APS Service Territories

Transcription

1 May 23, 2013 GFOAz 2013 May Quarterly Training APS Franchises 101 Can I get fries with that? APS Franchises & Technical Services Kendra Cea,

2 Agenda APS Overview Overview of utility Franchises Coordination with local government Franchise fees & administration Upcoming franchise agreement negotiations and/or elections Conclusion - Q&A 2

3 APS Service Territories

4 APS Statistics 11 of 15 counties 34,645 square miles CC&N area 1.1 million customers 424 substations 28,937 distribution line miles 5,434 transmission line miles 54 generation units

5 What is an APS franchise? Is it like buying a fast food franchise? Does the City of Peoria buy its utility infrastructure and electricity from APS and sell it to the town residents? 5

6 Overview of Utility Franchises Use of public rights-of-way Purpose of the franchise Arizona Corporation Commission regulation Arizona Constitution and Statutes APS Franchises 6

7 Utilities coordinate with local government 7

8 Public Rights-of-Way (PROW) PROW established for two primary purposes: Public transportation (primary rights) Public utilities (secondary rights) PROW are owned by the public, held in trust by local governments Local governments are charged with control and regulation of the PROW 8

9 Utilities relocate from PROW to accommodate governmental projects 9

10 Grant of Franchise The Franchise grants utilities permission to use PROW It s where utilities should be Utilities must comply with local regulations Utilities may be required to pay franchise fee to municipalities Utilities must relocate from PROW to accommodate governmental projects 10

11 AZ Constitution and Statutes Franchises shall not exceed 25 years The Franchise must be approved by a majority of the electorate Utilities are obligated to relocate at their expense if facilities conflict with governmental purposes in PROW Municipalities have the authority to collect franchise fees 11

12 ACC Regulations Public Service Corporations are granted Certificate of Convenience & Necessity PSC s are obligated and have the right to provide exclusive service in territory specified in the CC&N ACC has jurisdiction over tariffs, electric delivery and power resources ACC allows direct recovery of franchise fees from APS customers 12

13 How much does APS pay for franchise fees & use of PROW?

14 APS Franchises 53 incorporated cities & towns 11 counties Franchise provisions are very similar 25-year term Franchise fee is uniform at 2% (different revenue bases) APS responsible for relocating our facilities to accommodate governmental projects in PROW 14

15 APS Franchises, con t Franchise agreement provides clarity on mutual obligations Relocations and payments Surface restoration Vegetation management Government s use of APS facilities Municipality may determine TPT offset via Model City Tax Code, Section 480.d 15

16 Model City Tax Code Option 13 To increase their revenues, many cities have opted to remove the tax credit offset for franchise fees from their city tax code. The Model City Tax Code (MCTC) allows for this offset in Section 480(d) of the Utility Services section. Here is an example from the Phoenix version of the MCTC: Sec (d) - Tax credit offset for franchise fees. There shall be allowed as an offset any franchise fees paid to the City pursuant to the terms of a franchise agreement. However, such offset shall not be allowed against taxes imposed by any other section of this chapter. Such offsets shall not be deemed in conflict with or violation of subsection (b). 16

17 Yes Option 13 If a city has adopted Option 13 of the Model City Tax Code that community will receive their full TPT & their full franchise fee payment... Example: 2% for franchise fee, plus 3% for TPT, equals Total of 5% collected from APS customers and returned back to towns/cities 17

18 NO Option 13 If a city has NOT adopted Option 13 of the Model City Tax Code, the tax will be offset for franchise fees.. Example: 2% for franchises, plus 1% for TPT (3% tax is offset), equals Total of 3% collected from APS customers and returned back to towns/cities

19 Keeping our ducks in a row 19

20 Franchise Administration Monthly/annual review of tax & franchise calculations Annual review of municipalities approved amount for TPT Annual verification of Option 13 Annual verification of recent annexations Actively review customer information to accurately determine franchise & tax calculations Prompt response to audit requests 20

21 Upcoming Municipal Franchise Elections Litchfield Park expired March 15, 2013 MOU extended current franchise Globe expires August 22, 2014 Quartzsite expires March 30, 2015 Sedona expires November 19,

22 Franchise Elections Included on general election ballots in March, May, September and November APS pays for newspaper publication ( legal posting ) and its prorata share of election costs APS will provide franchise information and campaign materials, as requested

23 What happens if we lose? Would APS have to remove its equipment or sell it to the city or another utility? The right to provide electricity is approved by the Arizona Corporation Commission and defined in the Certificate of Convenience and Necessity (CC&N) The franchise is simply a contract defining APS use of public rights of way and our coordination with governmental entities. 23

24 Conclusion We have a model franchise agreement that is agreeable to governmental entities and APS. We value our long-standing partnership with the communities we serve. 24