Jacks

FACTS AND PROCEDURAL BACKGROUND

For more than 50 years, SCE has provided electricity to the City pursuant to a series of franchise agreements allowing SCE to use the City's streets and other property. In 1994, as a 10-year franchise agreement was expiring, the City and SCE began negotiating the terms of a possible franchise renewal. Because the negotiations for a new long-term agreement took longer than anticipated, they entered into five one-year extensions in the interim. The expiring agreement and subsequent extensions required SCE to pay the City a "franchise fee" of one percent of SCE's gross annual receipts for electricity sold within the City (1% franchise fee). During the negotiations, the City proposed increasing the SCE franchise fee from one percent to two percent of SCE's revenue from City customers, the difference being the 1% surcharge, in order to raise revenues for general governmental purposes.1 In responding to the City's proposal, SCE took into account a 1989 Public Utilities Commission (PUC) decision establishing "Guidelines for the Equitable Treatment of Revenue-Producing Mechanisms Imposed by Local Government Entities on Public Utilities"…