Utilities typically have paid for relocation costs to make way for city work crews in public alleys.

In a big win for cities, the Texas Supreme Court this month has ruled that utilities must bear the cost of relocating utility equipment from public alleys when required to do so for municipal work projects.

Municipal groups and the state’s largest electric utility had been at odds over the potentially expensive issue for years. The high court decision confirms common law and common sense that public use takes precedent over commercial use in such cases, said an attorney representing cities.

“This has been a significant issue for cities for many years — and it’s a huge victory,” said Thomas Brocato, counsel for the Steering Committee of Cities Served by Oncor that filed an amicus brief with the high court.

At the heart of the issue is a dispute between Oncor, which is the north Texas electric utility, and the city of Richardson. In 2010 the municipality elected to begin reconstruction work on some of its public alleys with the expectation that Oncor would move its utility poles to make way for work crews.

Oncor, as other utilities across Texas, typically pay the relocation of poles and other equipment during such work projects. The obligation for Oncor to do so also is included in its franchise agreement that authorizes the utility to operate within city limits. But despite the clear language of the franchise agreement and common practice, in this case Oncor refused to pay relocation costs.

At about the same time that the utility and city were fighting over the issue, Oncor separately reached an unrelated electric rate settlement with a city coalition that also included Richardson. A rate tariff adopted as part of that settlement included boilerplate language that Oncor said bolstered its position in the relocation dispute.

In 2012 the city sued, accusing the utility of breaching its franchise agreement. The city argued, among other things, that the boilerplate language in the tariff was subordinate to both the franchise agreement and to common law. The Steering Committee of Cities Served by Oncor, which was a party to the 2011 rate case, noted in supporting briefs that the boilerplate language cited by Oncor was never at issue in the rate settlement.

Richardson won a summary judgment at the Dallas trial court in 2014, lost on appeal, but now has prevailed at the state Supreme Court. “As a home-rule city, Richardson has exclusive control over its public rights-of-way and has authority to manage the terms of use of those rights-of-way,” the high court stated in its ruling.

The Texas Municipal League also filed an amicus brief in support of Richardson.

— R.A. Dyer