§ 2-20-4. Provision of natural or artificial gas and electric services within city.

A.

Without a franchise granted by the council of the city, no person, firm or corporation ("person") shall have the right or privilege:

1.

To erect, construct, operate or maintain or use any natural or artificial gas pipeline, plant or system or gasworks, or electric light and power system or works within the city in order to sell or distribute or provide nonmunicipal natural or artificial gas or electrical power and energy to itself or any other user or consumer within the city; or

2.

To use the streets or alleys of the city for such purpose; or

3.

To interconnect any building, structure or facility of any kind to any natural or artificial gas pipeline or system, or electrical line or system other than to the natural gas or electrical system of the Memphis light, gas and water division.

4.

Subsection A of this section shall not apply to the on-site generation or production and self-consumption of electricity, natural or artificial gas.

B.

No ordinance for the grant of a franchise for an electric distribution system or a natural or artificial gas distribution system as set forth in subsection A of this section shall be granted except under such terms and conditions as shall preserve the financial integrity of the Memphis light, gas and water division and the amount of in lieu of tax payments received by the city from the Memphis light, gas and water division. Such franchise ordinance shall require that any franchise holder shall pay to the city a maximum franchise fee of five percent of gross receipts of the electric or gas distribution system. Gross receipts shall include the costs of operation and the costs of purchased electric power and natural gas. If the franchise holder is distributing to itself, the gross receipts shall include not only the cost of operation of the distribution system, but the cost of the electricity or gas to be distributed. The franchise holder shall be required to make all of its records available to the city for the purpose of determining the franchise fee. If the franchise holder is also the owner of any natural gas facilities or the producer of electricity, the cost of the natural gas or the cost of the electricity shall not be less than the average annual cost for the preceding calendar year of electricity (demand and commodity charges) or such natural gas (commodity charge only) to the Memphis light, gas and water division for the purpose of computing the franchise fee. If franchises are granted by Shelby County and the City of Memphis, the franchise fee of the city shall be computed by applying the city percentage the total gross receipts within both Shelby County and the City of Memphis. One-half of that amount shall be allocated to facilities and one-half to consumption. The amount payable to the city from the portion allocated to facilities shall be its proportion of the value of facilities within the city to the total value of facilities. The amount payable to the city from the portion allocated to consumption shall be its proportion of the amount of consumption within the city to the total consumption. The allocation between the city and the county shall be adjusted as of the effective date of any annexation by the city and prorated for the franchise year.

C.

Unless a franchise has been given or granted it is unlawful for any person:

1.

To erect, construct, operate or maintain or use any natural or artificial gas pipeline, plant or system or gasworks, or electric light and power system or works within the city in order to sell or distribute or provide nonmunicipal natural or artificial gas or electrical power and energy to itself or other consumer within the city; or

2.

To use the streets or alleys of the city for such purpose; or

3.

To interconnect any building, structure or facility of any kind to any natural or artificial gas pipeline or system, or electrical line or system other than to the natural gas or electrical system of the Memphis light, gas and water division.

D.

The above provision shall not apply to a cogeneration facility permitted by law whereby any excess is to be distributed by the Memphis light, gas and water division.

E.

If any person constructs, operates or maintains any natural or artificial gas pipeline, plant or system or gasworks, or electric light and power system or works or sells or distributes any natural or artificial gas or electricity within the city, or makes any connections with gas or electrical lines or systems contrary to the provisions of the foregoing; then, in addition to any other remedies and measures provided by law, the city attorney or the general counsel of the Memphis light, gas and water division may commence an action in the name of and on behalf of the city for suitable and appropriate legal and equitable relief.

(Code 1985, § 2-259; Ord. No. 3838, § 1, 1-31-1989)