their bills under taxes and fees, bringing the total franchise fee to 5 percent.
Naugle said similar agreements with a rate of 5 percent have passed in all other cities with which they have renegotiated.
The proposed agreement will be published in the newspaper for 30 days prior to the election. Naugle also said Southwest Gas plans to visit community groups to explain the agreement. Furthermore, the information will appear in voter materials and pamphlets.
However, on the actual ballot in November, the question will be yes or no on whether to renew the agreement. It will not mention the rate increase that customers would pay.
If the initiative does not pass, the current rate will remain in effect until the utility and the city can renegotiate terms, because there is no current contract.
Herald/Review reporter Julie Ann Marra can be reached at 515-4680 or by e-mail at julieann.marra@svherald.com.
what a confusing article wrote on Aug 6, 2008 10:18 PM: