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9.2.04 Bellevue, M.U.D. look at franchise deal The Metropolitan Utilities District and the City of Bellevue have voted to discuss the possibility of M.U.D. operating the city's entire natural gas system. M.U.D. provides natural gas to 73 percent of the city, while the rest is served by Aquila Inc. The change wouldn't happen without a battle. Aquila would "absolutely" fight any effort to take over its services, said Jan Davis, a spokeswoman for the utility based in Kansas City, Mo. In early August the Bellevue City Council voted to invite M.U.D. to submit a franchise proposal. The M.U.D. board voted Wednesday to accept that invitation. Bellevue officials have said they are interested in a proposal from M.U.D. because M.U.D., as a public gas utility, is able to provide natural gas at a lower cost than the privately owned Aquila. "The intent of this," said Bellevue City Councilman Dave Sanborn, "is to get a look-see and compare figures." The long-term goal, Sanborn said, would be to equalize rates among residents. M.U.D. board member Mark Doyle said the discussions could bear good news for Bellevue residents. "It could put money back into the pockets of Bellevue residents who aren't currently M.U.D. customers," he said. Any plan that could lead to M.U.D. taking over Aquila's gas service would entail complex and potentially costly legal maneuvering. For M.U.D. to provide gas to Aquila customers, Aquila would have to agree to sell its lines to M.U.D. or Bellevue would have to condemn Aquila's property. Aquila's property is not for sale, Davis said, and Bellevue has no standing to condemn Aquila's gas lines. Aquila's rates are set by the Nebraska Public Service Commission, she said, and a difference in rates would not be a sufficient reason to seize the utility's property. In terms of service, Davis said, Aquila is in good standing with its customers. Sanborn said something that weighs in Aquila's favor is that it pays higher taxes to Bellevue. Aquila pays a 3 percent franchise fee while M.U.D. pays a 2 percent general revenue tax. Davis also pointed to Aquila's higher taxes. "Why would you kick a tax-paying entity out of town?" she said. In 2003, Aquila paid $101,141 in fees to Bellevue, while M.U.D. paid $240,776, though M.U.D. had about triple the number of customers. Aquila's long-term franchise agreement with Bellevue has expired, and it is providing gas through a month-to-month agreement. These discussions with M.U.D. could be a way for Bellevue officials to gain more leverage as it hammers out a long-term contract with Aquila. Even if M.U.D.'s discussions with Bellevue do not lead to a citywide franchise, they could lead to a formal agreement covering M.U.D.'s existing customers. Doing so, said Doug Clark, vice president of governmental affairs and marketing at M.U.D., would give M.U.D. better standing in disputes with Aquila that require state arbitration. The two utilities occasionally butt heads when one or the other is expanding. When that happens, the Public Service Commission is called in to resolve the dispute. If a utility has a franchise, Clark said, any expansion is presumed to be in the public's interest. An opponent of the expansion would bear the burden of proving that the public's interest isn't served. Because Aquila already is a franchisee, M.U.D. would gain equal footing by also becoming one. |
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