07-09-2003 Council Minutes - Laserfiche WebLink

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MINUTES CITY COUNCIL JULY 9, 2003 FRANCHISE Collette Jurelc, Community Relations Manager with Xcel Energy, AGREEMENT- appeared before the Council to review revised franchise agreements XCEL for gas and electric service with Xcel Energy, specifically as relates ENERGY to City-imposed franchise fees. Fahey indicated that in reviewing the material presented this evening, his concern would be the imposition of a flat franchise fee amount rather than a percentage amount. Fahey noted that staff's position is that a flat fee is regressive in nature. Fahey also questioned why the fee was being proposed on electric only and not on both gas and electric. Jurek indicated that Xcel Energy looked at the total amount of revenue that the City is trying to collect and then applied that amount to its customer base in a way they felt would be fair and equitable, while still meeting the needs of the City. Xcel does not want the fee to be disproportionate between its classes of customers. Jurek explained that they are proposing a flat fee per month on gas because natural gas prices are more subject to supply and demand. She anticipated that gas prices could increase by 40% depending on the weather. Therefore, Xcel is proposing a monthly fee of $1 for residential customers and $5 for commercial customers. This fee would raise about $59,000 per year for the City. Jurek further explained the percentage fee being proposed for electric customers and the impact it would have on the various classes of electric customers. If the percentage is set at 2.5%, the resulting revenue would be approximately $135,000 per year. Therefore, the total from gas and electric franchise fees would be about $200,000. Fahey asked if the City would have the ability to review and adjust this fee on an annual basis. Jurek indicated that Xcel would suggest review occurs on an every three-year basis. However, the City would have the ability to reopen the franchise more frequently than that if so desired. Fahey pointed out that the City Attorney has indicated that the City has the ability to impose a franchise fee on both gas and electric without reopening the franchise agreements. Jurek indicated that Xcel appreciates the City's willingness to work on the issue cooperatively. Fahey stated that he does not want Xcel to have the final authority in this issue, nor does he want the City to collect the franchise fee any longer than it has to. Fahey stated that he would like the City to have the ability to review the franchise fee on an annual basis, although in reality such a review would probably occur no more than every two years.