Utility Franchise Fees - Laserfiche WebLink

Home Browse Search

This material is provided as general information and is not a substitute for legal advice. Consult your attorney for advice concerning specific situations. 145 University Ave. West www.lmc.org 5/15/2024 Saint Paul, MN 55103-2044 (651) 281-1200 or (800) 925-1122 © 2024 All Rights Reserved INFORMATION M EMO Gas and Electric Utility Franchising Learn about city gas and electric utility franchising authority, especially authority to charge franchise fees. The League thanks James Strommen of the Kennedy and Graven Law Firm, who is attorney for the Suburban Rate Authority, for his assistance in creating this memo and the model and sample ordinances. RELEVANT LINKS: I. Franchising authority Minn. Stat. §216B.04 Minn. Stat. § 216B.36. Minn. Stat. § 301B.01. Minn. Stat. § 222.37. Minn. Stat. § 237.162. and Minn. Stat. § 237.163. Minnesota statute requires public gas and electric utility providers to provide safe, adequate, and efficient utility services. In order to do so, utility companies often need to use public rights-of-way, such as roads or sidewalks, to deliver their services. Since cities are responsible for the reasonable management of its rights-of-way, franchise agreements are often necessary. Franchise agreements are a contract between the city and the utility provider that allows the utility provider the right to use the public rights-of-way to install, maintain and repair their equipment located on public grounds or in the right-of-way. Cities have broad gas and electric franchise rights under state law. In Minnesota, these franchises are negotiated and take the form of a contract set forth in an ordinance. Cities have the right to require franchises and to include certain terms, such as franchise fees. There is little case law guidance on what specific franchise terms may be required by the city. Accordingly, a franchise can incorporate all reasonable terms within the limits of a city’s statutory franchise and police power authority. These rights are extensive and can be found in state statute and case law. II. Franchising ordinances Minn. Stat. § 237.162 and Minn. Stat. § 237.163. LMC Information Memo, Cell Towers, Small Cell Technologies & Distributed Antenna Systems. Minn. R. ch. 7819. There has been little legislative change in the scope of city franchise authority in recent years. However, in 2017 new laws regarding the regulation of telecommunications right-of-way users were adopted. Though outside the scope of this memo, it is recommended cities review their ordinances to ensure compliance with the new statutory requirements and new federal requirements. The main focus of discussion involving gas and electric franchises in the post-1999 right-of-way standards rules by the Minnesota Public Utilities Commission (MPUC) is the franchise fee. That remains a matter negotiated with the utility but also one where cities should take care to retain their full franchise fee rights in the franchise agreement itself.