(a) 
Fee.
In partial consideration for the franchise, which provides for the company’s use of City streets and other City property, which are valuable public properties acquired and maintained by the City at great expense to its residents, and in recognition that the grant to the company of the use of City streets and other City property is a valuable right, the company shall pay the City a sum equal to three percent of all gross revenues. To the extent required by law, the company shall collect this fee from a surcharge upon City residents who are customers of the company.
(b) 
Obligation in Lieu of Fee.
In the event that the franchise fee specified herein is declared void for any reason by a court of competent jurisdiction, unless prohibited by law, the company shall be obligated to pay the City, at the same times and in the same manner as provided in the franchise, an aggregate amount equal to the amount which the company would have paid as a franchise fee as partial consideration for use of the City streets. To the extent required by law, the company shall collect the amounts agreed upon through a surcharge upon utility service provided to City residents.
(c) 
Changes in Utility Service Industries.
The City and the company recognize that utility service industries are the subject of restructuring initiatives by legislative and regulatory authorities, and are also experiencing other changes as a result of mergers, acquisitions, and reorganizations. Some of such initiatives and changes have or may have an adverse impact upon the franchise fee revenues provided for herein. In recognition of the length of the term of this franchise, the company agrees that in the event of any such initiatives or changes and to the extent permitted by law, upon receiving a written request from the City, the company will cooperate with and assist the City in modifying this franchise to assure that the City receives an amount in franchise fees or some other form of compensation that is the same amount of franchise fees paid to the City as of the date that such initiatives and changes adversely impact franchise fee revenues.
(d) 
Utility Service Provided to the City.
No franchise fee shall be charged to the City for utility service provided directly or indirectly to the City for its own consumption, including street lighting service and traffic signal lighting service, unless otherwise directed by the City.
(a) 
Remittance Schedule.
Franchise fee revenues shall be remitted by the company to the City as directed by the City in monthly installments not more than 30 days following the close of each month.
(b) 
Correction of Franchise Fee Payments.
In the event that either the City or the company discovers that there has been an error in the calculation of the franchise fee payment to the City, it shall provide written notice to the other party of the error. If the party receiving written notice of error does not agree with the written notice of error, that party may challenge the written notice of error pursuant to Section 4.2(d) of this franchise; otherwise, the error shall be corrected in the next monthly payment. However, if the error results in an overpayment of the franchise fee to the City, and said overpayment is in excess of $5,000, credit for the overpayment shall be spread over the same period the error was undiscovered. All franchise fee underpayments shall be corrected in the next monthly payment, together with interest computed at the rate set by the PUC for customer security deposits held by the company, from the date when due until the date paid. In no event shall either party be required to fund or refund any overpayment or underpayment made as a result of a company error which occurred more than five years prior to the discovery of the company error.
(c) 
Audit of Franchise Fee Payments.
(1) 
Every three years commencing at the end of the third year of this franchise, the company shall conduct an internal audit to investigate and determine the correctness of the franchise fee paid to the City. Such audit shall be limited to the previous three calendar years. The company shall provide a written report to the City Manager containing the audit findings.
(2) 
If the City disagrees with the results of the audit, and if the parties are not able to informally resolve their differences, the City may conduct its own audit at its own expense, and the company shall cooperate fully, including but not necessarily limited to, providing the City’s auditor with all information reasonably necessary to complete the audit.
(3) 
If the results of a City audit conducted pursuant to subsection (c)(2) of this section concludes that the company has underpaid the City by two percent or more, in addition to the obligation to pay such amounts to the City, the company shall also pay all costs of the City’s audit.
(d) 
Fee Disputes.
Either party may challenge any written notification of error as provided for in Section 4.2(b) of this franchise by filing a written notice to the other party within 30 days of receipt of the written notification of error. The written notice shall contain a summary of the facts and reasons for the party’s notice. The parties shall make good faith efforts to resolve any such notice of error before initiating any formal legal proceedings for the resolution of such error.
(e) 
Reports.
Upon written request by the City, but not more than once per year, the company shall supply the City with reports, in such formats and providing such details as reasonably requested by the City, of all suppliers of utility service that utilize company facilities to sell or distribute utility service to residents and the names and addresses of each such supplier.
Payment of the franchise fee does not exempt the company from any other lawful tax or fee imposed generally upon persons doing business within the City, including any fee for a street closure permit, an excavation permit, a street cut permit, or other lawful permits hereafter required by the City, except that the franchise fee provided for herein shall be in lieu of any occupation, occupancy or similar tax for the use of City streets and other City property.