2 - Franchise Fee SlidesFranchise FeesImplementing Franchise Fees for Electric and Gas Utilities
Legal Authority to Implement Franchise Fees•Municipalities have legal authority to implement franchise fees pursuant to Minn. Stat. § 216B.36.•“Any public utility . . . may be required to obtain a license, permit, right, or franchise in accordance with the terms, conditions, and limitations of regulatory acts of the municipality . . . . Under the license, permit, right, or franchise, the utility may be obligated by any municipality to pay to the municipality fees to raise revenue or defray increased municipal costs accruing as a result of utility operations, or both.”
Step One: Adopt Ordinance Implementing Franchise•The first ordinance the City Council will consider is the Ordinance Implementing the Franchise.•First Ordinance:•Contains various agreements regarding the company’s use of public ways, including restoration, tree trimming, and relocation of facilities.•Does not establish the franchise fee, but it lays the groundwork for a second, separate ordinance which would implement the fee.
Step Two: Prior Notice of Second Ordinance Implementing Franchise Fee•The City must notify the utility company at least 90 days (or 60 days under the older CenterPoint franchise agreement) beforethe City adopts the second ordinance implementing the franchise fee.•This provides utility companies with an opportunity to prepare for the possible implementation of the franchise fee.
Step Three: Adopt Second Ordinance Implementing Franchise Fee•The City considers whether to adopt the second ordinance implementing the franchise fees.•Typically, the franchise fees vary depending upon the customer classification (i.e. residential, commercial, industrial).•The franchise fees apply to all utility users, even those entities who may be otherwise exempt from property taxes, such as religious organizations.
Step Four: Subsequent Notice of Adoption of Second Ordinance•After City Council adopts the second ordinance implementing the fee, the City is required to notify the utility companies at least 90 daysbefore the franchise fee commences.
First Ordinance Adopted• Regular 10 day posting required.• Tentative: October 2021Prior Notice of 60 or 90 days of Second Ordinance• Notices via certified mail.• Regular 10 day posting required.Second Ordinance Implementing Fee Adopted• Tentative: February 2022Subsequent Notice of 90 days of Second Ordinance• Tentative Implementation of Fee: June 2022