For the next 25 years, Arizona Public Service will pay the same percentage of revenue to Cottonwood it has for the last 25 years so long as voters approve an agreement between the city and the public utility in the Tuesday, May 17, special election.
Cottonwood City Council deemed the agreement “beneficial” and voted unanimously at a meeting Feb. 1 to submit it to voters.
If approved, APS would pay the city 2 percent of gross revenue collected from Cottonwood electricity users, the same percentage it has paid since 1986. Over the last 10 years, APS has paid the city more than $1 million under the existing agreement, Councilman Terence Pratt said.
If the agreement is not approved, APS would continue to provide electricity to users, but would not pay a percentage of gross revenue to the city. Costs for electricity would also go up, APS spokeswoman Kendra Cea said in answer to questions from Mayor Diane Joens.
“So if we get greedy and try to raise your rate, you would raise our rates, is that it?” Councilman Darold Smith asked Cea, who nodded in agreement.
Failure to approve the contract would also force APS to go through the normal permitting process required by the city whenever repairs become necessary, City Attorney Steve Horton said after the meeting.
The agreement grants rights of way to APS that allow the utility to perform maintenance and installation work without interference, he said.
No city or town has ever voted a franchise agreement down, Cea said. Because of this, the consequences of an unfavorable vote are uncertain, Horton said after the meeting.
“No one has ever voted to shut off their own electricity, so the answer is we really don’t know what would happen,” he said.
“We would need to get out and educate the public if that happened,” Cea said.
Horton told council negotiations took several weeks. The deal mirrors those entered into by other Arizona cities. It contains terms favored by APS and acceptable to the city, he said.
One term favorable to Cottonwood gives it a kind of “most favored nation status,” Horton said after the meeting.
To date, APS negotiated the 2 percent franchise fee with every municipality in the state. Under the clause, Cottonwood would automatically be allowed to collect a larger franchise fee should any other Arizona city or town in persuade APS to pay a higher rate, he said.
“It’s probably not going to happen,” Horton said.
The current agreement expires Thursday, June 2.
