Opinion ID: 1180934
Heading Depth: 1
Heading Rank: 5

Heading: natural gas franchises

Text: AN ACT to amend W.S. 15-1-103(a)(xxxiii) by creating a new subparagraph (C) and by creating new subsections (b) and (c) relating to natural gas franchises; providing such franchises may be for providing a natural gas distribution system only thereby allowing any person to deliver natural gas through the system; providing for a vote of the electors; requiring annual reports to the public service commission; prohibiting certain increases in cost and price in purchase contracts for the resale of gas to franchise holders; specifying franchise conditions including liability; providing for repeal of the act unless continued by the legislature; and providing for an effective date. Be It Enacted by the Legislature of the State of Wyoming: Section 1. W.S. 15-1-103(a)(xxxiii) by creating a new subparagraph (C) and by creating new subsections (b) and (c) is amended to read: 15-1-103. General powers of governing bodies. (a) The governing bodies of all cities and towns may: (xxxiii) Grant franchises for such terms as the governing body deems proper to any utility company, provided no franchise may be entered into with any person in which that person is given an exclusive right for any purpose whatsoever and: (C) Upon renewal or initial grant or renewal after condemnation of a franchise, may provide in the franchise that the franchisee shall furnish a gas distribution system through which any supplier, including the franchisee, may sell and distribute natural gas as provided by subsection (b) of this section, to any person served by the distribution system, provided that before any city or town implements this subparagraph, the question of whether or not to do so shall be submitted to and approved by a majority of the electors of the city or town voting on the question at a one-time election called for that purpose. (b) Any franchise granted pursuant to subparagraph (a)(xxxiii)(C) of this section is subject to the following: (i) The franchise agreement shall specify who is responsible for deliverability; (ii) The distribution system shall continue to be a public utility whose charges are regulated by the public service commission. The charges shall reflect the reasonable nongas costs subject to management audit as the public service commission deems necessary plus a reasonable return on investment; (iii) Any city or town or its authorized representative shall act as an agent for any person served by the system in negotiating terms and conditions for the supply of natural gas to that person, and the franchisee distribution system shall accept for delivery to any person served by the system, natural gas from any supplier; (iv) The public service commission shall designate a place or places in the vicinity of the distribution system for the acceptance of natural gas not supplied by franchisee; (v) The public service commission shall adopt and enforce minimum quality standards for all gas delivered to the distribution system. These standards shall reflect the practices of the operators of the distribution system unless good cause is shown for different standards. The standards shall be designed to facilitate the comingling of gas from different suppliers; (vi) As soon as there are at least two (2) suppliers offering natural gas to all customers served by the franchisee and as soon as the additional supplier or suppliers are capable of delivering gas in at least one-third (1/3) of the volume required by the entire distribution system provided that the public service commission finds that the suppliers own or control, and have committed to guaranteed delivery, reserves of natural gas sufficient to supply ten (10) years of demand at that level, then all persons supplying gas shall have the authority to set their own prices. The proposed supplier has the burden of proving adequate reserves and deliverability. The Wyoming oil and gas commission shall report to the public service commission on the adequacy and deliverability when a utility gas supply is proposed to be displaced under this act; (vii) Subject to the availability of pipeline capacity and the requirements of federal law and regulations the public service commission may, after notice and hearing if necessary, designate any point in the state on a gas pipeline operated for the purpose of delivering gas to the distribution system or its parent or subsidiary company as a point for receipt of gas to the system and regulate the charges for shipping gas from that point to the system. If a pipeline has insufficient capacity the public service commission consistent with W.S. 30-5-125 may require it to accept gas that has a lower price to the consumer in preference to higher price gas. The public service commission may impose any conditions or requirements pursuant to this subsection that are necessary to protect the public health, safety and welfare, to ensure the efficient operation of the natural gas distribution and supply system and to ensure the lowest possible price to retail customers, including but not limited to proper assignment of costs of connecting suppliers to the system; (viii) When a city renews or grants a franchise for the supply of natural gas under subparagraph (a)(xxxiii)(C) of this section, the public service commission may require that the distribution of gas in surrounding unincorporated areas also be made subject to the terms of the same franchise; (ix) If a distribution system has only one (1) supplier of natural gas all prices charged in that franchise are subject to W.S. 37-2-121 and 37-2-122; (x) All suppliers of gas to the distribution system shall annually report to the public service commission the annual consumption of natural gas by their customers of record at the date of the report and their natural gas reserves. If their natural gas reserves are less than a five (5) year supply, the public service commission may forbid any supplier from serving new customers until the reserves are equal to a five (5) year supply for all customers; (xi) Any supplier entering the system under this subsection is liable for injuries, damages or other losses to the extent to which the injuries, damages or other losses are proximately caused by the supplier's operations within the system and are due to failure of the supplier to exercise that standard of care which a reasonable, prudent person would exercise under the same or similar circumstances to avoid an undue risk of harm or are due to the supplier's failure to deliver contracted amounts of natural gas. (c) Any provision in a gas purchase contract which contains or creates an indefinite escalator clause, otherwise known as a favored nation treaty provision, is contrary to the public policy of the state and is void and unenforceable if: (i) The contract is to sell gas to the holders of a municipality franchise which supplies retail customers in the state; (ii) The contract provides for the sale in the state of gas produced within the state; (iii) The contract gas price is in excess of the general market price which would otherwise exist in the absence of the indefinite escalator clause; and (iv) The higher price resulting from the application of the escalator clause is not required by any enforceable provision of statutes or regulations enacted or adopted pursuant to the National Gas Policy Act of 1978 or other appropriate statutes and regulations of the United States. Section 2. If any provision of this act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions of application of the act which can be given effect without the invalid provision or application and to this end, the provisions of this act are severable. Section 3. Effective July 1, 1988, W.S. 15-1-103 (a)(xxxiii)(C) and (b) are repealed unless continued by an affirmative act of the legislature. The repeal of these provisions does not affect any franchise agreement made pursuant to these provisions prior to the effective date of their repeal. Section 4. This act is effective May 23, 1985. Approved February 23, 1985.