07/07/2008 Council Packet - Laserfiche WebLink

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The limits on fee amounts are established more by the voting public in the form of objections to contemplated amounts, than by agreed caps. The five percent limit includes with the draft given to the City has been a common limit in. many city -Xce1 franchises. While that cap can be removed, it is likely that Xcel will raise the subject of.a cap in fee, but not on the other, and it mows fees to :be different from one utility to another. Despite that legal right, it is uncommon for a city to impose a franchise fee on an electric utility and, not on its gas ut i l ity,, or on one unlit y p ro.v i d er and not the other provider of the same services in the other part of the city. e.g., and (onnexus. 1 am aware of at least one exception to that practice. Minnetonka's Franchise Ice is to fund undergrounding cosh of Xcel electric. No.fee is imposed on its gas franchisee, CenterPoint. Utilities always seek a "substantially equivalent" clause in the franchise to prevent a city from making our product more expensive that the other utilities "." Cities always compl) in my experience because, although it is their right to distinguish between utilities, the councils have wanted to treat all utilities and their customers the same with respect. to fees Here. the City has had a fee on a single utility and no other for several years. As a result the status quo already incorporates a fee on some but not others. The fact that the utility collecting the fee is a municipal probiibly influences this exception to the rule. It has different "shareholder" dynamic than the Xcels and CenterPoints, and obviously agreed tc the franchise and fee collection when the other utilities did not have: a similar- obligation That has not been my experience with the investor - owned utilities like Xcel anc CenterPoint has a "substantially equivalent" provision in its franchise with the City, in force until 2012. By excluding a similar provision in the Xcel or Connexus franchises, the Cit) reserves the right to collect fees from those utilities in equal or different amounts or nol impose any fee on CenterPoint. Xcel will not agree to this, especially as it relates to its competing gas operations in the City. Xcel and CenterPoint also take the position that they are competing electric versus gas and therefore seek parity with the other with regard to As a result, I predict that excluding the `substantial equivalent" provision in the Xcel franchise will create an impasse in the negotiations. If Xcel does not agree to the franchise regarded as a contract by the courts), the City will be unable to collect any franchise tees from Xcel due to no agreement, or Connexus if it doesn't agree, unless the City 1) Memorandum June 19, 2008 more than ten percent of the Metro cities that impose gas or electric franchise fees, with Greater .Minnesota cities comprising less than ten percent of the total. when negotiating tllc Franchise. Franchises Fees Need Not be Uniformly Imposed Between Utilities Minnesota law allows cities to impose franchise fees on one franchised gas or electri c utility CenterPoint fees. 335300v1 JMS LN140 -105