HomeMy WebLinkAbout2024-02-8804CITY OF PADUCAH
ORD 2024-02-8804
AN ORDINANCE CREATING A NATURAL GAS
FRANCHISE
WHEREAS, the Constitution of the Commonwealth of Kentucky, Sections 163
and 164, and Chapter 96 of the Kentucky Revised Statutes authorize municipal corporations to
require public utilities, including providers of natural gas within their boundaries, to operate
under franchise agreements and to grant utilities the right to use public right-of-way on such
terms and conditions as are deemed reasonable and necessary; and further KRS 82.082
authorizes the City to exercise any and all powers within its boundaries that are not in conflict
with the Kentucky Constitution or state statutes; and
WHEREAS, the Board of Commissioners of the City of Paducah, Kentucky, has found
and determined that the construction, operation, maintenance and utilization of a natural gas
franchise over, across or under public right-of-way in the City of Paducah, benefits said utility
and the customers it serves and the Board has further found and determined that the construction,
installation, removal, maintenance and/or repair of utility -owned facilities and other
infrastructures does periodic and unavoidable disturbance that gradually results in the
degradation of the City's streets and sidewalks, for which the City is entitled to reasonable
compensation in order to offset and recover the costs of reconstructing, removing, repairing or
resurfacing damaged public right-of-way; and,
WHEREAS, in order to protect the health, safety and welfare of the citizens of Paducah,
Kentucky, to protect and preserve the City's public right-of-way and infrastructure and to provide
for the orderly administration of the franchise contemplated herein, it is necessary and
appropriate to require the successful franchisee to conduct its business and operations in a lawful
manner in compliance with the terms and conditions set forth hereinbelow.
NOW THEREFORE be it ordained by the Board of Commissioners of the City of
Paducah as follows:
SECTION A. Chapter 24 "Natural Gas" of the Code of Ordinances of the City of Paducah,
Kentucky is hereby created as follows:
Sees. 24-1. - Short title.
This article shall be known and may be cited as the "Paducah Natural Gas Franchising Ordinance
of 2023."
See. 24-2. — Purpose.
The purpose and intent of this article is to:
1) Establish a local policy concerning natural gas providers and services;
2) Secure fair and reasonable compensation to the City and the residents of the City for
permitting private use of the Rights-of-way; and
3) Ensure that the City can continue to fairly and responsibly protect the public health,
safety and welfare.
See. 24-3. — Definitions.
As used in this Ordinance, the following words and phrases shall have the following meanings:
(A) "Commission" refers to and is the Kentucky Public Service Commission, the state
utility regulatory Commission having jurisdiction over the rates, services and operations of
Grantee within the State of Kentucky or other administrative or regulatory authority succeeding
to the regulatory powers of the Commission.
(B) "Board of Commissioners" means the Board of Commissioners of the City of
Paducah.
(C) "City" refers to and is the City of Paducah, McCracken County, Kentucky, and
includes such territory as currently is or may in the future be included within the boundaries of
the City of Paducah.
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(D) "Force Majeure" shall mean any and all causes beyond the control and without
the fault or negligence of Grantee. Such causes shall include but not be limited to acts of God,
acts of the public enemy, insurrections, terrorism, riots, labor disputes, boycotts, labor and
material shortages, fires, explosions, flood, breakdowns of or damage to equipment of facilities,
interruptions to transportation, embargoes, acts of military authorities, or other causes of a
similar nature whether or not foreseen or foreseeable which wholly or partly prevent Grantee
from performing one or more of its obligations hereunder.
(E) "Franchise" shall mean the rights and privileges granted by the Grantor to Grantee
under the terms and provisions of this Ordinance.
(F) "Grantee" shall mean a legal entity that is granted a Franchise by the Grantor.
(G) "Grantor" shall mean the City of Paducah, Kentucky.
(H) "Public Right -of -Way" shall mean the surface, the airspace above the surface and
area below the surface of any street, highway, alley, avenue, boulevard, sidewalk,
pedestrian/bicycle lane or trail, driveway, bridge, utility easement or any other public ways
owned, dedicated by plat, occupied or used by the public and within Grantor's geographical
limits or boundaries established by applicable law.
(I) "Revenues" refer to and are those amounts of money which the Grantee receives
from its customers within the Grantor's geographical limits or boundaries for the retail sale of
gas under rates, temporary or permanent, authorized by the Commission and represents amounts
billed under such rates as adjusted for refunds, the net write-off of uncollectible accounts,
corrections or other regulatory adjustments. Revenues do not include miscellaneous service
charges, including but not limited to turn ons, meter sets, nonsufficient funds, late fees and
interest, which are related to but are not a part of the actual retail sale of gas.
retail sale of gas.
(J) "System" shall mean the system of works, pipes, pipelines, facilities, fixtures,
apparatus, lines, machinery, equipment, structures, appliances, appurtenances or other
infrastructure reasonably necessary for the storage, transportation, distribution or sale of natural,
artificial or mixed gas to residential and commercial customers and the public generally, within
the geographical limits or boundaries of the Grantor.
Sec. 24-4. — Grant of Franchise.
(A) There is hereby created a non-exclusive Franchise to enter upon, acquire,
construct, operate, maintain and repair in the Public Right -of -Way the System, subject to the
provisions of this Ordinance. The Franchise granted hereunder shall be extended to territories
that are annexed by Grantor upon the same terms and conditions herein, subject to the approval
of the Commission, if any such approval is required.
(B) The Franchise granted to Grantee by the Grantor shall not be exclusive and the
Grantor reserves the right to grant a similar Franchise to any other person or entity at any time.
In the event the Grantor shall grant to another person or entity during the term hereof a Franchise
for a System within the geographical boundaries or limits of Grantor similar to the one herein
granted to the incumbent Grantee, the terms of any such Franchise agreement shall be no more
favorable to such new additional grantee than those terms contained herein. Additionally, any
such new/additional grantee shall have no right to use any portion of the System without the
incumbent Grantee's written consent.
Sec. 24-5. — Term, Effective Date, and Acceptance of Franchise.
(A) The term of this Franchise shall be for a term of twenty (20) years.
(B) The Franchise created hereby shall become effective upon its final passage and
approval by the City, in accordance with applicable laws and regulations, and upon acceptance
by the Grantee by written instrument within sixty (60) days of passage by the governing body
and filed with the Clerk of the Grantor. If the Grantee does not, within sixty (60) days following
passage of this Ordinance, express in writing its objections to any terms or provisions contained
therein, or reject this Ordinance in its entirety, the Grantee shall be deemed to have accepted this
Ordinance and all of its terms and conditions.
(C) The terms and conditions of any previous perpetual Franchise agreement are
superseded by the terms and conditions hereof.
(D) On the expiration of a Franchise granted pursuant to this Ordinance, in the event
the same is not renewed, or on the termination of any renewal of said Franchise, or on
termination of said Franchise for any other reason, the plant and facilities of the Grantee
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installed, constructed and operated hereunder shall, at the option of the City become the property
of the City, upon payment to the Grantee, its successors and/or assigns, of a fair valuation
thereof, such fair valuation to be determined by agreement between the City and the Grantee, its
successors and/or assigns. Grantor agrees that, at the time of such transfer of facilities, it shall
assume Grantee's contractual and regulatory obligations maintained in connection with the
System. If the City does not exercise the option hereunder, then Grantee may exercise its rights
under Sec. 24-12(B).
Sec. 24-6. — Grantee's Rights in and to Public Right -of -Way.
The Grantee shall have the right and privilege of constructing, erecting, laying, operating,
maintaining, replacing, removing and/or repairing a System through, along, across and under the
Public Right -of -Way within the geographical boundaries or limits of the Grantor as it now exists
or may hereafter be constructed or extended, subject to the inherent police powers conferred
upon or reserved unto the Grantor and the provisions of this Ordinance.
Sec. 24-7. — Operation of System; Excavation of Public Right -of -Way:
(A) The System shall at all times be installed, operated and maintained in good
working condition as will enable the Grantee to furnish adequate and continuous service to all of
its residential, commercial and industrial customers. The System shall be designed, installed,
constructed and replaced in locations and at depths which comply with all applicable federal and
state laws and regulations regarding minimum safety standards for design, construction,
maintenance and operation of gas distribution systems.
(B) Grantee shall have the right to disturb, break, and excavate in the Public Right -of -
Way as may be reasonable and necessary to provide the service authorized hereby.
(C) Grantee will repair any damage caused solely by Grantee to any part of the Public
Right -of -Way and will restore, as nearly as practicable, such property to substantially its
condition immediately prior to such damage.
(D) Grantee shall use reasonable care in conducting its work and activities in order to
prevent injury to any person and unnecessary damage to any real or personal property.
(E) Grantee shall, when reasonably practicable, install all pipelines underground at
such depth and in such manner so as not to interfere with the existing pavement, curbs, gutters,
underground wires or cables or water or sewer pipes owned or controlled by the Grantor.
Sec. 24-8. — Degradation/Restoration of Public Right -of -Way.
(A) In the event that Grantor or any other entity acting on behalf of Grantor requests
or demands that Grantee remove, move, modify, relocate, reconstruct or adjust any part of the
System from their then -current locations within the streets, alleys, and public places of Grantor
in connection with a public project or improvement, then Grantee shall relocate, at its expense,
the System facilities affected by such project or improvement. Grantee's obligations under this
paragraph shall apply without regard to whether Grantee has acquired, or claims to have
acquired, an easement or other property right with respect to such System facilities and shall not
affect the amounts paid or to be paid to Grantee under the provisions of this Ordinance.
Notwithstanding the foregoing provisions of this paragraph, Grantee shall not be obligated to
relocate, at its expense, any of the following: (i) System facilities that are located on private
property at the time relocation is requested or demanded; (ii) System facilities that are relocated
in connection with sidewalk improvements (unless such sidewalk improvements are related to or
associated with road widenings, the creation of new turn lanes, or the addition of
acceleration/deceleration lanes); (iii) streetscape projects or other projects undertaken primarily
for aesthetic purposes; or (iv) System facilities that are converted from an overhead
configuration or installation to an underground configuration or installation.
(B) When it is necessary to relocate any of Grantee's facilities within the boundaries
of Grantor, Grantor and Grantee shall work cooperatively to minimize costs, delays, and
inconvenience to both parties while ensuring compliance with applicable laws and regulations.
In addition, Grantor and Grantee shall communicate in a timely fashion to coordinate projects
included in Grantor's five-year capital improvement plan, Grantor's short-term work program, or
Grantor's annual budget in an effort to minimize relocation of Grantee's facilities. Such
communication may include, but is not limited to, (i) both parties' participation in a local
utility's coordinating council (or any successor organization) and (ii) both parties' use of the
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National Joint Utility Notification System (or any alternative comparable systems or successor to
such system mutually acceptable to both parties).
Sec. 24-9. — Compensation for Use of Public Right -of -Way and Consideration for
Franchise.
(A) In consideration for the granting and exercise of the rights and privileges created
hereunder, and in further consideration of the grant to the Franchisee of the right to make use of
Public Right -of -Way, Grantee shall pay to the Grantor, during the entire life of the Franchise, a
sum equal to two percent (2%) of its Revenues. The fee prescribed herein shall be paid to the
Grantor quarterly on or before the 30th day after the end of each calendar quarter after the
effective date hereof, and the Grantee shall furnish to the Grantor quarterly a statement of
Grantee's Revenues.
(B) Grantee may add a line -item surcharge to the monthly bills of each of its
customers located within the geographical boundaries or limits of Grantor, which surcharge may
be designated as a Franchise fee, in an amount that is sufficient to recover the portion of the
Franchise fee paid by the Grantee to the Grantor that is attributable to the Revenue derived by
Grantee from such customer.
(C) The Franchise fee provided herein, together with any charges of the Grantor for
water, sewage and garbage services provided by the Grantor to Grantee, and any applicable
occupational license fees or sales, ad valorem or other taxes payable to the Grantor by the
Grantee under applicable law, shall constitute the only amounts for which Grantee shall be
obligated to pay to the Grantor and shall be in lieu of any and all other costs, levies, assessments,
fees or other amounts, of any kind whatsoever, that the Grantor, currently or in the future, may
charge Grantee or assess against Grantee's property. The Franchise fee herein contemplated shall
be uniformly and equally applied to all natural gas utilities, of like services or any other natural
gas service that compete with the Grantee, such that Grantee will be excused from collecting and
paying Franchise fees and/or taxes if Grantee's competitors are not also required to do so.
(D) The Grantor, through its duly authorized representative and at all times
reasonable, shall have access to, and the right to inspect Grantee's books and records that are
necessary to confirm the accuracy of the amount of Franchise fee being paid to the City.
Sec. 24-10. — Service To New Areas.
If during the term of any Franchise granted pursuant to this Ordinance, the boundaries of
the Grantor are expanded, the Grantor will promptly notify Grantee in writing of any geographic
areas annexed by the Grantor during the term hereof ("Annexation Notice"). Any such
Annexation Notice shall be sent to Grantee by certified mail, return receipt requested, and shall
contain the effective date of the annexation, maps showing the annexed area and such other
information as Grantee may reasonably require in ascertaining whether there exist any customers
of Grantee receiving natural gas service in said annexed area. To the extent there are such
customers therein, then the revenue of Grantee derived from the retail sale of natural gas to such
customers shall become subject to the Franchise fee provisions hereof effective on the first day
of Grantee's billing cycle immediately following Franchisee's receipt of the Annexation Notice.
The failure by the Grantor to advise Grantee in writing through proper Annexation Notice of any
geographic areas which are annexed by the Grantor shall relieve Grantee from any obligation to
remit any Franchise fees to Grantor based upon revenues derived by Grantee from the retail sale
of natural gas to customers within the annexed area prior to Grantor delivering an Annexation
Notice to Grantee in accordance with the terms hereof.
Sec. 24-11. — Breach of Franchise; Remedies.
In the event of a breach by Grantee of any material provision hereof, the Grantor may
terminate the Franchise and rights granted to Grantee hereunder, provided, however, that such
termination shall not be effective unless and until the procedures described below have been
followed:
(A) Grantor must deliver to Grantee, by certified or registered mail, a written notice
signed by the mayor or other duly authorized member of Grantor's governing body, attested by
the Grantor's secretary, and sealed with the official seal of the Grantor. Such notice must (i)
fairly and fully set forth in detail each of the alleged acts or omissions of Grantee that the
Grantor contends constitutes a substantial breach of any material provision hereof, (ii) designate
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which of the terms and conditions hereof the Grantor contends Grantee breached, and (iii)
specify the date, time, and place at which a public hearing will be held by the governing body of
the Grantor for the purpose of determining whether the allegations contained in the notice did in
fact occur, provided, however, that the date of such hearing may not be less than thirty (30) days
after the date of such notice.
(B) Within thirty (30) days following the adjournment of the public hearing described
in Subsection (A) above, the Grantor must deliver to Grantee, by certified or registered mail, a
written notice signed by the mayor or other duly authorized member of Grantor's governing
body, attested by the Grantor's City Clerk, and sealed with the official seal of the Grantor,
setting forth (i) the acts and omissions of Grantee described in the first notice that the governing
body of the Grantor determines to have in fact occurred and (ii) the specific terms and conditions
hereof listed in the first notice that the governing body of the Grantor determines to have in fact
been breached by such acts or omissions of Grantee. (C) The Grantor must permit Grantee the
opportunity to substantially correct all of the breaches hereof set forth in the written notice
described in Subsection (B) above within sixty (60) days after Grantee's receipt of such notice.
Sec. 24-12. — ADDITIONAL REQUIREMENTS; MISCELLANEOUS PROVISIONS
(A) Grantee shall at all times indemnify and hold harmless the Grantor from and
against any and all lawful claims for injury to any person or property by reason of Grantee's or
its employees' failure to exercise reasonable care in installing, maintaining and operating the
System. Provided, however, that none of the provisions of this paragraph shall be applicable to
the extent the Grantor, its officials, officers, employees, contractors, or agents, were negligent
and such negligence was the sole or contributing factor in bringing about injury to any person or
property. In such event, any liability shall be apportioned between the Grantor and the Grantee
based upon the percentage of fault assigned to each by a court of competent jurisdiction.
(B) Subject to the City's option under Sec. 24-12(D), Grantee may remove all or any
part of its System upon the expiration or termination of the Franchise and rights granted hereby.
(C) Grantee may transfer or assign the Franchise created by this Ordinance to any
other person, proprietorship, partnership, firm or corporation with written notification to the
Grantor.
(D) If any section, subsection or provision of this Ordinance or any part thereof is for
any reason found or held to be in conflict with any applicable statute or rule of law, or is
otherwise held to be unenforceable, the invalidity of any such section, subsection or provision
shall not affect any or all other remaining sections and provisions of this Ordinance, which shall
remain in full force and effect.
(E) Any Franchise subject to this Ordinance shall extend to, be binding upon, and
inure to the benefit of, the parties hereto, and their respective successors and assigns.
(F) To the extent that any other ordinances of the Grantor or portions thereof are in
conflict or inconsistent with any of the terms or provisions hereof, then the terms of this
Ordinance shall control. When this Ordinance becomes effective, all previous agreements of
Grantor granting Franchises for gas delivery purposes that were held by Grantee shall be
automatically canceled and annulled and shall be of no further force and effect.
See. 24-13. — Advertising for Bids.
It shall be the duty of the City Manager or his designee to offer the terms of this Ordinance to the
public. In the event that additional interested bidders are identified or express an interest in
obtaining a franchise after this initial offering, the additional offering and advertisement to
accommodate such bidders is hereby authorized. Said franchise and privilege shall be sold to the
highest and best bidder or bidders at a time and place fixed by the City Manager or his or her
designee after due notice thereof by advertisement or publication as required by law.
Sec. 24-14. — Bid Process.
(A)Bids and proposals for the purchase and acquisition of the franchise hereby created
shall be in writing and shall be delivered to the City Manager or his/her designee upon the
date(s) and at the time(s) fixed by the City Manager in said advertisement(s) for receiving same.
An opening time for each bid shall be stated in any advertisement and invitation for bids. The
time set for opening of bids shall be established by a clock in the office of the City Clerk. It is
the bidder's responsibility to ensure the bidder's bid is in the office before the time set for bid
openings. At the set time, the City Clerk shall declare bids to be closed. All bids shall be
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opened publicly and read aloud when the structure of the invitation for bids permits. The City
Manager or his/her designee shall with reasonable promptness prepare a tabulation of all bids
received and make the documents available to the public upon reasonable request.
(B) Immediately after bids are opened, the City Manager or his/her designee shall review
all bids for compliance with specifications, terms and conditions. If, in the judgment of the
City Manager or designee, a portion of a bid is uncertain or unclear, the bidder shall be
required to clarify all such portions which are in question. Any clarification of this nature shall
be sent to the City Manager's office in written form.
(C) The City Manager reserves the right to reject any and all bids, and to waive technicalities
and minor irregularities in bids. Grounds for the rejection include, but are not limited to:
1) Failure of a bid to conform to established requirements of an invitation for bids;
2) Failure to conform to specifications contained in or referred to in any invitation
for bids, unless the invitation authorized submission of alternative bids, and the
alternative proposal meets the requirements specified in the invitation for bids;
3) Failure to conform to a delivery schedule established in an invitation for bids;
4) Determination that a bid was submitted by a bidder determined to be not
responsible;
5) Failure to furnish a bid guarantee when a guarantee is required by an invitation for
bids; or
6) Imposition of conditions which would modify the terms and conditions of the
invitation for bids, or which would limit the bidder's liability to the City under
terms of the contract awarded, on the basis of such invitation for bids.
(D) Thereafter, the City Manager shall report and submit to the Mayor and Board of
Commissioners, at the time of its next regular meeting or as soon as practicable thereafter, said
bids and proposals for its approval.
(E) The Board of Commissioners reserves the right, for and on behalf of the City, to
reject any and all bids for said franchise; and, in case the bids reported by the City Manager shall
be rejected by the Board of Commissioners, it may direct said franchise and privilege to be again
offered for sale, from time to time.
SECTION B. SEVERABILITY. If any section, paragraph or provision of this Ordinance shall
be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such
section, paragraph or provision shall not affect any of the remaining provisions of this
Ordinance.
SECTION C. COMPLIANCE_ WITH OPEN MEETINGS LAWS. The Board of
Commissioners hereby finds and determines that all formal actions relative to the adoption of
this Ordinance were taken in an open meeting of this City Commission, and that all deliberations
of this Board of Commissioners and of its committees, if any, which resulted in formal action,
were in meetings open to the public, in full compliance with applicable legal requirements.
SECTION D. EFFECTIVE DATE. This Or - e all be read on two separate days and
will become effective upon summary publica ' n purs n to S hapter 424.
GEORGE BRAY, MA OR
ATTEST:
ginda`yl—a,�iliy Clerk
Introduced by the Board of Commissioners, February 13, 2024
Adopted by the Board of Commissioners, February 27, 2024
Recorded by City Clerk, February 27, 2024
Published by The Paducah Sun, March 1, 2024
Ord\Natural Gas Franchise Creation