Atmos agreement under scrutiny

More insurance

The town of Crested Butte remains in a bit of a loggerhead with the company that supplies gas to area residents. Town attorney John Belkin is going back and forth with lawyers from Atmos Energy over the upcoming franchise agreement between the gas company and the town.

Such an agreement is usually signed every 20 years and allows the company to sell and distribute gas in town limits. It also allows the company to perform the necessary work to do so; that means they can, for example, lay their lines in public rights of way. In exchange, customers are charged a 3 percent franchise fee that is collected by the company and passed on to the town. Last year, the town received about $30,000 from the franchise agreement with Atmos.
The loggerhead issue is about liability. Belkin and the town council want to be listed as “additionally insured” on the Atmos liability insurance. That would provide the town more protection in case of an accident. The company doesn’t want to go there even though the previous agreement did just that. That agreement was originally signed with the leading Greeley Gas Company after the Crested Butte Bank explosion in the early 1990s. Atmos bought Greeley Gas 16 years ago and abided by its franchise agreement. But now it wants Crested Butte to fall in line with the other municipalities it serves and sign a basic contract the company uses for other towns. Crested Butte representatives are balking at that.
After a private executive session at the December 6 council meeting to discuss the matter among themselves, the council members told Atmos representative Brian Martens that the town wasn’t yet ready to proceed.
“The Town Council is in the business of performing due diligence to make sure anything we enter into doesn’t compromise the health, safety and welfare of the community,” said mayor Leah Williams. “Our insurance company, CIRSA [Colorado Intergovernmental Risk Sharing Agency] isn’t comfortable with some of the language and I think we need to dig deeper into the reasons.”
Martens said that since April, he has dealt with franchise agreements for eight Colorado communities similar to Crested Butte and the issues raised here have never been a problem. “It’s the first time this concern has come up,” he said. “As a large company we are faced with coming up with some standardization in these contracts and we have a six-page boilerplate agreement. We are open to changes and in fact we made several changes with the city of Gunnison at their request that added five pages to the document. But our attorneys are not comfortable with what you have requested.”
“We just want to make sure we are doing the right thing by our community, so we want some extra time to look into it,” said Williams. To accommodate that, Williams and Martens agreed not to hold the public hearing on the matter until the first meeting in January.
Councilperson Jim Schmidt pointed out to Martens that the previous agreement listed the town as additionally insured. “Why should we expect a lessening of the coverage for the town?” he asked.
“The previous contract was signed with Greeley Gas and this is the standard for Atmos,” replied Martens.
“But you are standardizing to the detriment of the town,” countered Schmidt.
“The other communities in Colorado have felt comfortable with the language,” said Martens. “That’s where our impasse is. It’s an interpretation by the various attorneys. Look, we’ll continue to serve you and the residents whether we have a franchise agreement or not. We won’t change the quality of service. It will continue to be great service.”
Martens said of the 32 communities serviced by Atmos in Colorado, all have a franchise agreement with the company except Durango, which has a flat tax earmarked specifically for the gas company.
Martens said the company has a $10 million liability insurance policy. If there isn’t a franchise agreement, the company would have to obtain permits each time they did work in Crested Butte and pay town fees instead of being covered by the franchise agreement and fees.
Councilpersons and contractors Roland Mason and John Wirsing said they felt the council had compromised quite a bit but pointed out they sometimes have to list a client as being “additionally insured” as part of their business.
“If something catastrophic happens, I want to make sure we are covered,” said Mason. “I am sometimes asked that in my business and I do it.”
“Some of my customers ask that they be additionally insured and it’s pretty easy,” added Wirsing.
“I want a letter from the company explaining why that’s not possible,” said councilperson Reed Betz.
Martens said he would ask the company to provide such a letter at the town’s formal request.
“We’ll get you the letter and you as a council can look at the options and take a vote at the January meeting,” said Martens, “and then we’ll move on from there.”
Town manager Susan Parker said she would send a formal request for the information to Atmos immediately and include the concerns of CIRSA over language in the proposal. The council set the public hearing for the franchise agreement for January 3.