ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, May 24, 1996 TAG: 9605240068
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
SOURCE: DAN CASEY STAFF WRITER
It appears that the city of Roanoke's two-year standoff with Roanoke Gas over a new franchise agreement is over.
Following a closed meeting Monday - and without mentioning the gas company - City Council publicly authorized the city administration to advertise bids for a 20-year gas franchise agreement.
As the only gas utility authorized by the state to do business here, Roanoke Gas is expected to be the sole bidder.
But after nearly two years of negotiations, neither side is saying how much more than the current $29,000 franchise fee the city expects to get from the gas company. Its bid will be unveiled during council's June 17 meeting.
City Attorney Wilburn C. Dibling called the advertisement a "hoop" the city must jump through in the process of awarding a franchise agreement for a public utility.
It follows nearly 18 months of quiet negotiations that Dibling characterized as "fruitful" between the city and the gas company.
"Roanoke Gas is prepared to make a formal, public offer to the city based on those negotiations," said John Williamson III, gas company vice president for rates and finance. "It's a safe assumption the city wants more" than the $29,000 it currently receives from the gas company, he added.
The last franchise agreement expired in August 1993 amid a blizzard of charges that the city was trying to use a takeover clause to assume control of the portion of the privately held utility that falls within city boundaries.
Since then, however, city officials have argued the takeover clause was a bargaining chip they played in a effort to get the gas company to pay a higher franchise fee.
Nonetheless, a public relations campaign by the gas company whipped up a frenzy of public opposition to the takeover. Public criticism rained on city officials.
The city ultimately caved in, shelving a hired consultant's study about taking over the utility and granting the gas company a six-month extension with the takeover clause deleted.
"That was the biggest heat we've taken since I've been on council," said Vice Mayor William White, who was first elected in 1990. "The communications were not handled correctly and we got plastered."
After his March announcement that he wouldn't seek re-election, retiring Councilman Mac McCadden cited the controversy as one of the worst moments in his four-year term on council.
Williamson said it's a "safe assumption" that the takeover clause will be out of the new franchise agreement.
The extension expired in February 1994, when the gas company said it would operate without a franchise agreement. But operations have continued as if the old franchise agreement was in effect.
At the time the extension expired, the gas company was proposing a 40-year franchise agreement with a $40,000 annual payment to the city that would increase based on its gas sales in Roanoke, the size of its transmission system, or the number of gas customers in the city.
The city's counteroffer proposed a five-year franchise agreement for $60,000 annually plus increases based on inflation.
Williamson declined to say if the annual payment negotiated by the city and the gas company falls within the range the two sides were proposing in 1994.
The gas company won't gain a lot from having a written franchise agreement.
A franchise agreement "certainly facilitates a better working relationship between us and the city, not that we don't have a good working relationship now," Williamson said. It also formally sets down procedures for laying and working on gas lines. And no longer will the company have to explain in reports to investors why it doesn't have a franchise agreement, an item that has caused some confusion since 1994.
Franchise fees paid by other utilities in the city vary widely.
Bell Atlantic paid $40,069 in fiscal 1995 under a 30-year telephone service franchise that expires in 1997.
American Electric Power pays no franchise fee.
Cox Communications, which owns the cable television system in Roanoke, Roanoke County and Vinton, paid $585,598 in fiscal 1995 as part of a franchise fee it collects from its customers.
But Cox doesn't charge its customers a 12 percent utility tax, which the other utilities do.
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