Title
An ordinance, on first reading, granting to Trinity Valley Electric Cooperative, Inc., its successors and assigns, the nonexclusive right to use and occupy rights-of-way within the City of Mesquite, for the construction and operation of an electric transmission and distribution system, prescribing conditions governing the use of the public rights-of-way, providing for compensation therefore, providing for an effective date and a term of said franchise, providing for written acceptance of this franchise, finding that the meetings at which this ordinance is passed are open to the public, and providing for severability.
Body
D.R. Horton is under contract with Trinity Valley Electric Cooperative (TVEC) to provide electricity and street lighting service to the 450-lot Trailwind subdivision in Kaufman County. Trailwind was annexed into the City limits on October 1, 2018, and the public improvements for Phase 1 of Trailwind are nearing completion.
TVEC is an electric cooperative corporation that was formed in 1997 by the merger of two electric cooperatives, Kaufman County Electric Cooperative (incorporated 1938) and New Era Electric Cooperative (incorporated 1940). Unlike Oncor, which is a private, investor-owned utility, TVEC is a non-profit, public retail electric utility operating a retail electric distribution system within a service area defined by a Certificate of Convenience and Necessity (CCN) issued by the Texas Public Utility Commission (PUC).
Under State law, TVEC has the right to provide service within their CCN, and a municipality may not directly or indirectly regulate the rates, operations and services of an electric cooperative, except “to the extent necessary to protect the public health, safety and welfare.” The rates charged by TVEC are established by a board of directors who are elected by members of TVEC and only the PUC has jurisdiction to modify those rates. TVEC’s rate tariffs have not changed since 2008.
The City’s streets, rights-of-way and public easements used by utilities are valuable public properties acquired and maintained by the City. State law also allows the City to receive compensation for TVEC’s use of public rights-of-way within the boundaries of the City, and City staff has been working with outside counsel at Lloyd Gosselink Rochelle & Townsend, P.C., who specialize in utility matters and municipal law, and who have represented the City in electric rate proceedings at the PUC, to develop a franchise agreement.
TVEC and the City have negotiated the terms and conditions of a proposed franchise agreement for an initial period of 20 years, with automatic 6-month renewal periods up to the Charter limitation of 30 years, effective on the date when TVEC’s written acceptance of the franchise is filed with the City Secretary. In consideration for the privilege and license granted by the City to TVEC to occupy and use the City’s rights-of-way, TVEC will pay the City a franchise fee of four percent of its total gross receipts received from the provision of electric service within Mesquite.
City Charter requires ordinances granting franchises for public utilities to be read and passed at three regular meetings of the City Council. This is the first reading of the proposed franchise ordinance; the second reading is scheduled for the November 2, 2020, City Council meeting, and the third and final reading will take place at the November 16, 2020, City Council meeting.
Recommended/Desired Action
Staff recommends approval of the ordinance on first reading.
Attachment(s)
Proposed Franchise Ordinance
TVEC CCN and Board District Boundary Location Map
TVEC Tariff
TVEC Bylaws
Drafter
Ted Chinn
Head of Department
Ted Chinn