HomeMy WebLinkAboutItem M. Ofr4,11 a
March0, 2000 ./ °
AGENDA REPORT
To: Mayor Yost and Members of the City Council
From: Dan Dorsey, Assistant to the City Manager
Attention: Keith Till, City Manager
Subject: PROPOSED RENEWAL OF OIL PIPELINE FRANCHISE
(ORDINANCE NUMBER /y017 ) WITH SOUTHERN
CALIFORNIA EDISON COMPANY
SUMMARY OF REQUEST
City Council conduct a Public Hearing in order to consider the proposed renewal of an oil
pipeline franchise between the City of Seal Beach and Southern California Edison
Company.
BACKGROUND
Seal Beach City Council approved Ordinance No. 953 on April 14, 1975 with Southern
California Edison for an oil pipeline franchise--which is due to expire on April 14, 2000.
Southern California Edison is requesting renewal of the oil pipeline franchise for another
25-year term.
Edison currently maintains a comprehensive oil pipeline system throughout the greater
Southern California area, including the City of Seal Beach. The utility and its pipeline
system are regulated by the State of California through the Public Utilities Commission.
However, whenever pipelines are located within local public rights-of-way or on public
property, state law does authorize cities to enter into pipeline franchise agreements
through the enactment of Ordinances in order to govern the utility's use of public property.
BASIC PROVISIONS OF THE NEW FRANCHISE AGREEMENT
FRANCHISE:
Edison would be given authorization to construct, lay, operate,test, maintain, use, renew,
repair, replace, change the size, and remove or abandon in place a system of pipeline(s) for
the purpose of conveying oil, gas, petroleum products, water, waste water, and other
substances. The pipeline in Seal Beach is currently transporting low sulfur oil.
Agenda Item: / "/
TERM:
This ordinance provides for a twenty-five(25) year franchise term commencing April 15,
2000, the day after Edison's existing franchise ordinance(No. 953) expires. At the end of
this 25-year term, the Franchise would automatically renew for two successive ten-year
terms--unless either party declines to renew the Franchise.
FRANCHISE FEES:
The methodology for calculating franchise fees for oil pipelines is based on different PUC
formulas and regulations. The current franchise formula pays a fee to the City which is
based on"2% of gross revenues from the pipeline" (the annual fee for 1998 was$1,331).
Under the proposed franchise agreement, the fee formula with the most optimal benefit for
the City would be based on the"length and size of pipe," plus an annual adjustment for the
Consumer Price Index (the estimated annual fee would be approximately $5,355/see
Attachment"A").
LOCATION OF OIL PIPELINE:
Edison's oil pipeline enters Seal Beach from the north of College Park West, skirts the
western edge of CPW, moves further west into Long Beach, travels through the Alamitos
Generation Station and then returns to and traverses Seal Beach along Westminster Avenue
(see Attachment "B").
OIL PIPELINE TESTING:
Pursuant to Public Utilities Code, Edison will test the pipeline on an annual basis and
provide reports to the City of Seal Beach.
CITY ATTORNEY::
The proposed ordinance for the oil pipeline franchise has been reviewed and approved by
the City Attorney.
FISCAL IMPACT
PUC regulations stipulate that the new franchise fee formula(in this case, "length and size
of pipe") does not become effective until the calendar year following approval of a new
Franchise Agreement. Accordingly, the City would receive a franchise fee of
approximately$1,300 to $1,400 during the year 2000; and then an annual payment of
$5,355 + CPI commencing in the year 2001.
In addition, Edison has agreed to make a one-time payment of$5,000 to the City--in the
year 2000--for"administrative expenses" associated with preparing and approving the
documents for this Franchise.
2
RECOMMENDATION
Council receive public comment, approve renewal of oil pipeline franchise with Southern
California Edison Company and conduct first reading of Ordinance No. /1/6-7 .
/ ` / • 4/
NOTED & APPROV:
_40
Keith Till
City Manager
ATTACHMENTS
A: Franchise Fee Formulas
B: Map of Edison's oil pipeline within City of Seal Beach
C: Proposed Oil Pipeline Franchise (Ordinance No. /YJ7 )
3
ATTACHMENT "A"
City of Seal Beach
Oil Pipeline Franchise Fee Analysis
Under the existing franchise agreement, the City of Seal Beach receives two percent(2%)
of SCE's annual gross revenue from pipeline usage (approximately $1,331 in 1998).
Under the proposed franchise agreement, the Public Utilities Code provides that the City
can choose from either of two formulas:
• Renewing the fee paid in 1989, adjusted for change in the Consumer Price Index, or;
• Charging SCE a fee based on the length and size of the pipe.
•
Current Franchise Payments
Broughton Act, PUC Section 6231, calculation at 2% of gross revenue.
Ordinance No. Payment Method 1998 Actual Fee Paid
953 2% of Gross Revenue $ 1,330.7 1
Total $ 1,330.71
Future Franchise Payment Methods
Section 6231.5 ( c ), 1989 Payment, plus Escalation Factor (CPI)
Ordinance No. Payment Calculation 1999 Estimated Fee
1989 Base plus Escalation Factor '
953 1989 Base = $1,398.72 $ 1,767.15
"Total $ 1,767.15
Section 6231.5 ( b ), based upon length and size of pipe, plus Escalation Factor (CPI).
Ordinance No. Payment Calculation 1999 Estimated Fee
16,056 Ft. @ 12 inches $ 5,355.29
X $0.264= $ 4,238.78
Total $ 5,355.29
ATTACHMENT "B"
MAP OF EDISON'S OIL PIPELINE WITHIN
CITY OF SEAL BEACH
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