An ongoing dispute between the city of Gardendale and the Fultondale Gas Board has taken another step.

Gardendale officials have sent Gas Board Chairman Tommy Loden, who is also a member of the Fultondale City Council, notice by certified letter that the board is in violation of its franchise agreement with Gardendale, which permits the board to provide natural-gas service to Gardendale residents.

The letter, the contents of which were posted by Gardendale City Council President Stan Hogeland on his personal Facebook page late Thursday afternoon, was dated Jan. 5 and sent by city attorney Ken Thompson.

In the letter, Thompson says that the board has violated the franchise agreement because it did not pay the 2-percent business-license fee for 2014, and also because it was charging Gardendale customers more than the limit imposed by the agreement — according to Thompson's letter, "more than two and one-half times (2.5X) the current rates charged by Alagasco for equivalent service."

The letter is in error regarding the amount allowed by the agreement; it's actually 2.5 percent above the Alagsco rate, not 2.5 times the rate. Hogeland confirmed the error to The North Jefferson News on Tuesday evening.

The dispute goes back more than a year. In February 2014, The North Jefferson News reported that the gas board had sent the city of Gardendale notice that it would not renew the agreement. That letter was sent by Fultondale Mayor Jim Lowery, who also serves as superintendent of the gas board.

Lowery said Tuesday evening that he had not seen a copy of the letter yet.

The text of the letter, as posted by Hogeland on his Facebook page:

January 5, 2014

BY CERTIFIED MAIL

RETURN RECEIPT REQUESTED

Attention: Tommy Loden, Chairman

Gas Board of the City of Fultondale

Post office Box 849

Fultondale, Alabama 35068

Re: Notice of Violation of Natural Gas Franchise

Dear Mr. Loden:

As City Attorney for and on behalf of the City of Gardendale, Alabama (“Gardendale”), I am notifying the Gas Board of the City of Fultondale (“FGB”) that it is in violation of Ordinance No. 88-22, as amended by Ordinance No. 93-13 (the “Franchise”), and such violation is continuing. Specifically, FGB is violating the terms of the Franchise as follows:

1. Section 12 of the Franchise requires FGB to pay annually to Gardendale a two percent (2%) franchise fee. FGB has failed and/or refused to pay this fee for the 2014 reporting year.

2. Section 13 of the Franchise mandates that FGB’s rates be not more than two and one-half times (2.5X) the current rates charged by Alagasco for equivalent service. FGB is a named defendant in the case of Michael Watson and Charles E. Evans v. Gas Board of the City of Fultondale, Alabama, Circuit Court of Jefferson, County, Alabama, Case No. 2012-900114. The basis of this pending lawsuit is the allegation that Fultondale has violated the rate cap established in the Franchise by systematically charging Gardendale customers in excess of 2.5% above Alagaso’s rates for many years. It has also come to our attention that FGB may have now implemented additional charges and/or surcharges for service that likewise serve to unlawfully increase its rates.

Gardendale and I are aware that FGB may have informed certain customers that FGB is no longer subject to regulation under the Franchise nor is bound to its terms. Please be advised this is not the case. So long as FGB continues utilizing Gardendale’s right-of-way for its natural gas service FGB does so only under the terms and conditions of the Franchise which remains in full force and effect unless or until otherwise amended or repealed.

Gardendale further demands that FGB immediately adhere strictly to the rate structure provided by the Franchise until further notice. Please let me know if you have any questions or need any additional information.

Sincerely,

J. Ken Thompson, Esq.

City Attorney

Cc:Honorable Othell G. Phillips, Mayor (by email only)

Honorable Stan Hogeland, Council President

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