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of Little can <br />COMP1UNLN P156 <br />1953 — 2003 <br />515 Little Canada Road, Little Canada, MN 55117 -.1600 <br />(651) 766 -4029 / FAX: (651) 766 -4048 <br />www.cilttle-canada.mn.us <br />MEMORANDUM <br />TO: Mayor and Council <br />FROM: Joel Hanson /Shelly Rueckert <br />DATE: August 22, 2003 <br />RE: Franchise Fee <br />As you know, city staff members, along with Council Members Matt Anderson and Bill <br />Blesener, met with Xcel Energy on Monday, August 18"' to discuss the application method <br />of the franchise fee. <br />MAYOR <br />Michael. L Fahey <br />COUNCIL, <br />Jim LaValle <br />Matt Anderson <br />Rick Montour <br />Bill Blesener <br />ApiLII1VIST1t/1TOR <br />Joel R. I- Janson <br />After discussing various options the City proposed that Xcel Energy consider accepting an <br />electric franchise fee only, to be calculated in one of the two following methods: <br />1) 3.75% gross earnings fee with a yet undefined cap for the largest customers. <br />2) A flat fee based on the 3.75% gross earnings fee with a proper modification <br />of that flat fee within the large commercial and industrial class if that flat fee <br />proved to be disportionate within the class. <br />Xcel agreed to research the distribution of customers in the Large commercial and industrial <br />class and provide the city with their findings. <br />City staff has subsequently received two different models of the large commercial and industrial <br />class customers. (See attachments A & B). <br />Attachment A was based on a random selection of high and low customers billings within the <br />class over the past year. This Model was advanced to determine the actual range of fees based on <br />a straight percentage fee. The range within the Small C &I customers was $18 -$70. Therefore <br />the flat fee of $20.14 does not appear to be overburdening the small users. However recognizing <br />the diversity within the Large C & I group a min and max formula for fees was forwarded to <br />Xcel for their comment. While Xcel agreed that there was a burden for the small customers, they <br />stated their programming does not have a min/max- billing feature. They then suggested a lower <br />flat fee for Large C & I and rounding up residential customers to $2.00. Lastly it was determined <br />that the model submitted may include the same large and small customers more then once. It <br />does provide some information regarding absolute ranges and it the case of the Small C & I <br />seems adequate for the information required. However this model was not considered <br />reasonable for Large C &I customers given our concerns. <br />H: \ShellyR\ Correspondence \Shelly 2003 \Xcel Franchise Fees.doc <br />