Alliant Energy is holding a bill of over $500,000 that they say will come due if the Mason City City Council does not pass a “mutually beneficial” franchise agreement. According to a an attorney hired by the city, that bill is bogus and would never have to be paid by the city. PHOTO: Alliant’s Regional Director John Boston tells the City Council how the citizens will pay $500,000 to Alliant if the Council doesn’t make an agreement with Alliant.|Alliant Energy is holding a bill of over $500,000 that they say will come due if the Mason City City Council does not pass a “mutually beneficial” franchise agreement. Alliant seems to imply that since the old franchise agreement has basically expired some months ago, the City is on the hook for work Alliant did since that time.
According to an attorney hired by the city, that bill is bogus and would never have to be paid by the city.
Ivan Webber is a law firm out of Des Moines that represents Mason City on various issues. City Administrator Brent Trout passed the issue by the legal experts there to see how the current (expiring) franchise agreement between Mason City and Alliant Energy continues, if at all.
Ivan Webber told Trout that Mason City and Alliant would continue to operate under the old agreement until one party “terminates” the agreement.
“The hold over is provided by common law,” Webber said. “There is not any right to the continued use of the streets and right of way without a franchise, but if the parties continue to operate an implied or a quasi contract under the franchise terms continues until one party acts to terminate any rights under the franchise.”
Trout told the city council via email that “The basic rules states that unless either party terminates the franchise it is basically an implied agreement to continue operation as if it was in place. Us granting use of our right of way to them and them agreeing to provide service as they had been to the community. Until one party decides to terminate this is how it works. For us that means that any bills sent regarding payment of expenses for moving utilities for projects is still to be covered by them if it would have been under the old ordinance.”
Mason City and Alliant Energy are currently trying to negotiate a new franchise agreement for Alliant to provide natural gas and electricity service to the city. The two parties are sticking on several points, one of which is the length of the contract, upwards of 25 years, that Alliant wants. Some on the council want clauses in the contract that allow the city an “out.”
Alliant Energy, sometimes known as Interstate Power and Light, has provided utility services in Iowa for decades. On March 10, 2010, they filed for a multi-million dollar revenue increase with the Iowa Utilities Board. Alliant was allowed a $113,978,761 (8.99%) revenue increase to its Iowa customers by the board, according to Dan Fritz, a Utility Specialist with the board and a team leader who worked on that case. Alliant wanted a bigger increase initially, and implemented that right away. The board allowed them the smaller increase of 8.99% and Alliant refunded about $5 million to its Iowa customers. These refunds, including interest, were completed in July of 2011.
Watch video of Alliant’s Regional Director John Boston tell the City Council how the citizens will pay $500,000 to Alliant if the Council doesn’t make an agreement with Alliant. At-large Councilman Scott Tornquist tells Boston where the council stands.