Citizens vote May 9 on OG&E franchise

(May 4, 2005) – Citizens will vote Tuesday, May 9 whether to grant Oklahoma Gas and Electric a 25-year franchise to provide electric utility service in the City.

The current franchise, approved five years ago, expires in a few months.

Terms of the proposed new franchise are:

• OG&E will be allowed to produce and sell electricity within the corporate limits of the City.
• OG&E’s rights will not include use of City rights of way to provide telecommunications services, cable services and information services except in connection with OG&E’s electricity business.
• OG&E will continue to pay the City franchise fees totaling 3% of its gross revenues from the electricity sales within the corporate limits of The City.
• A “re-opener” provision will allow renegotiation of the agreement terms in the event electricity is deregulated in Oklahoma.
• The City will receive an energy credit of 0.5% of the kilowatt hours sold within the City limits. The City uses this energy credit for electric utility service to City-owned buildings, such as City Hall. In the proposed franchise, application of the energy credit will be expanded to include street lighting, which will save the City an estimated $1.2 million a year in electricity costs.

Franchise agreements are typically for 25 years. But in 2001, when the current franchise was approved, the State Legislature was considering deregulating electric utilities. City staff determined it would not be in the City’s best interest to enter into another long-term electric franchise agreement until the State reached a decision on electric deregulation, so voters were asked to approve a short-term five-year agreement. Since then, interest in deregulation has waned, so City staff recommends returning to the previous 25-year term.

City franchises are governed by State law and City Charter.