January 17, 2023
City Manager's Office
DATE: January 17, 2023
TO: Mayor Martinez and Members of the City Council
FROM:
Shasa Curl, City Manager
Shannon Moore, Chief Assistant City Attorney
Subject:
Amendment to contract with Colantuono, Highsmith, &
Whatley, PC for legal representation related to PG&E’s
Franchise Agreements with the City.
FINANCIAL IMPACT: The City Manager’s Economic Development division’s fiscal year (FY) 2021-2022 budget (01362765-400206)
includes funds for this amendment. If this contract results in an outcome favorable to the City, revenue will increase in future fiscal years, likely by several hundred thousand dollars per year.
PREVIOUS COUNCIL
ACTION:
Dec. 1, 2021 (3rd Amend. to increase by amount
$59,000); Jan. 7, 2021 (2nd Amend. to increase amount
by $125,000); Oct. 12, 2018 (Original contract for
$100,000 through Jun. 30, 2020).
STATEMENT OF THE
ISSUE:
In 1958, the City entered into a franchise agreement with Pacific Gas &Electric (“PG&E”) for electricity and natural gas which renews every 20 years. In compliance with the agreement’s terms, the City submitted a formal request to PG&E to adjust the franchise fee. The parties have
entered arbitration in effort to settle the proposed
changes to the franchise fee payments.
RECOMMENDED ACTION: APPROVE a fifth amendment to the contract with Colantuono, Highsmith, & Whatley, PC for legal
representation, to increase contract payment limit by
$50,000, for a new total contract amount not to exceed
$334,000, while maintaining the term expiration date of June 30, 2023 – City Manager’s Office (Shasa
Curl/Shannon Moore 510-620-6505).
AGENDA
REPORT
January 17, 2023
DISCUSSION:
In 1958, the City entered into a franchise agreement with Pacific Gas & Electric (“PG&E”) for electrical and natural gas services, which renews every 20 years (the “Franchise Agreement”). The Franchise Agreement’s third, 20-year renewal cycle occurred in May of 2018. Per the Franchise Agreement’s terms, one year prior to the 2018 renewal, the City submitted a formal request to PG&E, requesting an adjustment to increase to the franchise fees. The proposed increase would place the City on par with other cities PG&E serves. PG&E did not agree to the City’s request. Subsequently, both parties entered into arbitration in an attempt to settle the matter.
The City contracted with Colantuono, Highsmith, & Whatley, PC (“Colantuono”) to provide specialized legal services and to represent the City in pre- and post-arbitration related to the PG&E electrical and natural gas utility franchise agreement(s) and related franchise fees.
The City entered into the original Colantuono contract on October 2, 2018, for a two- year time period through June 30, 2020, for $100,000. The contract has since been amended four times. The First Amendment on May 12, 2020, extended the contract’s term for two years through June 30, 2022. The Second Amendment on January 7, 2021, increased the contract by $125,000, for a total amount not to exceed $225,000.
The Third Amendment on December 1, 2021, increased the contract by $59,000, for a total amount not to exceed $284,000. The Fourth Amendment on March 18, 2022, extended the contract’s term through June 30, 2023. The proposed Fifth Amendment will increase the contract by $50,000, for a new total amount not to exceed $334,000, and will maintain the term expiration date of June 30, 2023.
DOCUMENTS ATTACHED:
Attachment 1 – Fifth Amendment to Legal Services Agreement with Colantuono, Highsmith & Whatley, PC (“Colantuono LSA”)
Attachment 2 – Fourth Amendment to Colantuono LSA
Attachment 3 – Third Amendment to Colantuono LSA
Attachment 4 – Second Amendment to Colantuono LSA
Attachment 5 – First Amendment to Colantuono LSA
Attachment 6 – Colantuono LSA