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