05-10291 Natural Gas Distribub1
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(Published in the Salina Journal on July I 2005)
ORDINANCE NO. 05-10291
AN ORDINANCE OF THE CITY OF SALINA, KANSAS PERTAINING TO THE
TRANSPORTATION, DISTRIBUTION, AND SALE OF NATURAL GAS OR OTHER
ENERGY THROUGH PIPELINES OR DISTRIBUTION SYSTEMS IN THE CITY
REQUIRING A FRANCHISE.
BE IT ORDAINED by the Governing Body of Salina, Kansas:
Section 1. Definitions.
City - shall mean the City of Salina, Kansas.
Consumer or User - shall mean, without limitation, any individual person, business,
corporation, company, partnership, firm, limited liability corporation, limited liability
partnership, unincorporated association, joint venture, trust, municipality, or public
corporation served by a Franchised Entity or Provider through a Distribution System.
Distribution System or Distribution Facilities - shall mean a pipeline or system of pipelines,
including without limitation, mains, pipes, boxes, reducing and regulating stations, laterals,
conduits, and services extensions, together with all necessary appurtenances thereto, or any
part thereof, for the purpose of supplying natural gas or Other Energy for light, heat, power,
and all other purposes.
Franchised Entity - shall mean any entity that has a franchise granted by the City for
supplying of natural gas under the procedures and provisions of K.S.A. 12-2001, et seg., as
amended; such entity at the effective date of this Ordinance is Kansas Gas Service, a
Division of ONEOK, Inc.
Gross receipts —
1. Shall mean any and all compensation and other consideration derived directly or
indirectly by the Provider from:
a. Any transportation, distribution, or sale of natural gas to a Consumer for any use,
including domestic, commercial, and industrial purposes, and including without
limitation interruptible, single, and firm sales; and shall also include all fees or
rental received by the Provider for the lease or use of pipeline capacity within the
corporate limits of the City.
2. Except the Gross receipts shall not include:
a. Connection and disconnection fees, reconnection fees, returned check charges,
temporary service charges, and delayed or late payment charges as such terms are
used in tariffs or in the natural gas industry; and
b. Compensation from the sale of natural gas when:
(i) The Customer purchases the natural gas as a separate and identifiable
commodity that is not subject to a regulated tariff rate, and
(ii) On which the Volumetric Rate is applied; or
c. Compensation from the sale of natural gas when a franchise fee has been paid by
another Franchised Entity on the same transaction.
MCF - shall mean a measurement of natural gas equal to one thousand (1,000) cubic feet. It
is assumed for purposes of this Ordinance that one MCF equals one million (1,000,000)
British Thermal Units (BTUs).
Other Energy - shall mean energy provided in a gaseous, liquid, or slurry mixture form
through pipelines for light, heat, power, and all other purposes as an alternative or
replacement for natural gas, but specifically, it shall not include electrical energy.
Provider - shall mean any business, including any individual person, business, corporation,
company, partnership, firm, limited liability corporation, limited liability partnership,
unincorporated association, joint venture, trust, municipality, or public corporation
providing the transportation, distribution, or sale of natural gas or Other Energy to a
Consumer, whether through its own Distribution System, the Distribution System of a
Franchised Entity, or through the Distribution System of another, and shall also include a
Consumer transporting natural gas or Other Energy for its own use.
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Public Right -of- Way - shall mean present and future public streets, alleys, bridges, rights-
of-way, public utility easements, and easements dedicated in plats of the city for streets and
alleys.
Settlement Prices - shall mean the settlement prices for natural gas futures contracts traded
on the New York Mercantile Exchange (NYMEX) on the fifteenth (15th ) day of each month
as published daily in the Wall Street Journal (WSJ) on the following business day (or the
next day in which the Settlement Price is published).
Volumetric Rate - shall mean $0.2768 per MCF, or such amount as may be hereafter
calculated and filed with the City Clerk according to the provisions of this Ordinance.
Section 2. Application of Ordinance.
From and after the effective date of the ordinance, no natural gas or Other Energy shall be
transported, distributed, or sold by any Provider to any Consumer for use within the corporate limits
of the City through a Distribution System located in whole or in part in the Public Right-of-way of
the City except in accordance with the provisions of this Ordinance. This Ordinance applies to any
distribution to a Consumer within the City whether or not the portion of the Distribution System
serving the Consumer is in the Public Right-of-way so long as any portion of the Distribution
System of the Provider is in the Public Right-of-way.
Section 3. Franchise Required.
Every Provider subject to this Ordinance shall obtain a franchise from the City under the
provisions of K.S.A. 12-2001 et seq., for the use of Distributions Systems located in the
Public -Right-of-way. Any Provider that only uses the Distribution System of a
Franchised Entity and that reports and pays a sum equal to the compensation calculated
by the separate Ordinance of the Franchised Entity for transportation services and by
Section 4(2) of this Ordinance to the City through such Franchised Entity shall be
exempt from the requirement of a separate franchise. Any interstate pipeline
transportation company that is otherwise a Provider under this Ordinance shall not be
required to obtain a separate franchise under this section, provided that all Users of such
interstate pipeline transportation company that are located within the City shall obtain a
franchise and shall report and pay a sum equal to the compensation calculated by Section
4(1)(b) of this Ordinance and a sum equal to five percent (5%) of the amount paid for the
transportation of such natural gas.
2. The franchise required under this Ordinance shall substantively contain the following
elements:
a. In consideration of and as compensation for the franchise, the Provider shall agree to
pay to the City a sum equivalent to fees calculated in accordance with Section 4.
b. The payments and compensation paid by the Provider shall be in lieu of all other
licenses, taxes, charges, and fees, except the usual general property taxes and special
ad valorem property taxes, sales and excise taxes, and any permit fees and charges
for pavement cuts or other permit fees and charges based on restoring premises to
their same condition, or charges made for privileges which are not in any way
connected with the natural gas or Other Energy business, as such, will be imposed on
the Provider and are not covered by the franchise fee payments.
c. The Provider shall agree that the City shall have access to and the right to examine
and audit all records reasonably necessary to verify the payment of the franchise
fees. If any such payment is found to be incorrect, then payment shall be made upon
a corrected statement. The Provider shall agree that for each and every month, or any
part thereof, that the franchise compensation remains unpaid after the same becomes
due and payable by the Provider, there shall be added as a late charge a sum
equivalent to the statutory rate for interest on the unpaid amount.
d. Provider shall agree to hold the City harmless from any and all damages arising from
the exercise of any right or privilege granted under this Ordinance and the franchise,
and from any and all damages accruing from the neglect or mismanagement of its
employees, agents, or servants in the exercise of any right or privilege granted under
this Ordinance and the franchise.
e. Subject to the approval of the regulatory body having jurisdiction and control over
rules and regulations of the Provider at the time in question, the Provider shall agree
that the City has the right to make such reasonable rules and regulations for the
protection of its property and for the distribution and sale of gas, and the appropriate
conduct of business as the City may from time to time deem necessary.
f. The franchise shall be non-exclusive.
g. The franchise shall be for a term expiring no later than the earliest date of expiration
of the franchise of any Franchised Entity and subject to reopening and renegotiation
upon events materially affecting the rights or obligations of the City or Provider.
h. In the event the Provider owns or maintains all or any portion of a Distribution
System, it shall agree to provisions on the use of the Public Right-of-way and the
construction, location, and relocation of facilities, and the equality of standards of
service, all substantively equivalent to those of the Franchised Entities.
i. The Provider shall agree to file its acceptance in writing of the provisions, terms, and
conditions of the franchise with the City Clerk within thirty (30) days after final
passage and approval of the franchise ordinance.
Section 4. Calculation of Fees.
1. Natural Gas Fees by a Provider Required to Have a Franchise.
In consideration of and as compensation for the franchise granted to the Provider by the
City, the Provider shall make an accounting on a monthly basis to the City of all sales,
distribution, or transportation to any Consumer, or User for use within the City by the
Provider or by others through the Distribution Facilities of the Provider. The Provider shall
pay the City a franchise fee calculated as follows:
a. A sum equal to five percent (5%) of the Gross Receipts.
b. A sum equal to the Volumetric Rate multiplied by the number of MCF of natural gas
transported or distributed by the Provider. Such sums shall be adjusted for
uncollectible receivables and for uncollectible receivables which are later collected.
Such payments shall be made to the City under procedures established by the City
Treasurer within thirty (30) days of the last day of the month to which such
accounting shall apply.
2. Natural Gas Fees by a Provider Through a Franchised Entity.
In consideration of and as compensation for the use of the Public Right-of-way, any
Provider using the Distribution System of a Franchised Entity (other than Provider) shall pay
the City through the Franchised Entity a fee calculated by the separate Ordinance of the
Franchised Entity for Transportation Services and pursuant to the formula contained in
Section 4(1)(b). Such payments shall be made monthly under procedures established by the
Franchised Entity.
3. Other Energy Fees.
In consideration of and as compensation for the franchise granted to the Provider by the
City, the Provider shall make an accounting and provide compensation to the City for the
transportation, distribution, and sale of Other Energy to any Consumer, or User for use
within the City by the Provider or by others through the Distribution Facilities of the
Provider. The Provider shall pay the City a franchise fee that is calculated in a manner
provided in each franchise that is substantially equivalent to the fees paid by Providers of
natural gas, taking into account the alternative form of energy, its value per unit, and the
amount of energy necessary for light, heat, power, or other purposes.
Section 5. Adjustment of Volumetric Rate.
The Volumetric Rate shall be recalculated annually by the City beginning January 1, 2006,
based upon the Settlement Prices. The Volumetric Rate calculation form on file with the City Clerk
and incorporated herein by reference shall be used for the recalculation of the Volumetric Rate. The
recalculation shall be effective each January 1 and shall be based on Settlement Prices for the
twelve (12) month period beginning in July of the second (2nd) preceding year and ending in June
of the preceding year. For the fifteenth (15th) day of each month during said twelve (12) month
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period, the Settlement Prices for the next twelve (12) months will be summed and divided by twelve
(12) to determine an average Settlement Price. The average Settlement Prices for each of the twelve
(12) months shall then be summed and divided by twelve (12) and multiplied by five percent (5%)
to obtain the Volumetric Rate to be effective January 1 of the next succeeding year. The Volumetric
Rate shall be calculated in July annually by the City and shall be effective upon filing of the
completed Volumetric Rate Calculation Form with the City Clerk without requirement of
amendment to the Ordinance.
Section 6. Reporting and Collection Provisions
1. All Providers using the Public Right-of-way for the transportation, distribution, or sale
of natural gas or Other Energy, whether through their own Distribution Facilities,
through the Distribution Facilities of a Franchised Entity, or through the Distribution
Facilities of another, shall report or register such use with the City's Director of Finance
on such forms as are established and furnished by the City's Director of Finance and
subject to such administrative fees necessary to cover the costs of the effective
administration of the ordinance as established by the City's Director of Finance. Such
registration shall include the name, address, and agent for the Provider and shall include
such information on the method and means of transportation, distribution, or sale to
Consumers as may be reasonably required by the City for enforcement of this
Ordinance. The City shall have access to and the right to examine and audit such records
necessary to verify the payment of compensation.
2. Franchised Entities may serve as the agent for Providers using the Distribution System
of the Franchised Entity for the purposes of reporting and collection under this
Ordinance.
3. Franchised Entities with a current and effective franchise and any Provider which reports
and pays a sum equal to the fees calculated by Section 4(2) to the City through a
Franchised Entity shall be exempt from the separate reporting and registration
requirements of the ordinance.
Section 7. Times.
1. All Providers shall make application within thirty (30) days of the effective date of this
Ordinance, unless the Provider is exempt from the requirement of a separate franchise
under the provisions of Section 3(1). It is the intent of this Ordinance that a franchise
ordinance consistent with the requirements of Section 3 will be submitted to the
governing body for consideration according to statutory procedures immediately upon
such application. If a Provider not utilizing the Public Right-of-way on the effective date
of this Ordinance, seeks to utilize such Right-of-way after the effective date of this
Ordinance, such Provider shall make an application for a franchise sixty (60) days prior
to the date it shall begin use of the Public Right-of-way.
2. All Providers exempted from the requirement of a separate franchise under Section 3(1)
shall be responsible for the fees required by this Ordinance upon the effective date of the
franchise ordinance for the Franchised Entity which authorizes the Franchised Entity to
collect payments from the Provider on behalf of the City.
3. Any Provider hereafter becoming subject to this Ordinance shall immediately comply
with the provisions of the ordinance prior to use of Public Right -of- Way for the
transportation, distribution, sale of natural gas, or Other Energy.
4. The fees calculated under Section 4 of this Ordinance shall be assessed and shall be
effective as of the first cycle of the monthly billing cycle which begins no later than
sixty (60) days after final passage and approval by the City and acceptance by the
Provider.
Section 8. Violations.
It shall be unlawful for a Provider to transport, distribute, or sell natural gas or Other
Energy to a Consumer in violation of this Ordinance.
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Section 9. Savings Clause.
If any clause, sentence, or section of this Ordinance shall be held to be invalid, it
shall not affect the remaining provisions of this Ordinance.
Section 10.. Effective Date of Ordinance.
This Ordinance shall take effect and be in force from and after its passage, approval,
and publication in the official city newspaper.
[SEAL]
AT ST:
Lieu Ann Elsey, CMC, City erk
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Introduced: June 27, 2005
Passed: July 11, 2005
Deborah Divine, Mayor