Crested Butte remains without natural gas franchise agreement

Town out $30K – $40K

It has been six months since the town of Crested Butte had a franchise agreement with Atmos Energy, the provider of natural gas in town. Last January, the council voted 4-3 to not enter such an agreement and instead deal with Atmos issues on a case-by-case basis. The franchise agreement had technically expired in June 2010.

Before entering into a new agreement, the council wanted the company to add the town as “additionally insured” on the company insurance policy. The council, at the urging of town attorney John Belkin, felt they, along with communities like Cañon City, could forge a new way in the state in requiring utilities like Atmos to include the “additionally insured” language as part of a franchise agreement. But last month Cañon City voted to enter into a franchise agreement without that specific insurance language.
Atmos Energy representative Brian Martens told the council last January that the company felt the town was protected if something went wrong. “With the liability insurance we have, you are covered,” responded Martins. “You are held harmless with our insurance coverage.”
At the same time, councilperson John Wirsing was adamant the town not enter into the agreement without the additionally insured language. “I think it is better to run the risk we are for three to six months and ultimately get a better 20-year deal. If other towns take the same stand, Atmos might see they are heading down a wrong path by eliminating that protection,” Wirsing said at the time.
Town manager Susan Parker and public works director Rodney Due were both disappointed with the council’s decision at the time.
It has now been six months. How is it working so far?
“I still do not like it,” said Parker. “Is it working? Not really. The town has lost $30,000 to $40,000 in revenue through the franchise fees. We still don’t even have the protections for insurance or indemnification that would have come with the franchise agreement. We don’t have the formal protocols of how to work together or get safety reports and things like that. And frankly, the town isn’t as protected now as it would be with a franchise agreement. I am still disappointed in that council decision. I’ll be bringing it back to them to consider later this year.”
Due agrees with Parker.
“For the most part, Atmos is providing service like they said they would,” Due said. “We have always had a good relationship with the Atmos people that are here.”
Due said since the council decision he has had conversations with the Public Utilities Commission, and the PUC representatives scratch their head over the council move. “The PUC made it clear to me that franchise agreements are there to protect the town. They don’t protect the utility companies.
“I’m not happy at all with the situation,” Due continued. “We are losing revenue when the general fund is hurting. The protection we have, seems less. All I see is the town losing from it and that’s what the PUC representatives have told me. I’m just glad we have a good relationship with the Atmos guys. They are great to deal with.”
Due admits that Atmos has not had to apply for any individual permits this year to do work on the public rights-of-way. There was a concern that since every project that impacted the town at all would have to have a special permit, staff time would be heavily impacted. “The construction market is down so they haven’t had to come in for any permits,” Due said. “We haven’t issued any individual permits. But when it rains it pours. When the construction market heats back up, that’s when the town will get hit.”
Parker and Due both used the example of a recent pole replacement situation. During January discussions, Martens represented that under the franchise agreement if the town wanted the gas company to move a line, the company would be obligated to do so at its expense. But without a franchise agreement the town would have to pick up the cost of moving the line. That seemed to be everyone’s general understanding at the time.
In that regard, this summer the town asked the Gunnison County Electric Association (GCEA) to move a pole that sits in the alley between the Dogwood and the Brick Oven out of the gutter while GCEA was replacing the pole. But the GCEA said a gas line was in the way. Due said he felt the town would have to pay for the move and it could reach thousands of dollars not in his budget.
“Under a franchise agreement, we would have made a phone call and [GCEA] would have taken care of it,” Due said.
But Due didn’t make the call and the new pole sits where the old one did and is likely to get nicked by winter plows.
Belkin said Atmos is obligated under state law to pick up the costs. “My quick read is that if the town requires Atmos to move its facilities located in public right of way, provided the town is not being unreasonable in its request, for example asking Atmos to move it three blocks instead of three feet, then Atmos would have to do it at its sole cost and expense,” he said.
As to the issue of Atmos naming the town as an additionally insured, Belkin said that such a requirement is standard fare. By way of recent examples, he cited the U.S. Pro Challenge Bike Race that is asking the host towns like Crested Butte and Mt. Crested Butte along with sponsors to name all of the bike organizers as insureds. And Belkin says there are many.
Belkin expects both towns to sign on to that provision as he called the request “reasonable.” Belkin said, “Further, the town asked the Nordic Center and Center for the Arts to similarly name the town as additional insured in their leases with the town and neither raised a concern, as such a requirement is completely market  in these kinds of relationships.”
As to the franchise fees being lost by the town, Belkin said, “Maybe down the line, the town council could consider some sort of impact fee or tax,” he suggested.
“My hope is that it will come up to the council again this year and we can get a franchise agreement back in place,” said Due.
“I’ll be bringing it back to them to consider later this year,” said Parker.
It appears the council will soon get another look at the idea of having a franchise agreement with the gas company.