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RELEVANT LINKS: League of Minnesota Cities Information Memo: 5/15/2024 Gas and Electric Utility Franchising Page 2 A. Fees Minn. Stat. 216B.361 Electric Utility Franchise Fee, City of Victoria sample ordinance. Gas Utility Franchise Fee, City of Victoria sample ordinance. The city’s legal right to include a particular franchise provision, and the practical realities facing a city when the utility refuses to agree, are two quite different matters. Though a city may have the right to insist on a franchise fee, potentially as high as 8 percent of the utility’s gross revenues, it is unlikely that the utility would readily agree to such a percentage, even though the utility passes the fee through to its customers within the city. Gas and electric utilities remain concerned that, despite their retained monopoly or near monopoly status, franchise fees will harm their position relative to perceived competitors. This fee pass-through also becomes an issue to the residential and business customers who pay the fee. Thus, cities must be careful to gauge the level of local acceptance or resistance to the exercise of their full franchise rights under the law. As a result of the realities of the franchise negotiation and community acceptance process, a “take it or leave it” franchise ordinance that includes the imposition of franchise fees and strict right-of-way management provisions may be difficult to enact without compromise. B. Right-of-way rules Minn. R. ch. 7819. Gas Utility Franchise, LMC model ordinance. Electric Utility Franchise, LMC model ordinance. The two franchise ordinances offered here incorporate many of the MPUC’s right-of-way management rules on such matters as street restoration, relocation for utilities, construction performance bonds, mapping information, street vacation, removal of abandoned facilities, and indemnification. The MPUC right-of-way rules were largely a product of negotiations between local government units and members of the utility industry, including a number of gas and electric providers. By all indications—lack of formal legal disputes over terms—these rules have been very successful. Minn. Stat. § 237.163 subd. 2(b). LMC Information Memo, Regulating City Rights-of- Way. To take full advantage of the rules and to fully implement the right-of-way management authority granted to cities by Minn. Stat. §§ 237.162 - .163, a city should consider adopting a comprehensive right-of-way management ordinance by exercising its option under state law. C. Model ordinance notes Gas Utility Franchise, LMC model ordinance. Electric Utility Franchise, LMC model ordinance. The two model franchise ordinances offered here are the result of a cooperative effort between the League of Minnesota Cities and James Strommen of the Kennedy & Graven Law Firm, attorney for the Suburban Rate Authority (SRA), a joint powers organization consisting of 29 Twin City suburban municipalities.