The Administration & Regulatory Affairs Department (ARA) recommends that City Council approve an ordinance granting Universal Natural Gas, LLC (d/b/a Universal Natural Gas, Inc.) the right, privilege and franchise to construct, install, extend, retire, operate and maintain its facilities within the public rights-of-way of the City of Houston, Texas, for the transportation, delivery, sale and distribution of natural gas within the corporate limits of the City of Houston.
Universal Natural Gas, LLC is seeking a franchise agreement with the City of Houston to serve customers in The Commons development located northwest of the intersection of Magnolia Point Dr. and Huffman Cleveland Rd, the Park Vista at El Tesoro development located northwest of the intersection of Mykawa Rd. and E. Orem Dr., and the Westside Village development located southwest of the intersection of Little York Rd. and Mesa Dr. Universal Natural Gas, LLC will supply natural gas to approximately 1,167 residential customers. At this time, Universal Natural Gas, LLC does not have proposed, planned, or likely expansions for the City of Houston other than these developments.
The proposed ordinance grants the franchisee the non-exclusive right, privilege and franchise to use the City’s public rights-of-way for the transportation, delivery, sale and distribution of natural gas within the corporate limits of the City of Houston, pursuant to Section 17 of Article II of the City of Houston Charter. In consideration for this grant, the franchisee agrees to pay to the City an annual franchise fee of 5% of Gross Revenues with a CPI adjustment annually. The franchise allows for the City to conduct compliance reviews to monitor and collect franchise fee payments, contains a late payment provision of 12% per annum, compounded daily, and includes quality of service provisions. It also requires Universal Natural Gas, LLC to conduct its activities in the public rights-of-way in compliance with Chapter 40 of the City of Houston Code of Ordinances and other City requirements applicable to investor owned public utilities in Houston. The franchise agreement also contains the City’s standard release and indemnification, default and termination, and force majeure provisions. The proposed franchise term is 30 years.
The notice of grant of franchise proposal to Universal Natural Gas, LLC, including the name of the franchisee, description of the nature of the proposed franchise, and location where the ordinance can be found, will be published in the Houston Chronicle for three consecutive weeks as required by City Charter.
For FY 2022, the total franchise revenue to the City is projected to be $15,000.
Departmental Approval Authority:
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Tina Paez, Director
Administration & Regulatory Affairs Department