Talks between Southern California Gas Company and SLO County are at an impasse
A lot’s changed since 1955. Presidents have come and gone. Wars have been fought. Physicists have reshaped our view of space and time. Then there’s the franchise agreement between SLO County and Southern California Gas Company, which has remained virtually unchanged for more than 50 years.
It’s not that there haven’t been attempts to update a decrepit contract that allows SCGC to place gas lines in the county right-of-way. It’s fairly routine, as most municipalities have similar agreements with utility companies. But here, negotiations between the two sides have gone essentially nowhere.
“The one thing we don’t want to do is have customers lose services—obviously,” Public Works Administrator John Diodati said.
According to Diodati, there are three significant hanging issues that have the potential to cost taxpayers money. For example, the contract on the books requires SCGC to cover the cost of any county roads destroyed when the company works on its underground lines, but there are no penalties or other means of enforcement.
Another problem: Utility companies sometimes abandon old pipes, which can confuse county crews when they encounter unmarked mystery pipes and have to stop work until everything’s identified.
“We have our crews sitting there twiddling their thumbs,” Diodati said, adding that construction downtime can cost taxpayers valuable dollars. “They’re leaving the other stuff in the ground, so now it’s just spaghetti under there.”
Why would SCGC want to change any of this? The answer: They wouldn’t.
The original 1955 agreement expired in 2005. At the time, SLO County supervisors voted, under staff recommendation, to extend the contract for a year to give county and SCGC officials time to update the agreement and fix some of the hanging inadequacies.
“The extension will allow county staff and gas company representatives to produce the appropriate renewal documents,” a county staff report said at the time.
The year came and went with no real progress, and in 2006 there was another request for an extension—then another in 2007, 2008, 2009, and again this year.
“Are we going to make some progress or is this going to continue as an annual thing?” Supervisor Bruce Gibson asked at the March 23 Board of Supervisors meeting.
“I think we’re done trying to go down these creative paths to meet in the middle,” Diodati responded. “I think now might be that we’re at an impasse.”
County officials could conceivably cancel the agreement and effectively cut off SCGC’s legal access to pipelines in the public right-of-way. According to the agreement, if SCGC fails to meet its end of the bargain, they can forfeit the contract.
But doing so is mired in more dangerous public policy consequences. The county draws about $600,000 per year from a two-percent franchise fee. Cracking down on SCGC could result in the termination of gas service to 50,000 connections.
Deputy County Counsel Patrick Foran declined to comment on the county’s options, but indicated there are some potential remedies.
“Nothing’s gone to court yet,” he said. “Public Works has been trying to negotiate an agreement with the gas company, and so far the county and Southern California Gas [Company] have not been able to agree on terms that both sides have found acceptable.”
Gibson told the Sun he was “very frustrated with the gas company’s stubbornness.”
“I think the gas company needs to step up to the plate on some of these issues that cost taxpayers money,” he said.
SLO County is the most northern portion of SCGC’s territory, which stretches south along the coast into the Los Angeles area and partially into the lower San Joaquin Valley.
Tim Mahoney, SCGC district manager for SLO and Santa Barbara counties, said most of the company’s agreements were drafted 50 or 60 years ago and there are active negotiations with about four municipalities. No other agreement, however, has required annual extensions. In SLO, he said, it’s taken so long because it took a while for the county to hire someone (that’s Diodati) to handle the negotiations. Also, other projects, like the Los Osos sewer, added bumps in the road.
Mahoney said he believes this will be the last year of negotiations, and that the county’s push for steep penalties is unnecessary.
“Because I guarantee the work for life, I’ll be glad to go out and fix it,” he said. “So why would we need to be penalized if a trench fails?”
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This article appears in Apr 8-15, 2010.