County of Sacramento v. Pacific Gas & Electric Co.

Under the Broughton Act (Pub. Util. Code, § 6001 et seq.), a county may grant a franchise to the highest bidder to use its public streets to transmit and distribute gas and electricity. The grantee is statutorily required to pay the county a fee of 2 percent of the “gross annual receipts” derived from the use of the franchise. (Pub. Util. Code., § 6006.) The County of Sacramento (County) granted two such franchises to defendant Pacific Gas and Electric Company (PGandE) to use county streets to supply gas and electricity to the public. PGandE regularly uses its franchise facilities to convey and sell gas and electricity to its customers in Sacramento County and pays the franchise fee to the County on the revenues generated by those sales. In addition to its customers, PGandE also uses the franchise facilities to transmit and distribute gas and electricity to itself for its own internal use. It does not pay itself for that power and consequently did not remit any franchise fee to the County for the use of the franchise for those internal transmissions. The County claims that it is entitled to franchise fees for those transmissions. Predictably, the principal issue in this…