CITY STILL NEGOTIATING WITH UE ON ELECTRIC, WATER, GAS FRANCHISES

CAPE GIRARDEAU -- The city and Union Electric Co. continue to negotiate sewer, electric and water franchises, nearly three years after the previous agreements expired.

City Manager J. Ronald Fischer said Friday that he now is waiting for UE officials to respond to the city's latest franchise offer.

Negotiations have vacillated as the city has submitted proposals and UE has offered counter-proposals. UE officials met "about 10 days ago" to discuss the city's most recent proposal, Fischer said, and he's expecting a response from the utility company "any day now.

"We're still in the negotiations stage," he said. "We were working on an April election, but that deadline I think is probably out. We would have to have a proposal for the council by February and there just doesn't seem to be sufficient time to meet that timetable.

"I think, unless something comes up that hasn't surfaced, we're very close to proposing something to the (City) Council for their consideration. Whether Union Electric would approve that, I have no way of telling."

Fischer said the next step in the negotiations process is for city and UE officials to "sit down and talk across the table" to try to iron out some of the differences that have surfaced in franchise talks.

Such a meeting was held last November in St. Louis, where Fischer said UE officials studied the franchises initially proposed by the city.

"After that, they took it back and sent us a revised version," Fischer said. "The city staff went over that and sent back our revision after we discussed it with the council during executive session.

"From the response we received from them at the first meeting we had and their written response and our written response since then, I think we're getting close. Of course, there are still things we didn't agree to and some things they didn't agree to."

The city staff in July sent franchise proposals to UE with hopes of negotiating new settlements in time to put the issue before voters in last November's general election. But that deadline passed without the two sides reaching an accord.

Once the city and UE agree on franchise proposals, the City Council must consider the issue prior to placing the measure before Cape Girardeau voters. If voters reject the franchises, the city and UE will have to "go back to the table" and begin negotiations again, Fischer said.

UE has refused to accept three extensions to the expired franchises, wanting instead to negotiate new agreements and operate under temporary permits. The utility company is required by law to maintain service even without a franchise agreement.

Fischer said UE essentially is operating under the regulations set forth by the Missouri Public Service Commission. He said the company can continue to operate indefinitely without franchise agreements, as it does in many cities.

But Cape Girardeau's city charter, adopted in 1981, requires the franchise agreements for city utilities and cable television service.

One item that apparently was a sticking point in drafting new franchises has been the fate of the city's water system. The Cape Girardeau water system is the only one UE owns and operates.

The system was purchased by UE when the company merged with Missouri Utilities Co. in 1984.

The city and a Kansas firm have expressed interest in buying the system, but UE officials have yet to announce to whom they might sell it.

In a letter last summer to Virgil Chirnside of UE, Fischer said that "if we are unable to reach an agreement on the franchises and obtain voter approval prior to March 28, 1991, the City Council will have to seriously consider whether to require your company to move its facilities off of city-owned rights of way.

"Of course," the letter said, "the same issue will have to be faced with regard to any purchaser of your water system since they would not have a franchise allowing them the use of city rights of way."

The letter also said that if UE continued to be "unresponsive" to the city, or were unwilling to continue negotiations, the City Council would be "faced with reconsidering the option to purchase the utilities through eminent domain and, or, construction of our own systems."

But Fischer said Friday he doubts the city will need to resort to those options because talks have since resumed.

"At that time, we didn't have anything on the table," he said. "Now that we do, I don't think the council would endorse that at this time.

"I think once we have a proposal that the city and UE can live with, it'd be my recommendation to the council that they approve it and put before the voters."

An advisory group that no longer exists recommended in 1987 that the city "proceed with the process of municipalization" of the electric and water systems, provided that further study indicated it was economically feasible.

But the city staff and many of the City Council members have since concluded that the high cost of municipalization might make such a move impractical.

The matter was put on hold in 1988 after the council issued temporary two-year permits to UE. Another set of one-year permits was issued last year. The permits will expire in March.