pacific power sues klamath falls 011715

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Pacific Power sues city. Eminent domain, public utility district at heart of lawsuit

by HOLLY DILLEMUTH, Herald and News 1/17/15

Pacific Power is suing the City of Klamath Falls and Mayor Todd Kellstrom, challenging a franchise agreement between the entities approved by members of city council in December.

The company filed the legal complaint Thursday, asking the U.S. District Court in Medford to declare the ordinance containing the agreement illegal.

Nearly one year since council tabled an effort to form its own public utility district, Pacific Power alleges that the city is trying to limit compensation to the company within the ordinance in the case of a renewed municipal utility district effort. “The city’s actions clearly are intended to keep the municipal utility idea alive and to strip Pacific Power of its rights if and when it decides to move ahead,” said Scott Bolton, vice president of community and government affairs for Pacific Power, in a press release.

The company also claims that the city’s ordinance violates the Oregon constitution by applying a series of fees and obligations to Pacific Power they say do not apply to other companies. Pacific Power representatives also state the city is applying a privilege tax on customers that allows the city to attach equipment to Pacific Power poles without compensation.

“Our hope has been and remains to negotiate a mutually beneficial renewal of equal treatment under the law,” Bolton said. “By unilaterally applying a series of fees and obligations to Pacific Power that do not apply to other utilities or businesses that operate in the city. However, given the city’s decision to break off negotiations and unilaterally impose an illegal ordinance, we have no choice but to take action to protect the interest of our customers.”

Mayor Todd Kellstrom expressed surprise Friday at the federal suit.

“I’m kind of taken aback because just recently, (community relations director) Todd Andres and I have been talking about ways to put this back on the table,” Kellstrom told the Herald and News. “I’m a little surprised that they disregarded those efforts and chose to take it to court.”

The city’s attorney Joanna Lyons-Antley and City Manager Nathan Cherpeski are currently reviewing the complaint. Lyons-Antley was unavailable to comment by press time.

“Right now, it’s with the attorneys,” Cherpeski said. “We’ll see what they say and go from there.”

An executive session has been planned for 6:30 p.m. Tuesday at City Hall, 500 Klamath Ave., to discuss litigation to be filed. The meeting is not open to the public, but media representatives can attend but can only report generally on the meeting. A regular City Council meeting is scheduled at 7 p.m. following the special session, and is open to the public.

Andres said he hasn’t had conversations about specifically renegotiating the ordinance since he made a public statement at city council Dec. 15 asking the city to re-enter negotiations. Andres said the statement he made, made Pacific Power’s intentions clear. Pacific Power spokesman Bob Gravely agreed.

“I think it was very clear on the 15th (of December): ‘Please come back to the negotiation table,’ ” Gravely said. “We need to have a franchise agreement we can live with before we talk about other things.”

Kellstrom said the agreement with Pacific Power approved by the council Dec. 1 is no different than agreements between the entities in the past.

“Council felt that this was the same agreement we had for 50 years,” he said. “This is essentially the same language (used) since 1962. We felt comfortable going with that.”

The ordinance is No. 14-12.

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