08-27-2003 Council Agenda - Laserfiche WebLink

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Xcel subsequently submitted the model in attachment B that includes customers only once and reflects each customer high and low bills. Customers with more than one account were combined by Xcel, therefore lowering the number of accounts modeled. Both of the distributions lent credibility to the argument that a flat fee would be a disproportionate burden on the small users within the large C &I group. However Xcel's suggestion of raising the residential fee and lowering the large commercial flat fee was viewed as counterproductive as it would have shifted burden from the Large C & I accounts to Residential users. Shelly contacted Harold Bagley, Xcel Senior Counsel, to discuss an alternative in keeping with the City's' two proposals made on the 18th. After several conversations back and forth both parties agreed that Harold would present the following to upper management. All customer classes, excluding large commercial and industrial, would be charged a flat fee based on a 3.75% earnings and Large C & I users would be charged an outright 3.75% fee with a cap of $200 a month. Xcel would then provide us with the dollars produced by this scenario for our review. The response from upper management was yes, except a maximum Cap of $160. Colette subsequently did a preliminary estimate on the dollars impact which was a loss of $20,000 in the Large C& I class. They again suggest rounding up residential customers as a way of recovering lost fees. Staff feels this shift is not acceptable and Xcel should agree to a higher Cap figure. I will be contacting Council members Matt Anderson and Bill Blesener to see if they are interested in meeting with Xcel regarding this last offer, prior to Wednesday's Council meeting. Assuming we can resolve the franchise fee issue, the agreements themselves then become the focus. (See Attachments C, D, & E) +We have been able to make substantial changes to their initial draft and essentially have modeled our proposed ordinances after New Brighton's. Some key issues for you to be aware of are as follows: • New gas and electric franchises are being proposed for 20 -year terms. (Even though our franchise fee is only on electric, Xcel wants to incorporate the gas franchise at the same time and with essentially the same terms. • Xcel indicated that they would expedite the initiation of the collection of the franchise fees faster than the 60 -day period spelled out in the ordinance. We believe they should reflect that commitment in the electric franchise ordinance. • If we have Xcel move it utilities as allowed pursuant to these agreements and then require them to move again within a five year term as the result of a City initiated project, we will be required to reimburse Xcel for these additional costs. (Good planning on our part should negate this concern.) • Xcel will not be paying us any right -of -way permit fees in lieu of the franchise fee we will be collecting. (The Council has indicated their acceptance of this provision in earlier discussion.) • We have the ability to add a franchise fee on gas at a later date if we are so inclined. This will require some negotiation with Xcel, but they must approve our request with "such terms and conditions as Company at that time is willing to incorporate in it Gas franchise agreements with other cities of the second, third or fourth class in the seven-county metropolitan area ". Our concern with this provision is the qualifier "at that time" noted in bold. We need to clarify or eliminate that component of the sentence. We will attempt to resolve these issues prior to Wednesday's meeting. If you have any comments in the meantime, please let us know. cc: Colette Jurek Harold Bagley II: \SheltyR \Correspondence \Shelly 2003 \Xcel Franchise Fees.doc -2-