08-13-2003 Council Agenda - Laserfiche WebLink

Home Browse Search

L��y of �ittl e` dnc'd COPIPIUIIIN PRIDE 1953 - 2003 515 Little Canada Road, Little Canada, MN 55117 -1600 (651) 766 -4029 / FAX: (651) 766 -4048 wWWci.little- canada.mn.us MEMORANDUM TO: Mayor Fahey and Members of the City Council FROM: Joel Hanson, City Administrator Shelly Rueckert, Accounting Supervisor DATE: August 8, 2003 RE: Franchise Fee MAYOR Michael I. Fahey COUNCLL Jim LaValle Matt Anderson Rick Montour 1381 Btesener ADAUVISTRATOR Joel R. Hanson On August 1" the City Attorney and the Accounting Supervisor met with Xcel representatives to discuss the franchise agreement and ordinances. The main topic of discussion was whether the City has the unilateral right to impose a franchise fee and whether Xcel is obligated to collect such a fee. It is Xcel's position that the Statutes grant the City the right to adopt franchise fees, but it is not a policing power and, therefore, it must be a bilateral agreement between the City and Xcel. Therefore, it may take more time to attain our objective of a percentage based fee. The Council will have to weigh that position versus our need to collect the added revenue. We will defer to the City Attorney to elaborate more at the Council meeting regarding Xcel's position and his evaluation of the City's options. At that meeting Xcel also brought a new flat fee proposal that goes back to applying the same percentage charge to each class group prior to computing the flat fee (Attachment A). While this current proposal is equitable between classes of customers it should be evaluated as to equity within the classes. As you can see from attachments B and C, the annual ranges for residential and small commercial classes are not materially dramatic. For example, on a usage basis an electric customer (without space heating) using 339 kwh would have an annual cost of $6.82, while a customer using 733 kwh would have a cost of $13.49. This equals a range of $6.67 or just over $.50 a month. Applying the flat fee, the smaller users would pay a $5.18 premium ($.43 per month) and the larger user would receive a $1.49 benefit ($.12 per month). For residential and small commercial customers the variances in the usage and flat fee amounts may be small enough that the equity issue could be tolerated. A similar analysis can be applied to large customers, but the difficulty here is the lack of data on the range of usage with these groups. As you can see Attachments B and C, we have made a broad -brush assumption on customer distribution. We have assumed one -third of the customers in each group use the group average of kwh while one -third uses 50% less and one -third uses 50% more. With this type of customer distribution, the ranges between flat fees and usage fees are not significantly different. However, it is considered likely that the distribution in these classes is more skewed to a few big 1