By Kerry Lyman
The Fernley City Council extended a franchise agreement with the Southwest Gas Corporation for 25 years during the Nov. 19 meeting, ensuring the city continues to receive 5 percent of the company’s gross revenues generated within the city’s boundaries.
That percentage can be significant to the city’s income, generating more than $2.3 million to the city’s coffers between fiscal 2023 and 2025, according to City Treasurer Robert Carson.
The current franchise agreement was due to expire on July 1, 2026, according to a staff report.
When Carson was asked why Southwest Gas pays the city a franchise fee when there is no competition for gas service, because it’s common for cities to only receive franchise fees when a city grants an “exclusive” franchise to an entity providing competitive services, Carson said the fee, up to 5 percent of gross revenues, is allowed by state law, probably because utility companies essentially have a monopoly on their services.
Carson said NV Energy also pays the city a franchise fee of about 5 percent.
Section 12 of the franchise agreement with Southwest Gas has been updated to include 5 percent of gross revenues collected from gas delivery within the city to be paid to the city within 30 days following the end of each quarter, the staff report said.
In fiscal year 2023, the Southwest Gas franchise fee generated $744,927 to the city, $959,753 in fiscal year 2024 and $617,805 in fiscal year 2025, according to Carson. Asked about the curious one-third drop in franchise fees between 2024 and 2025, Carson surmised it may be due to a warmer winter or something like that.
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