08-13-2003 Council Minutes - Laserfiche WebLink

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MINUTES CITY COUNCIL AUGUST 13, 2003 Fahey agreed that applying a flat franchise fee to electric only would be the most equitable situation in lieu of a percentage fee on both gas and electric. Blesener suggested that in order to generate the amount of revenue the City needs, a flat franchise fee on electric have to generate the equivalent of an approximately 3% percentage fee. Blesener asked if the large commercial and industrial category could be broken down into subcategories. Jurek indicated that Xcel does not have the capability to break this group down further. Anderson asked the range of usage within the large commercial and industrial category from low-end usage to high end. Jurek estimated the range from 3,120 kwh on the low end to 256,400 kwh on the high end. Jurek also explained the differences between demand users and non- demand users, noting that total usage between these two types of users may not differ much. Anderson expressed concern about the inequity of charging the same flat franchise fee for two businesses with this type of difference in usage. Anderson indicated that the flat fee was troubling to him given the small users will end up subsidizing the large users. Anderson pointed out that this disparity is what is being proposed by Xcel under their flat fee proposal. Anderson felt there has been no effort on Xcel's part to work toward a mutually agreeable situation. Anderson pointed out that the City's position has been that a percentage fee provides for the most equity between utility users, while the flat fee allows Xcel to protect its large user customer base at the expense of the small user. Anderson asked if the City proposes the percentage fee and that proposal is rejected by Xcel, and the City decides to litigate the matter, if the City can recover from Xcel the damages without those damages being billed to its customers. Fahey stated that his position would be that if Xcel refuses to collect a franchise fee that the City decides upon, that the City would then terminate the franchise agreement with Xcel. Fahey again stated that as he looks at the numbers provided in staff's report, the flat fee inequity exists primarily within a small classification of users that make up 1% of the customer base. A franchise fee on electric only would move toward reducing that inequity. Fahey indicated, however, that he is an advocate for a percentage fee as it provides for the most equitable situation. Fahey felt it would be in both the City's and Xcel's best interests to reach a mutual agreement on this matter. 9