Town rejects SW Gas claim | SierraSun.com
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Town rejects SW Gas claim

JOHN A. BAYLESS

The Truckee Town Council last week rejected a claim by Southwest Gas for $15 million in damages, and town attorney J. Dennis Crabb drafted a strongly-worded letter to the corporation’s Sacramento attorney.”As a personal observation, I feel compelled to state that in 25 years of practicing municipal law in California I have never seen a claim so clearly meritless or more deserving of the title specious,” Crabb wrote.He also placed attorney Gregory Dyer, the law firm Jones & Dyer and Southwest Gas on “unequivocal notice,” stating that the claim and any litigation arising from it are in violation of codes of civil procedure. He said also that the claim and any litigation arising from it were clearly subject to governmental immunities under California law, and that the town would seek its immediate dismissal and recover its full attorney’s fees and costs.”To the extent that the filing of the claim and any litigation represents a refusal by Southwest Gas under the terms of the existent franchise and the express order of the Public Utilities Commission, the Town reserves in full its right to commence proceedings to revoke the franchise, obtain possession of all improvements installed by Southwest Gas pursuant to the franchise, and obtain a new franchise,” Crabb wrote.”If your clients are prepared to abandon this utterly inappropriate course of action and seek a mutually acceptable way for them to comply with the PUC order and move forward, the Town would be happy to discuss with Southwest Gas the conditions under which that might occur.”Southwest claimSouthwest in its claim alleges that the town violated the corporations constitutional rights, breached its franchise agreement with the corporation and interfered with the contractual relation between Southwest and the California Public Utilities Commission.The corporation also alleges in its claim that the town intentionally and negligently interfered with Southwest’s prospective economic advantage from the construction project.Southwest contends that the company was selectively held to a different standard than other companies involved in construction projects in Truckee, and that the conditions imposed upon it during construction led to cost overruns which continue to cause the firm to lose money in its project here. Southwest claims that the town required it to restore streets to a better condition than they were before gas line installation commenced.”As a direct and proximate cause of the Town of Truckee’s above-described conduct, Southwest has sustained and continues to sustain, damages in the form of substantially increased construction costs and a massive loss of profits, presently and in the future,” the claim states.No further comment from Southwest’s attorney was available before press time Wednesday.CPUC rulingThe California Public Utilities Commission ruled in July that Southwest should abide by its deal with Truckee ratepayers, when commissioners voted 4-1 that Southwest should proceed with “all deliberate speed” to fulfill its obligation to provide natural gas to all of Truckee for the price agreed upon in 1995.Southwest received approval from the CPUC in 1995 to expand its service territory in Northern California beyond the Lake Tahoe area, and Truckee was included in the plan. The utility originally agreed that it would recover from ratepayers no more than $29 million, including a 10 percent contingency for cost overruns. It agreed any costs above that amount would be recovered from shareholders.Upon proceeding with the project, Southwest experienced significant cost overruns and sought CPUC approval in 1997 to scale back the project. The changes would have eliminated Donner Lake and parts of Prosser, and Tahoe Donner from the service area, in addition to collecting an additional $17.6 million from ratepayers.Parties to the proceeding, including the CPUC’s Office of Ratepayer Advocates, agreed upon a settlement to allow most cost overruns from ratepayers. As part of the proceeding, the CPUC conducted a public hearing in Truckee in February, and the proposed settlement was discussed with potential customers. Truckee residents pointed out that they had modified their homes to receive the natural gas promised to them, but that 1,500 of them were now being excluded from the expansion, and they objected to the increased facilities charge from 12 cents to 18 cents per therm that would occur if the settlement were approved. Residents and representatives of the town expressed those concerns in letters and in presentations to the CPUC in San Francisco.According to the commission, it is not known whether the cost overruns were reasonably incurred. Because of the proposed settlement, it was not determined whether they were the result of changes in government regulations, unforeseen changes in construction practices or excusable clerical errors in excess of the 10 percent contingency.Southwest Gas filed a motion in August to stay the CPUC decision which ordered it to proceed with its project here at the original price. The motion to stay the decision was filed in conjunction with a request for a rehearing of the commission’s decision on July 2 holding Southwest to the terms of its original agreement with the town.Sierra Sun E-mail: sun@tahoe.comVisitors Guide | News | Diversions | Marketplace | Weather | CommunityCopyright, tahoe.com. Materials contained within this site maynot be used without permission.About tahoe.com… 


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