HomeMy WebLinkAbout7A - Gas & Electric Franchise
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
DISCUSSION:
ISSUES:
CITY COUNCIL AGENDA REPORT
DECEMBER 19, 2005
7A
Ralph Teschner, Finance Director
CONSIDER APPROVAL OF ORDINANCES ADOPTING SECTIONS 312,
313, AND 314 OF PRIOR LAKE CITY CODE ESTABLISHING GAS AND
ELECTRIC FRANCHISES AND FRANCHISE FEES
Introduction
The purpose of this agenda item is to consider ordinances that would establish
both gas and electric franchises and franchise fees.
Current Circumstances
Presently approximately 16 metro area cities charge a franchise fee as
reported by the latest AMM (Association of Metropolitan Municipalities) survey.
In addition to this number CenterPoint Energy has indicated that they have an
additional dozen or so cities with franchise fees in existence. 8ased upon
these numbers nearly 25% of all metro cities of at least 5,000 in population
currently have a franchise fee in effect.
The legal authority is provided by Minnesota Statutes Section 2168.36 which
states that, "any public utility furnishing utility services .., or occupying streets,
highways or other public right of way within a municipality may be required to
obtain a license, permit, right or franchise in accordance with the regulatory
acts of the municipality... Under the license, permit, right or franchise the utility
may be obligated by a municipality to pay the municipality fees to raise
revenue or defray municipal costs accruing as the result of utility operations or
both."
The franchise ordinance has been prepared by the city attorney's office and
has been drafted to be set forth as a standardized agreement The gas
franchise ordinance has some variations that are unique to gas companies
while the electric franchise ordinance will apply uniformly to the three (3)
electric companies.
There are a number of reasons why it would be advantageous for the City to
consider the implementation of utility franchise agreements and the associated
franchise fees:
1.) The franchise agreement itself would establish location requirements and
conditions of use for placement of utilities in the City's right of way. Such
provisions would not only enhance the safety of the public but would also
govern street openings, restoration and provide mapping of facilities.
2.) The City needs to address the issue of cost recovery for money spent for
acquisition of road right of way and associated expenses such as the
www.cityofpriorlake.com
Phone 952.447.4230 / Fax 952.447.4245
installation of curbing, sod and landscaping in improving the public right of
ways. Over the past five years the City has spent in excess of $1.7 million
dollars for the purchase of right of way property. This property benefits not only
us, for our placement of streets and water and sewer utilities, but also the gas
and electric companies as well, although they have not incurred any expense
in purchasing the property.
3.) There is the issue of equity. The City currently has a franchise agreement
with Mediacom for utilizing city right of way for cable installation that imposes a
franchise fee of 5% of gross revenues plus a separate subscriber fee of .65
cents that is paid each quarter to the City. In the interest of fairness it would
seem that all utility companies should be regulated by a franchise agreement.
The one exception to this rule would be telecommunication companies
because they are exempt by federal law.
4.) The City has been approached in the past by both CenterPoint Energy and
Xcel Energy to enter into franchise agreements. Their interest is based upon
the fact that they wish to have a formal agreement that grants them the
expressed authority to install gas and electric service mains on city property.
The franchises are non exclusive.
5.) One of the goals of the 2030 Vision and Strategic Plan is to identify and
develop alternative revenue sources for the City. Diversifying the city's
revenue base is important not only from a property tax perspective but also
from the standpoint of providing the City flexibility when faced with levy
limitations imposed by the State.
Franchise fees may be based upon a percentage of utility revenues, a flat fee
based upon usage or a fixed fee per account or meter. A significant number of
metro communities (15) are already charging franchise fees and many more
are considering this tool in balancing their non-tax revenues against increasing
property taxes. The most common method used is the fixed account fee
because both the percentage and usage charge methods of imposing fees are
somewhat regressive as the fee escalates either due to winter weather or
energy costs that are especially punitive to customers on fixed incomes.
FINANCIAL
IMPACT:
One of the strategies that the Council discussed in the workshop was on the
subject of franchise fees to backstop the loss of state aid in 2006 due to the
State's decision not to pay the market value credit. At present our budget does
not account for this deficiency that will amount to $333,385.00 next year. If the
Council were to approve gas and electric franchise fees, the affected utility
companies would be CenterPoint Energy for gas and the electric utility
companies of Xcel Energy, Minnesota Valley Electric and Shakopee Public
Utilities. For the purpose of this public hearing all four companies were given
written notice that included copies of both the proposed ordinances and
proposed franchise fees
Based upon discussions with CenterPoint Energy, Connie Hargest has
indicated that they have approximately 9000 gas customers. Assuming there
are a similar number of electric customers between the three electric utilities, it
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is projected that the minimum account fee proposed of $1.50 for residential
customers plus the tiered rates for higher demand (C/I) accounts per monthly
bill would generate between $324,000 to $340,000 annually. Since the utility
companies need a minimum of 60 days to implement the fee, the earliest the
fee could begin is with the March bills so actual franchise revenue realized in
2006 would be closer to $276,000.
The total maximum cost for city residents would be $36.00 for the year if the
utility companies were to place the franchise fee as a surcharge on their billing
statements which is allowable by state law. They have the option to absorb the
cost as simply an operating expense but in all likelihood the franchise fee will
be indicated similar to what is on the cable bills.
ALTERNATIVES:
The following alternatives are available to the City Council:
1. Consider approval of Ordinances Adopting Section 312 - Gas
Franchise ordinance, Section 313 - Electric Franchise Ordinance, and
Section 314 - Gas & Electric Franchise Fee
2. Amend specific ordinances per Council direction.
3. Deny approval of proposed ordinances.
RECOMMENDED
MOTION:
Alternative 1. Staff would recommend that the City Council approve all three
ordinances as indicated.
ReVieu
Frank Boyles Ci
(
_____,~, '_'_"_~" ..".,__,_,,____~o+_~~""_~__~,_..___......~~~-~-----..........-...." ....
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
FROM: City of Prior Lake Legal Notice
RE: Public Notice
CITY OF PRIOR LAKE
PUBLIC HEARING NOTICE TO CONSIDER GAS AND ELECTRIC
FRANCHISE AGREEMENTS AND FEES
Notice is hereby given that a public hearing will be conducted on Monday December 19,
2005, at 7:00 P.M. at Prior Lake Fire Station, 16776 Fish Point Road SE, for the purpose
of considering franchise agreement ordinances between the City of Prior Lake and all gas
and electric utility companies that currently conduct business within the City which
would establish location requirements and conditions of use for placement of utilities
within City road right of way. Also to be considered are separate franchise fee ordinances
that will determine payment method and the fee basis to be implemented.
Frank Boyles
City Manager
(published in Prior Lake American week of December 17,2005)
(e-mailed Wednesday, December 7, 2005)
www.cityofpriorlake.com
H\LEASE\FRANCHISEPUBLICHEARING1'f'R~<952.447.4230 / Fax 952.447.4245
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
December 7, 2005
CenterPoint Energy
Attention: Connie Hargest
800 LaSalle Avenue
PO Box 59038
Minneapolis, MN 55459-0038
Franchise Agreement Public Hearing Notice
Dear Connie:
The City of Prior Lake will be conducting a public hearing at 7:00 p.m. on Monday December
19, 2005 for the purpose of considering adoption offranchise agreement ordinances between the
City and all gas and electric utility companies that currently conduct business within the City
which would establish location requirements and conditions of use for placement of utilities
within City road right of way. Also to be considered are separate franchise fee ordinances that
will determine payment method and the fee basis to be implemented.
Enclosed are copies of the following proposed ordinances:
1. Standard Franchise Agreement Ordinance
2. Franchise Fee Ordinance
The franchise agreement ordinance follows for the most part the language of the model gas and
electric ordinance developed by the Suburban Rate Authority and the League of Minnesota
Cities. This ordinance has been modified somewhat in an effort to standardize the franchise
agreement provisions so that all gas and electric companies would conduct their business
activities under uniform conditions that would apply to all serving Prior Lake citizens.
Our city council has already conducted two workshops and has reviewed in detail the proposed
ordinances and accompanying franchise fees.
Please consider this letter as an invitation to attend the council meeting on the 19th of December
at the Prior Lake Fire Station, 16776 Fish Point Road SE, Prior Lake, Minnesota or if you wish
you may forward your comments to either myself at 952.447.9841 or to City Manager Frank
Boyles at 952.447.9801.
Sincerely,
Ralph Teschner
Finance Director
City of Prior Lake
www.cityofpriorlake.com
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Phone 952.447.4230 / Fax 952.447.4245
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
Gas Franchise Ordinance
ORDINANCE NO. 105-
ADOPTING SECTION 312 OF THE PRIOR LAKE CITY CODE AUTHORIZING
NONEXCLUSIVE FRANCHISES TO CONSTRUCT, OPERATE, REPAIR AND
MAINTAIN FACILITIES AND EQUIPMENT FOR THE TRANSPORTATION,
DISTRIBUTION, MANUFACTURE AND SALE OF GAS ENERGY FOR PUBLIC AND
PRIVATE USE AND TO USE THE PUBLIC GROUND OF THE CITY OF PRIOR LAKE,
MINNESOTA, FOR SUCH PURPOSE; AND, PRESCRIBING CERTAIN TERMS AND
CONDITIONS THEREOF.
THE CITY COUNCIL OF THE CITY OF PRIOR LAKE, SCOTT COUNTY,
MINNESOTA, DOES HEREBY ORDAIN THAT:
1. The City Council is hereby authorized to enter into the City's Standard Franchise
Agreement as it deems appropriate which reflect the terms and conditions of Section 312 of
the Prior Lake City Code that establish the Gas Franchise.
2. Section 312 of the Prior Lake City Code is hereby adopted as follows:
312.100:
DEFINITIONS.
For purposes of this Ordinance, the following capitalized terms listed in alphabetical
order shall have the following meanings:
City. The City of Prior Lake, County of Scott, State of Minnesota.
City Utility System. Facilities used for providing public utility service owned or
operated by City or agency thereof, including sewer, storm sewer, water service,
street lighting and traffic signals, but excluding facilities for providing heating,
lighting, or other forms of energy.
Commission. The Minnesota Public Utilities Commission, or any successor
agency or agencies, including an agency of the federal government, which preempts
all or part of the authority to regulate gas retail rates now vested in the Minnesota
Public Utilities Commission.
Company. A partnership or corporation, its successors and assigns including all
successors or assigns that own or operate any part or parts of the Gas Facilities
subject to this franchise.
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www.cityofllriorlake.com
Phone 952.447.4230 / Fax 952.447.4245
312.200:
312.201
312.202
312.203
312.204
312.205
Gas Facilities. Gas transmission and distribution pipes, lines, ducts, fixtures, and
all necessary equipment and appurtenances owned or operated by the Company for
the purpose of providing gas energy for public or private use.
Notice. A writing served by any party or parties on any other party or parties.
Public Way. Any street, alley or other public right-of-way within the City.
Public Ground. Land owned or otherwise controlled by the City for park, open
space or similar public purpose, which is held for use in common by the public.
ADOPTION OF FRANCHISE.
Grant of Franchise. City hereby grants Company, for a period of 10 years from
the date this Ordinance is passed and approved by the City, the right to import,
manufacture, distribute and sell gas for public and private use within and through
the limits of the City as its boundaries now exist or as they may be extended in the
future. For these purposes, Company may construct, operate, repair and maintain
Gas Facilities in, on, over, under and across the Public Ways and Public Grounds,
subject to the provisions of this Ordinance. Company may do all reasonable things
necessary or customary to accomplish these purposes, subject however, to such
reasonable regulations as may be imposed by the City pursuant to ordinance or
permit requirements and to the further provisions of this franchise agreement.
Effective Date; Written Acceptance. This franchise shall be in force and effect
from and after its passage of this Ordinance and publication as required by law and
its acceptance by Company. If Company does not file a written acceptance with the
City within 60 days after the date the City Council adopts this Ordinance, or
otherwise informs the City, at any time, that the Company does not accept this
franchise, the City Council by resolution may revoke this franchise or seek its
enforcement in a court of competent jurisdiction.
Service and Gas Rates. The service to be provided and the rates to be charged by
Company for gas service in City are subject to the jurisdiction ofthe Commission.
Nonexclusive Franchise. This is not an exclusive franchise.
Default. If the Company is in default in the performance of any material part ofthis
franchise for more than 60 days after receiving written notice from the City of such
default, the City Council may, by ordinance, terminate all rights granted in the
present ordinance to the Company. If the Company is in default as to any provisions
of this franchise, the City may, after giving notice to the Company, take such action
as may be reasonably necessary to abate the condition caused by the default, and the
Company agrees to reimburse the City for all its reasonable costs.
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312.304
312.305
312.306
312.400
312.401
312.402
312.403
312.500
Company shall provide a certificate of insurance listing the City of Prior Lake as
additional insured.
Avoid Dama~e to Gas Facilities. The Company must take reasonable measures to
prevent the Gas Facilities from causing damage to persons or property. The
Company must take reasonable measures to protect the Gas Facilities from damage
that could be inflicted on the Facilities by persons, property, or the elements. The
Company must take protective measures when the City performs work near the Gas
Facilities, if given reasonable notice by the City of such work prior to its
commencement.
Notice of Improvements to Streets. The City will give Company reasonable
written Notice of plans for improvements to Public Ways where the City has reason
to believe that Gas Facilities may affect or be affected by the improvement. The
notice will contain: (i) the nature and character of the improvements, (ii) the Public
Ways upon which the improvements are to be made, (iii) the extent of the
improvements, (iv) the time when the City will start the work, and (v) if more than
one-Public Way is involved, the order in which the work is to proceed. The notice
will be given to Company a sufficient length of time, considering seasonal working
conditions, in advance of the actual commencement of the work to permit Company
to make any additions, alterations or repairs to its Gas Facilities the Company
deems necessary.
Mappin~ Information. The Company must promptly provide complete and
accurate mapping information for any of its Gas Facilities in accordance with the
requirements of Minnesota Rules Parts 7819.4000 and 7819.4100.
RELOCATIONS.
Relocation in Public Ways. The Company shall comply with Minnesota Rules,
part 7819.3100 and applicable City ordinances consistent with law.
Relocation in Public Grounds. City may require Company at Company's expense
to relocate or remove its Gas Facilities from Public Ground upon a finding by City
that the Gas Facilities have become or will become a substantial impairment to the
existing or proposed public use of the Public Ground. Relocation shall comply with
applicable city ordinances consistent with law.
Projects with Federal Fundin~. Relocation, removal, or rearrangement of any
Company Gas Facilities made necessary because of the extension into or through
City of a federally-aided highway project shall be governed by the provisions of
Minnesota Statutes Section 161.46.
INDEMNIFICATION.
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312.501
312.502
312.600
312.700
312.800
312.801
Indemnity of City. Company shall indemnify and hold the City hannless from any
and all liability, on account of injury to persons or damage to property occasioned
by the construction, maintenance, repair, inspection, the issuance of permits, or the
operation of the Gas Facilities located in the Public Ways and Public Grounds. The
City shall not be indemnified for losses or claims occasioned through its own
negligence except for losses or claims arising out of or alleging the City's
negligence as to the issuance of permits for, or inspection of, Company's plans or
work.
Defense of City. In the event a suit is brought against the City under circumstances
where this agreement to indemnify applies, Company at its sole cost and expense
shall defend the City in such suit if written notice thereof is promptly given to
Company within a period wherein Company is not prejudiced by lack of such
notice. If Company is required to indemnify and defend, it will thereafter have
control of such litigation, but Company may not settle such litigation without the
consent of the City, which consent shall not be unreasonably withheld. This section
is not, as to third parties, a waiver of any defense or immunity otherwise available to
the City. The Company, in defending any action on behalf of the City, shall be
entitled to assert in any action every defense or immunity that the City could assert
in its own behalf This franchise agreement shall not be interpreted to constitute a
waiver by the City of any of its defenses of immunity or limitations on liability
under Minnesota Statutes, Chapter 466.
VACATION OF PUBLIC WAYS.
The City shall give Company at least two weeks prior written notice of a proposed
vacation of a Public Way. The City and the Company shall comply with Minnesota
Rules, 7819.3200 and applicable ordinances consistent with law.
CHANGE IN FORM OF GOVERNMENT.
Any change in the form of government of the City shall not affect the validity of this
Ordinance. Any governmental unit succeeding the City shall, without the consent
of Company, succeed to all of the rights and obligations of the City provided in this
Ordinance.
FRANCHISE FEE.
Form. During the term of the franchise hereby granted, and in addition to permit
fees being imposed or that the City has a right to impose, the City may charge the
Company a franchise fee. The fee may be (i) a percentage of gross revenues
received by the Company for its operations within the City, or (ii) a flat fee per
customer based on metered service to retail customers within the City or on some
other similar basis, or (iii) a fee based on units of energy delivered to any class of
retail customers within the corporate limits of the City. The method of imposing the
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312.802
312.803
312.804
312.805
312.900
franchise fee, the percentage of revenue rate, or the flat rate based on metered
service may differ for each customer class or combine the methods described in (i) -
(iii) above in assessing the fee. The City shall seek to use a formula that provides a
stable and predictable amount of fees, without placing the Company at a
competitive disadvantage. If the Company claims that the City required fee formula
is discriminatory or othelWise places the Company at a competitive disadvantage,
the Company shall provide a formula that will produce a substantially similar fee
amount to the City and reimburse the City's reasonable fees and costs in reviewing
and implementing the formula. The City will attempt to accommodate the
Company but is under no franchise obligation to adopt the Company-proposed
franchise fee formula and each review will not delay the implementation of the
City-imposed fee.
Separate Ordinance. The franchise fee shall be imposed by separate ordinance
duly adopted by the City Council. The fee shall become effective sixty (60) days
after written notice enclosing such adopted ordinance has been served upon the
Company by certified mail.
Condition of Fee. The separate ordinance imposing the fee shall not be effective
against the Company unless it lawfully imposes a fee of the same or substantially
similar amount on the sale of gas energy within the City by any other gas energy
supplier, provided that, as to such supplier, the City has the authority or contractual
right to require a franchise fee or similar fee through a previously agreed upon
franchise.
Collection of Fee. The franchise fee shall be payable not less than quarterly during
complete billing months of the period for which payment is to be made. The
franchise fee formula may be changed from time to time, however, the change shall
meet the same notice requirements and the fee may not be changed more often than
annually. Such fee shall not exceed any amount that the Company may legally
charge to its customers prior to payment to the City. Such fee is subject to
subsequent reductions to account for uncollectibles and customer refunds incurred
by the Company. The Company agrees to make available for inspection by the City
at reasonable times all records necessary to audit the Company's determination of
the franchise fee payments.
Continuation of Franchise Fee. If the franchise expires and the City and the
Company are unable to agree upon terms of a new franchise, the franchise fee, if
any being imposed by the City at the time this franchise expires, will remain in
effect for a period not to exceed one year.
ABANDONED FACILITIES.
The Company shall comply with City ordinances, Minnesota Statutes, Section
216D.01 et seq. and Minnesota Rules Part 7819.3300, as they may be amended
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312.1000
312.1001
312.1002
312.1100
from time to time. The Company shall maintain records describing the exact
location of all abandoned and retired Facilities within the City, produce such
records at the City's request and comply with the location requirements of Section
216D.04 with respect to all Facilities, including abandoned and retired Facilities.
PROVISIONS OF ORDINANCE.
Severability. Every section, provision, or part of this Ordinance is declared
separate from every other section, provision, or part; and if any section, provision,
or part shall be held invalid, it shall not affect any other section, provision, or part.
Where a provision of any other City ordinance conflicts with the provisions of this
Ordinance, the provisions of this Ordinance shall prevail.
Limitation on Applicability. This Ordinance constitutes a franchise agreement
between the City and Company as the only parties and no provision of this
franchise shall in any way inure to the benefit of any third person (including the
public at large) so as to constitute any such person as a third party beneficiary of
the agreement or of anyone or more of the terms hereof, or otherwise give rise to
any cause of action in any person not a party hereto.
AMENDMENT PROCEDURE.
Either party to this franchise agreement may at any time propose that the agreement
be amended. This Ordinance may be amended at any time by the City passing a
subsequent ordinance declaring the provisions of the amendment, which
amendatory ordinance shall become effective upon the filing of Company's written
consent thereto with the City Manager within 60 days after the effective date of the
amendatory ordinance.
3. This ordinance shall become effective upon adoption and publication. Staff is
hereby authorized to publish this ordinance in summary.
Passed and adopted this 19th day of December, 2005.
YES
{Seal}
NO
Haugen
Fleming
LeMair
Petersen
Zieska
Haugen
Fleming
LeMair
Petersen
Zieska
City Manager,
City of Prior Lake
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16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
Electric Franchise Ordinance
ORDINANCE NO. 105-
AN ORDINANCE ADOPTING SECTION 313 OF THE PRIOR LAKE CITY CODE
AUTHORIZING NONEXCLUSIVE FRANCHISES TO CONSTRUCT, OPERATE,
REPAIR AND MAINTAIN IN THE CITY OF PRIOR LAKE, MINNESOTA, AN
ELECTRIC DISTRIBUTION SYSTEM AND TRANSMISSION LINES, INCLUDING
NECESSARY POLES, LINES, FIXTURES AND APPURTENANCES, FOR THE
FURNISHING OF ELECTRIC ENERGY TO THE CITY, ITS INHABITANTS, AND
OTHERS, AND TO USE THE PUBLIC WAYS AND PUBLIC GROUNDS OF THE CITY
FOR SUCH PURPOSES.
THE CITY COUNCIL OF THE CITY OF PRIOR LAKE, SCOTT COUNTY,
MINNESOTA, ORDAINS:
1. The City Council is hereby authorized to enter into the City's Standard Franchise
Agreement as it deems appropriate which reflect the terms and conditions of Section 313 of
the Prior Lake City Code that establish the Electric Franchise.
2. Section 313 ofthe Prior Lake City Code is hereby adopted as follows:
313.100
DEFINITIONS.
For purposes of this Ordinance, the following capitalized terms listed in alphabetical
order shall have the following meanings:
City. The City of Prior Lake, County of Scott, State of Minnesota.
City Utility System. Facilities used for providing public utility service owned or
operated by City or agency thereof, including sewer, storm sewer, water service,
street lighting and traffic signals, but excluding facilities for providing heating,
lighting, or other forms of energy.
Commission. The Minnesota Public Utilities Commission, or any successor
agency or agencies, including an agency of the federal government, which preempts
all or part of the authority to regulate electric retail rates now vested in the
Minnesota Public Utilities Commission.
Company. A corporation or partnership its successors and assigns including all
successors or assignees that own or operate any part or parts of the Electric Facilities
subject to this franchise.
H\LEASE\EJectric Franchise Ordinance. doc
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Phone 952.447.4230 / Fax 952.447.4245
313.200
313.201
313.202
313 .203
313.204
313 .205
Electric Facilities. Electric transmission and distribution towers, poles, lines, guys,
anchors, conduits, fixtures, and necessary appurtenances owned or operated by
Company for the purpose of providing electric energy for public or private use.
Notice. A writing served by any party or parties on any other party or parties.
Public Way. Any street, alley or other public right-of-way within the City.
Public Ground. Land owned or otherwise controlled by the City for park, open
space or similar public purpose, which is held for use in common by the public.
ADOPTION OF FRANCHISE.
Grant of Franchise. City hereby grants Company, for a period of 10 years from
the date this Ordinance is passed and approved by the City, the right to transmit and
furnish electric energy for light, heat and power for public and private use within
and through the limits of the City as its boundaries now exist or as they may be
extended in the future. For these purposes, Company may construct, operate, repair
and maintain Electric Facilities in, on, over, under and across the Public Ways and
Public Grounds, subject to the provisions of this Ordinance. Company may do all
reasonable things necessary or customary to accomplish these purposes, subject
however, to such reasonable regulations as may be imposed by the City pursuant to
ordinance or permit requirements and to the further provisions of this franchise
agreement.
Effective Date; Written Acceptance. This franchise shall be in force and effect
from and after the passage of this Ordinance and publication as required by law and
its acceptance by Company. If Company does not file a written acceptance with the
City within 60 days after the date the City Council adopts this Ordinance, the City
Council by resolution may revoke this franchise or seek its enforcement in a
competent jurisdiction.
Service, Rates and Area. The service to be provided and the rates to be charged by
Company for electric service in City are subject to the jurisdiction of the
Commission. The area within the City in which Company may provide electric
service is subject to the provisions of Minnesota Statutes, Section 216B. 37 - .40.
Nonexclusive Franchise. This is not an exclusive franchise.
Default. If the Company is in default in the performance of any material part of this
franchise for more than 60 days after receiving written notice from the City of such
default, the City Council may, by ordinance, terminate all rights granted in the
present ordinance to the Company. Ifthe Company is in default as to any provisions
of this franchise, the City may, after giving notice to the Company, take such action
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313.206
313.300
313.301
313.302
313.303
as may be reasonably necessary to abate the condition caused by the default, and the
Company agrees to reimburse the City for all its reasonable costs.
Continuation of Franchise. If the City and the Company are unable to agree on
the terms of a new franchise by the time this franchise expires, this franchise will
remain in effect until a new franchise is agreed upon, or until 90 days after the City
or the Company serves written Notice to the other party of its intention to allow the
franchise to expire. However, in no event shall this franchise continue for more
than one year after expiration of the 10 year term set forth in Section 313.201.
LOCATION AND CONDITIONS OF USE.
Location of Facilities. Electric Facilities shall be located, constructed, and
maintained so as not to interfere with the safety and convenience of ordinary travel
along and over Public Ways and so as not to disrupt or interfere with the normal
operation of any City Utility System. Electric Facilities may be located on Public
Grounds as determined by the City. Company's construction, reconstruction,
operation, repair, maintenance, location and relocation of Electric Facilities shall be
subject to other reasonable regulations of the City consistent with authority granted
the City to manage its Public Ways and Public Grounds under state law, to the
extent not inconsistent with a specific term of this franchise agreement.
Street Openines. Company shall not open or disturb the surface of any Public Way
or Public Ground for any purpose without first having obtained a permit from the
City, if required by a separate ordinance for which the City may impose a
reasonable fee. Permit conditions imposed on Company shall not be more
burdensome than those imposed on other utilities for similar facilities or work.
Company may, however, open and disturb the surface of any Public Way or Public
Ground without a permit if (i) an emergency exists requiring the immediate repair of
Electric Facilities and (ii) Company gives telephone notice to the City before, if
reasonably possible, commencement of the emergency repair. Within two business
days after commencing the repair, Company shall apply for any required permits
and pay any required fees.
Restoration. After undertaking any work requiring the opening of any Public Way,
the Company shall restore the Public Way in accordance with Minnesota Rules, part
7819.1100 and applicable City ordinances consistent with law. Company shall
restore Public Ground to as good a condition as formerly existed, and shall maintain
the surface in good condition for six (6) months thereafter. All work shall be
completed as promptly as weather permits, and if Company shall not promptly
perform and complete the work, remove all dirt, rubbish, equipment and material,
and put the Public Ground in the said condition, the City shall have, after demand to
Company to cure and the passage of a reasonable period of time following the
demand, but not to exceed five days, the right to make the restoration of the Public
H:\LEASE\Electric Franchise Ordinance. doc
3
313.304
313.305
313.306
313.307
313.400
313.401
313 .402
Ground at the expense of Company. Company shall pay to the City the cost of such
work done for or performed by the City. This remedy shall be in addition to any
other remedy available to the City for noncompliance with this Section 3.3.
Company shall also provide a certificate of insurance listing the City of Prior Lake
as an additional insured.
Shared Use of Poles. Company shall make space available on its poles or towers
for City fire, water utility, police or other City facilities whenever such use will not
interfere with the use of such poles or towers by Company, by another electric
utility, by a telephone utility, or by any cable television company or other form of
communication company. In addition, the City shall pay for any added cost
incurred by Company because of such use by City.
Avoid Dama2e to Electric Facilities. The Company must take reasonable
measures to prevent the Electric Facilities from causing damage to persons or
property. The Company must take reasonable measures to protect the Electric
Facilities from damage that could be inflicted on the Facilities by persons, property,
or the elements. The Company must take protective measures when the City
performs work near the Electric Facilities, if given reasonable notice by the City of
such work prior to its commencement.
Notice of Improvements to Streets. The City must give Company reasonable
written Notice of plans for improvements to Public Ways where the City has reason
to believe that Electric Facilities may affect or be affected by the improvement. The
notice must contain: (i) the nature and character ofthe improvements, (ii) the Public
Ways upon which the improvements are to be made, (iii) the extent of the
improvements, (iv) the time when the City will start the work, and (v) ifmore than
one Public Way is involved, the order in which the work is to proceed. The notice
must be given to Company a sufficient length of time, considering seasonal working
conditions, in advance of the actual commencement of the work to permit Company
to make any additions, alterations or repairs to its Electric Facilities the Company
deems necessary.
Mappin2 Information. The Company must promptly provide mapping
information for any of its underground Electric Facilities in accordance with
Minnesota Rules parts 7819.4000 and 7819.4100.
FACILITIES RELOCATION.
Relocation in Public Ways. The Company shall comply with Minnesota Rules,
part 7819.3100 and applicable City ordinances consistent with law.
Relocation in Public Grounds. City may require Company at Company's expense
to relocate or remove its Electric Facilities from Public Ground upon a finding by
H:\LEASE\EJeclnc Franchise Ordinance. doc
4
313.403
313.500
313.600
313.601
313.602
313.700
City that the Electric Facilities have become or will become a substantial
impairment to the existing or proposed public use of the Public Ground. Such
relocation shall comply with applicable ordinances consistent with law.
Projects with Federal Fundine. Relocation, removal, or rearrangement of any
Electric Facilities made necessary because of the extension into or through City of a
federally-aided highway project shall be governed by the provisions of Minnesota
Statutes Section 161.46.
TREE TRIMMING.
Unless otherwise provided in any permit or other reasonable regulation required by
the City under separate ordinance, Company may trim all trees and shrubs in the
Public Ways and Public Grounds of City to the extent Company finds necessary to
avoid interference with the proper construction, operation, repair and maintenance
of any Electric Facilities installed hereunder, provided that Company shall hold the
City hannless from any liability arising therefrom.
INDEMNIFICATION.
Indemnity of City. Company shall indemnify and hold the City hannless from any
and all liability, on account of injury to persons or damage to property occasioned
by the construction, maintenance, repair, inspection, the issuance of permits, or the
operation of the Electric Facilities located in the Public Ways and Public Grounds.
The City shall not be indemnified for losses or claims occasioned through its own
negligence except for losses or claims arising out of or alleging the City's
negligence as to the issuance of permits for, or inspection of, Company's plans or
work.
Defense of City. In the event a suit is brought against the City under circumstances
where this agreement to indemnify applies, Company at its sole cost and expense
shall defend the City in such suit if written notice thereof is promptly given to
Company within a period wherein Company is not prejudiced by lack of such
notice. If Company is required to indemnify and defend, it will thereafter have
control of such litigation, but Company may not settle such litigation without the
consent ofthe City, which consent shall not be unreasonably withheld. This section
is not, as to third parties, a waiver of any defense or immunity otherwise available to
the City; and Company, in defending any action on behalf of the City shall be
entitled to assert in any action every defense or immunity that the City could assert
in its own behalf. This franchise agreement shall not be interpreted to constitute a
waiver by the City of any of its defenses of immunity or limitations on liability
under Minnesota Statutes, Chapter 466.
VACATION OF PUBLIC WAYS.
H\LEASE\Electric Franchise Ordinance. doc
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"-~...~_.~_.., ----,.,- ...__.."----_.~--------,_.~~.,----~~.----..--~-+--.~._.~_......"'~,.. .._.,".,~_..~,,-,.__._.;---~~-"~.,_.~---_."._-'"_...~_.-~+...._._.,._.... -~."._.".~~~........---_..-
313.800
313.900
313.1000
313.1001
313.1002
The City shall give Company at least two weeks prior written notice of a proposed
vacation of a Public Way. The City and the Company shall comply with Minnesota
Rules, 7819.3200 and applicable ordinances consistent with law.
ABANDONED FACILITIES.
The Company shall comply with City ordinances, Minnesota Statutes, Section
216D.Ol et seq. and Minnesota Rules Part 7819.3300, as they may be amended
from time to time. The Company shall maintain records describing the exact
location of all abandoned and retired Facilities within the City, produce such
records at the City's request and comply with the location requirements of Section
216D.04 with respect to all Facilities, including abandoned and retired Facilities.
CHANGE IN FORM OF GOVERNMENT.
Any change in the form of government ofthe City shall not affect the validity of this
Ordinance. Any governmental unit succeeding the City shall, without the consent
of Company, succeed to all of the rights and obligations of the City provided in this
Ordinance.
FRANCHISE FEE.
Form. During the term of the franchise hereby granted, and in addition to permit
fees being imposed or that the City has a right to impose, the City may charge the
Company a franchise fee. The fee may be (i) a percentage of gross revenues
received by the Company for its operations within the City, or (ii) a flat fee per
customer based on metered service to retail customers within the City or on some
other similar basis, or (iii) a fee based on units of energy delivered to any class of
retail customers within the corporate limits of the City. The formula for a
franchise fee based on units of energy delivered may incorporate both commodity
and demand units. The method of imposing the franchise fee, the percentage of
revenue rate, or the flat rate based on metered service may differ for each
customer class or combine the methods described in (i) - (iii) above in assessing
the fee. The City shall seek to use a formula that provides a stable and predictable
amount of fees, without placing the Company at a competitive disadvantage. If
the Company claims that the City-required fee formula is discriminatory or
otherwise places the Company at a competitive disadvantage, the Company shall
provide a formula that will produce a substantially similar fee amount to the City
and reimburse the City's reasonable fees and costs in reviewing the formula. The
City will attempt to accommodate the Company but is under no franchise
obligation to adopt the Company-proposed franchise fee formula and such review
will not delay the implementation ofthe City-imposed fee.
Separate Ordinance. The franchise fee shall be imposed by separate ordinance
duly adopted by the City Council. The fee shall become effective sixty (60) days
after written notice enclosing such adopted ordinance has been served upon the
Company by certified mail.
H:\LEASE\Electric Franchise Ordinance. doc
6
313.1003
313.1004
313.1005
313.1100
313.1101
313.1102
313.1200
Condition of Fee. The separate ordinance imposing the fee shall not be effective
against the Company unless it lawfully imposes a fee of the same or substantially
similar amount on the sale of electric energy within the City by any other electric
energy supplier, provided that, as to such supplier, the City has the authority to
require a franchise fee.
Collection of Fee. The franchise fee shall be payable not less than quarterly
during complete billing months of the period for which payment is to be made.
The franchise fee formula may be changed from time to time; however, the
change shall meet the same notice requirements and the fee may not be changed
more often than annually. Such fee shall not exceed any amount that the
Company may legally charge to its customers prior to payment to the City. Such
fee is subject to subsequent reductions to account for uncollectibles and customer
refunds incurred by the Company. The Company agrees to make available for
inspection by the City at reasonable times all records necessary to audit the
Company's determination of the franchise fee payments.
Continuation of Franchise Fee. If this franchise expires and the City and the
Company are unable to agree upon terms of a new franchise, the franchise fee, if
any being imposed by the City at the time this franchise expires, will remain in
effect for a period not to exceed one year.
PROVISIONS OF ORDINANCE.
Severability. Every section, provision, or part of this Ordinance is declared
separate from every other section, provision, or part; and if any section, provision,
or part shall be held invalid, it shall not affect any other section, provision, or part;
provided, however, that if the City is unable to enforce its franchise fee provisions
for any reason the City will be allowed to amend the franchise agreement to
impose a franchise fee pursuant to statute. Where a provision of any other City
ordinance conflicts with the provisions of this Ordinance, the provisions of this
Ordinance shall prevail.
Limitation on Applicability. This Ordinance constitutes a franchise agreement
between the City and Company as the only parties and no provision of this
franchise shall in any way inure to the benefit of any third person (including the
public at large) so as to constitute any such person as a third party beneficiary of
the agreement or of anyone or more of the terms hereof, or otherwise give rise to
any cause of action in any person not a party hereto.
AMENDMENT PROCEDURE.
Either party to this franchise agreement may at any time propose that the agreement
be amended. This Ordinance may be amended at any time by the City passing a
H:\LEASE\Electric Franchise Ordinance. doc
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subsequent ordinance declaring the provIsIons of the amendment, which
amendatory ordinance shall become effective upon the filing of Company's written
consent thereto with the City Manager within 60 days after the effective date of the
amendatory ordinance.
3. This ordinance shall become effective upon adoption and publication. Staff is
hereby authorized to publish this ordinance in summary.
Passed and adopted this 19th day of December, 2005.
YES
NO
Haugen
Fleming
LeMair
Petersen
Zieska
Haugen
Fleming
LeMair
Petersen
Zieska
{Seal}
City Manager
City of Prior Lake
H:\LEASE\E1ectric Franchise Ordinance.doc
8
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
GAS AND ELECTRIC FRANCHISE FEES ORDINANCE
ORDINANCE NO. 105-
AN ORDINANCE ADOPTING SECTION 314 OF THE PRIOR LAKE CITY
CODE IMPLEMENTING GAS AND ELECTRIC FRANCHISE FEES WITHIN
THE CITY OF PRIOR LAKE
THE CITY OF PRIOR LAKE HEREBY ORDAINS THAT:
1. Section 314 of the Prior lake City Code is hereby adopted as follows:
314.100
314.200
314.300
314.400
Purpose. The Prior Lake City Council has determined that it is in the best interest of the
City to impose a franchise fee on those public utility companies that provide natural gas
and electric services within the City of Prior Lake.
(a) Pursuant to City Ordinance Sections 312 and 313, and the City's Standard
Franchise Agreements for Gas Franchise and for Electric Franchise, the City has the right
to impose a franchise fee in an amount and fee design as authorized therein and in the fee
schedule incorporated in 314.500 and 314.600 herein.
Franchise Fee Statement. A franchise fee is hereby imposed under City Code Section
312 and 313 in accordance with the schedule incorporated under Section 314.500 and
314.600 herein.
Payment and Fee Desien. Franchise fees shall be paid to the City quarterly, based upon a
calendar year, with payment due by the 30th day after the end of each quarter. This fee is an
account-based fee on each premise and not a meter-based fee. In the event that an entity
covered by this ordinance has more than one meter at a single premise, but only one
account, only one fee shall be assessed to that account. If a premise has two or more meters
being billed at different rates, the Company may have an account for each rate classification,
which will result in more than one franchise fee assessment for electric service to that
premise. If the Company combines the rate classifications into a single account, the
franchise fee assessed to the account will be the largest franchise fee applicable to a single
rate classification for energy delivered to that premise. In the event any entities covered by
this ordinance have more than one premise, each premise (address) shall be subject to the
appropriate fee. In the event a question arises as to the proper fee amount for any premise,
the Company's manner of billing for energy used at all similar premises in the city will
control.
Surcharee. The City recognizes that the Minnesota Public Utilities Commission allows
the utility company to add a surcharge to customer rates to reimburse such utility
company for the cost of the fee and that the Gas and/or Utilities Company will surcharge
its customers in the City the amount of the fee.
1:\CODE\Gas & Electric Franchise Fee Ordinance.doc www.cityofpriorlake.com
Phone 952.447.4230 / Fax 952.447.4245
314.500
Electric Fee Schedule.
Class
Residential
Sm C & 1- Non-Dem
Sm C & I-Demand
Large C & I
Fee Per Meter
$1.50
$5.00
$10.00
$50.00
Franchise fees are to be collected by the utility in the amounts set forth in the above
schedule, and submitted to the City on a quarterly basis as follows:
January - March collections due by April 30.
April- June collections due by July 31.
July - September collections due by October 31.
October - December collections due by January 31.
314.600
Gas Fee Schedule.
Class
Residential
Comm-A
Comm/Ind-B
Comm/Ind-C
SVDF-A
SVDF-B
LVDF
Fee Per Meter
$1.50
$1.50
$5.00
$10.00
$10.00
$10.00
$10.00
Franchise fees are to be collected by the utility in the amounts set forth in the above
schedule, and submitted to the City on a quarterly basis as follows:
January - March collections due by April 30.
April- June collections due by July 31.
July - September collections due by October 31.
October - December collections due by January 31.
314.700 Record Support for Payment. The Gas and/or Utilities Company shall make each
payment when due and, if requested by the City, shall provide at the time of each payment a statement
summarizing how the franchise fee payment was determined, including information showing any
adjustments to the total surcharge billed in the period for which the payment is being made to account
for any uncollectibles, refunds or error corrections.
314.800 Enforcement. Any dispute, including enforcement of a default regarding this ordinance
will be resolved in accordance with Section 3.5 the Standard Franchise Agreement, and Section 312.205
and 313.205 of the Prior Lake City Code.
314.900 Effective Date of Franchise Fee. Notwithstanding the effective date of this ordinance
and notwithstanding any contrary provisions in the Franchise, the effective date of the fee collected
under 314.200 of this ordinance shall go into effect and be applicable to all of the company's billings
commencing with the bills for the month of March, 2006.
1:\CODE\Gas & Electric Franchise Fee Ordinance.doc
3. This ordinance shall become effective upon adoption and publication. Staff is
hereby authorized to publish this ordinance in summary.
Passed and adopted this 19th day of December, 2005.
YES
NO
Haugen
Fleming
LeMair
Petersen
Zieska
Haugen
Fleming
LeMair
Petersen
Zieska
{Seal}
City Manager
City of Prior Lake
1:\CODE\Gas & Electric Franchise Fee Ordinance.doc
_._._~-----_...-".,,-~,..,._-~~_. -- ....._~.~~ ----,'+-._._._-_.~._-
SHAKOPEE PUBLIC UTI L1TIES COr-r11\1ISSION
December 19, 2005
Frank Boyles, City Manager BY PERSONAL DELIVERY
Ralph Tescher, Finance Director
City of Prior Lake
16200 Eagle Creek Ave. SE
Prior Lake, Minnesota 55372-1714
Re: Prior Lake Proposed Franchise Ordinance
Gentlemen:
On Monday, December 12th, I received the Franchise Agreement Public Hearing
Notice, which indicated that the City Council would consider a proposed franchise
ordinance in one week on December 19th.
That letter was the first indication to the Shakopee Public Utilities Commission
(SPUC) or the City of Shakopee that Prior Lake was considering such an ordinance, and
unfortunately the timing is too tight for us to respond or comment in detail. Indeed, the
Commission's next regularly-scheduled meeting is not until January 2006. I therefore
request that the City Council hold on enacting a final franchise ordinance until SPUC has
had an opportunity to review the proposal and consult as commissioners.
Because SPUC has not had an opportunity to meet and consider the proposed
ordinances, I cannot report on the position of SPUC as a body, but I would like to note
that there may be issues within the proposed ordinances that would apply differently to
SPUC, as a municipal utility, than perhaps other utility providers within the City. Some
potential issues may include:
. The proposed franchise ordinance incorporates a pole attachment
provision concerning public works and other uses, which is unclear in
terms of its scope and which I believe should be in a separate agreement.
. The proposed franchise ordinance also includes a section concerning
location and ordered relocation offacilities in the City right of way.
Municipal utilities have broad authority to determine placement of utilities
and conduct utility operations. It is not clear to what extent the proposal
contradicts that authority.
P.O. Box 470. 255 Sarazin Street. Shakopee, Minnesota 55379-1899
(952) 445-1988 Fax (952) 445-7767
. Similarly, it is unclear what impact the indemnification and defense
provisions of the proposed franchise would have on a municipal utilities
comnllSSlon.
· The franchise, as proposed to apply to SPUC, is unclear as to the timing of
the fee.
. Finally, the timing of implementing the proposed ordinance is very tight,
especially since the SPUC Commissioners have not been able to consider
it. SPUC requests a period of90 days from any approved ordinance as the
compliance effective date, to allow SPUC to make any necessary billing
and operational adjustments.
I therefore ask for additional time for SPUC to digest the proposed ordinances in
detail and discuss among its Commissioners and, if delay in enactment is not possible,
that the need or the possibility for refinement of those ordinances is acknowledged.
Sincerely,
~ IA t~'-
~~is V~n Hout
Utilities Manager
Shakopee Public Utilities Commission
P.O. Box 470.255 Sarazin Street. Shakopee, Minnesota 55379-1899
(952) 445-1988 Fax (952) 445-7767