HomeMy WebLinkAbout12 03 2018 Franchise AgreementsCity Franchises
Electric/Gas (Xcel, CenterPoint, MVEC, SPUC)
•Regulated primarily by the Minnesota Public Utilities Commission (MPUC)
•City does have the authority to require all electric and gas utilities to
obtain a franchise in order to operate within the City
•The franchise can incorporate all reasonable terms within the limits of a
City’s statutory franchise and police power authority
•City can impose a franchise fee of up to 8%, but the fee must be agreed
to by the utility and is a pass through to the customers so is rarely even
close to that high
•The City’s existing franchises address many issues including service
requirements, cold weather rule, disconnection, budget billing, solar
purchase, etc.
AUTHORITY (continued)
•City has NO authority over rates –regulated by MPUC
•City has NO authority over customer service or complaints –regulated by MPUC
•City can work with providers on a voluntary basis relating to customer service and complaints but has no authority to require the utility to cooperate
•City can refer residents with complaints to MPUC
•Electric and gas franchises are non-exclusive. Any provider that complies with the City regulations can request and obtain a franchise from the City to install utilities in the right of way
Cable (Mediacom; Nuvera)
•Regulated primarily by Federal law and Minnesota statute
•Regulated by the FCC but does not have a local body with regular
oversight (nothing similar to the MPUC)
•City does have the authority to require all cable providers to
obtain a franchise in order to operate within the City
•All franchises are subject to Federal law and Minn. Stat. Chap. 238
CABLE (continued)
•Minn. Stat. Chap. 238 has significant regulations regarding the procedure for issuing a franchise and what must be included in the franchise agreement/ordinance
•For example, must include the following regulations and terms: compliance with State and Federal law; term no more than 15 years; nonexclusive; sale and transfer; franchise fee and auditing; customer service; right of way; insurance; indemnification; liability; technical standards set by FCC; procedure for monitoring and resolving complaints; termination; abandonment; PEG fees and channels, etc.
•Can include additional terms if agreed to by the City and provider
•City’s franchise agreements/ordinances do contain these required regulations and terms
•City’s franchises include technical and service requirements including service standards for complaints
•If the standards are violated the City can require the provider to issue refunds or the City can impose fines on the provider
•City has security and can withhold funds from the security to ensure the provider complies
•City’s franchises also provide a system to create an evaluation session where the City meets with the provider to address and solve issues
CABLE (continued)
Additional Cable Providers
•Statute and federal law do address additional providers and encourage competition
•City cannot grant a franchise that has terms that are more favorable or less burdensome than other providers
•Franchises must be nonexclusive
•City must accept applications, provide notice and hold a public hearing prior to granting a new franchise
•In certain circumstances an existing provider must install a system that would allow another provider to use the system
•City can refuse to issue a franchise if the provider doesn’t have the technical ability, financial condition and legal qualifications to provide the proposed services
ADDITIONAL CABLE PROVIDERS
•BUT these provisions all assume another willing provider, absent another willing provider there is little the City can do to encourage competition
•Nuvera is limited by its phone service. Phone providers are granted a limited territory and cannot expand without approval from the Federal government. It is unlikely Nuvera would extend its cable service beyond its telephone service
•Any interested new provider would need to install an entirely new system. The cost of new infrastructure is a significant barrier to entry
Right of Way
•In addition to franchise authority the City has authority to manage
its right of way
•The City’s right of way management includes requiring a permit
for excavation and obstruction of the right of way and provides
rules and regulations relating to restoration, location, relocation
for City project, mapping, vacation of right of way and
abandonment of facilities