Exhibit 10.(tt)
AGREEMENT TO RESOLVE
OUTSTANDING FRANCHISE ISSUES
This Agreement To Resolve
Outstanding Franchise Issues (“Agreement”) is made and
entered into between TXU Electric Delivery Company (“Electric
Delivery”) and the Steering Committee of Cities Served by TXU
Electric Delivery Company on behalf of all cities listed on Exhibit
A to this Agreement (“Cities”), hereinafter referred to
jointly herein as “Signatories.” The cities listed on
Exhibit A to this Agreement are hereinafter referred to as
“Member Cities.”
WHEREAS, several Member Cities have
expressed concern about the increasing cost and complexity of
managing utilities in public rights-of-way and the desire to
receive increased compensation from utilities for their use of such
rights-of-way;
WHEREAS, several Member Cities who
receive their franchise fee payments from Electric Delivery on a
prospective yearly basis have expressed interest in transitioning
to prospective quarterly payments;
WHEREAS, the Signatories desire to
resolve outstanding issues related to franchises; and
WHEREAS, after extensive
negotiations, the Signatories have reached a resolution of those
issues.
NOW, THEREFORE, the Signatories,
through their undersigned representatives, hereby agree to the
following:
1. The Signatories agree that this
Agreement shall become effective only upon the execution of this
Agreement and of the Extension and Modification of Settlement
Agreement between the Signatories dated January 27, 2006. The
effectiveness of this Agreement shall be accomplished pursuant to
the terms of paragraphs 4 and 19 of the Extension and Modification
Settlement Agreement.
2. To recognize the increasing cost
and complexity of managing utilities in public rights-of-way,
Electric Delivery agrees to increase the franchise fee factor for
each Member City on January 1, 2006, by 2%. The franchise fee
factor is the amount per kilowatt hour which is multiplied times
the number of kilowatt hours of electricity delivered by Electric
Delivery to each retail customer whose consuming facility’s
point of delivery is located within the Member City’s
municipal boundaries. Electric Delivery will also increase the
franchise fee factor to be paid in the Member Cities an additional
1% on January 1, 2007, on January 1, 2008, and on
January 1, 2009, for a total potential increase of 5% above
the franchise fee factor in effect on December 31, 2005.
Exhibit B to this Agreement reflects the franchise fee factors in
effect for all Member Cities in 2005, and the increased franchise
fee factors for Member Cities provided by this paragraph for 2006,
2007, 2008, and 2009.
3. Electric Delivery’s
obligation to increase its franchise fee payments to reflect the
increased franchise fee factors described in paragraph 2 ceases on
the date upon which: (1) Electric Delivery is called in for a
rate case by any municipality; (2) a proceeding concerning
Electric Delivery’s rates is initiated under Subchapters C or
D of the Public Utility Regulatory
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Act, Tex. Util. Code Title 2
(“PURA”) Chapter 36; (3) a proceeding affecting
Electric Delivery’s rates is initiated as a result of a
settlement; or (4) legislation becomes effective that modifies
the franchise fee authorized by the PURA.
4. The Signatories agree that if the
Public Utility Commission of Texas denies recovery in Electric
Delivery’s rates of the fees associated with the increased
franchise fee factors described in paragraph 2, then the franchise
fee factors immediately revert to the franchise fee factors in
effect on December 31, 2005. Electric Delivery will not seek
to impose a refund or credit obligation on Member Cities for
franchise fees already paid under the increased franchise fee
factors.
5. Electric Delivery agrees to amend
its existing franchise agreements with those Member Cities who
receive their annual franchise fee payments from Electric Delivery
on a prospective basis, and who wish to receive franchise fee
payments on a quarterly basis, to reflect the following points.
Implementation of this amendment will be at each eligible Member
City’s option. Exhibit C is a list of Member Cities who are
eligible to take advantage of this provision. For the purposes of
this Agreement, “privilege period” is the period during
which Electric Delivery will have the right to use the public
rights-of-way to deliver electricity to a retail customer.
“Basis period” is the period during which kWh delivered
to each retail customer whose consuming facility’s point of
delivery is located within the Member City’s municipal
boundaries is used for the payment calculation.
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(a.)
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In calendar
year 2006, the annual payment to be made by Electric Delivery to
the eligible Member Cities will be paid in full on the date
required by the applicable franchise agreement.
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(b.)
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Electric
Delivery agrees to amend the franchise of eligible Member Cities to
make quarterly payments on a prospective basis in lieu of the
annual prospective payments as follows:
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(i.)
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A quarterly
payment schedule will be established with the first quarterly
payment due three months after the 2006 annual payment date in the
existing franchise.
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(ii.)
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If the
franchise amendment reflecting this Agreement is not effective
prior to the first quarterly payment date, Electric Delivery will
pay any quarterly payments due within 30 days of the effective date
of the amendment. Subsequent payments will be made in accordance
with the schedule established in the franchise
amendment.
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(iii.)
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The basis
period used in determining the first quarterly payment will be the
three-month period immediately following the end of the basis
period designated in the existing franchise agreement that
corresponds to the last annual payment made in 2006. The basis
period used in determining each subsequent quarterly payment will
be the subsequent three-month period.
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(iv.)
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The privilege
period covered by the first quarterly payment will be the
three-month period immediately following the end of the privilege
period designated in the existing franchise agreement that
corresponds to the last annual payment made in 2006. The privilege
period for each subsequent quarterly payment will be the subsequent
three-month period.
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(c.)
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For an eligible
Member City that chooses to amend its franchise agreement with
Electric Delivery in this manner, Electric Delivery will cease to
make annual franchise fee payments after December 31,
2006.
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(d.)
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In no instance
will Electric Delivery agree to payment provisions that would
require payment for the same privilege period twice.
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(e.)
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The franchise
amendment must extend the term of the amended franchise agreement
for at least five years beyond its current expiration
date.
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(f.)
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Since the
quarterly franchise payments will correspond to a privilege period
that is more than 12 months beyond the date of the payment, no
franchise payments will be made during the final year of the
franchise term unless the franchise is extended as set out herein.
The amended franchise agreement will include a provision allowing
Electric Delivery to elect to make one or more quarterly
pay
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