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Home My WebLink About2015-12-02 PACKET 04.E. REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM #�� DATE 12/02/15 � ` PREPARED BY: Finance Robin Roland ORIGINATING DEPARTMENT DEPARTMENT NEAD * * * :� � * � * * * * * * * * * * * * * � * � * * * * * :� � � � � * * * * * * * * :� * * :� :� * * COUNCIL ACTION REQUEST: Consider changing the Electric Service Franchise Fee ordinance. STAFF RECOMMENDATION: Adopt Electric Service Franchise Fee ordinance. Adopt resolution authorizing publication of the Oridinance by title and summary BUDGET IMPLICATION: BUDGETED AMOUNT ACTUAL AMOUNT ADVISORY COMMISSION ACTION: DATE REVIEWED APPROVED DENIED ❑ PLANNING ❑ ❑ ❑ ❑ PUBLIC SAFETY ❑ ❑ ❑ ❑ PUBLIC WORKS ❑ ❑ ❑ ❑ PARKS AND RECREATION ❑ ❑ ❑ ❑ HUMAN SERVICES/RIGHTS ❑ ❑ ❑ ❑ ECONOMIC DEV. AUTHORITY ❑ ❑ ❑ ❑ ❑ ❑ ❑ SUPPORTING DOCUMENTS: � MEMO/LETTER: � RESOLUTION: � ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: ADMINISTRATORS COMMENTS: �� / � �� .� �� ity Administrator Date * * * � * � * * :� * * * * � * * * * * * * * * � * � * * * * * * * * � � * * * * * * * * * * � * H:1Council items\council-action template.docx Cottage Grove �here Pride ana�cOSPerity Meet To: Mayor and City Council Members Charlene Stevens, City Administrator From: Robin Roland, Finance Director Date: November 25, 2015 Subject: Consider change to electric franchise fee INTRODUCTION In October 2014, the City Council changed the Electric Service Franchise Fee ordinance, reducing the City's franchise fee in acknowledgement of the Xcel Energy billing surcharge imposed on Cottage Grove customers. With the billing surcharge period ending, staff is recommending a return to the Franchise Fee which was in place before fifteen month surcharge period. DISCUSSION In 2013, at the request of the City Council, certain electrical facilities were undergrounded by Xcel Energy in conjunction with two road construction projects. Costs for the electrical undergrounding were agreed to be recouped by Xcel through the "City-Requested Facilities Surcharge" or CRFS program once final project expenses were known. The CRFS program allows Xcel to impose a billing surcharge on the customers in the Cottage Grove area for a period of time and in an amount agreeable to the City Council. The CRFS surcharge was/is in place for the 15 month timeframe October 1, 2014 to February 29, 2016. Xcel retained the surcharge amount and remitted the reduced franchise amount to the City. The City had reduced the electric franchise fees due from Xcel for the corresponding time frame by a similar amount to the CRFS surcharge; the amount billed to Xcel electric customers remained the same as the amount of the previous franchise fee pass through on customer billings. Now, by changing back to the previous electric franchise fee, the net effect will be as little impact to residents/Xcel customers as possible. To satisfy the legalities of this situation, the City Council must change the existing electric franchise fee ordinance before December 3, 2015 to be effective March 1, 2016. The revised ordinance is attached with this item. The proposed changes are as follows: Class Current fee Proposed Residential $-9�� $1.65 Small C & I — Non-Dem $-9:�� $1.65 Small C & I — Demand $-�� $8.25 Large C & I $�-8�9 $33.00 Public Street Lighting �9 $3.30 Muni Pumping—N/D $9:9A $0.75 Muni Pumping-Demand $-4�a $8.25 ACTION REQUESTED • Adopt the attached Electric Service Franchise fee ordinance. • Adopt the resolution authorizing publication of the Ordinance by Title and Summary. ORDINANCE NO. AN ORDINANCE IMPLEMENTING AN ELECTRIC SERVICE FRANCHISE FEE ON NORTHERN STATES POWER COMPANY, A MINNESOTA CORPORATION, ITS SUCCESSORS AND ASSIGNS, FOR PROVIDING ELECTRIC SERVICE WITHIN THE CITY OF COTTAGE GROVE THE CITY COUNCIL OF THE CITY OF COTTAGE GROVE DOES ORDAIN: SECTION 1. The City of Cottage Grove Municipal Code is hereby amended to include reference to the following Special Ordinance. Subdivision 1. Purpose. The Cottage Grove 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 electric services within the City of Cottage Grove. (a) Pursuant to City Ordinance 749, a Franchise Agreement between the City of Cottage Grove and Northern States Power Company, a Minnesota corporation, d/b/a Xcel Energy, its successors and assigns, the City has the right to impose a franchise fee on Northern States Power Company, a Minnesota corporation, d/b/a Xcel Energy its successors and assigns, in an amount and fee design as set forth in Section 9 of the Northern States Power Company Franchise and in the fee schedule attached hereto as Schedule A. Subdivision 2. Franchise Fee Statement. A franchise fee is hereby imposed on Northern States Power Company, a Minnesota Corporation, d/b/a Xcel Energy, its successors and assigns, under its electric franchise in accordance with the schedule attached here to and made a part of this Ordinance, commencing with the NSPM March, 2016 billing month. 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. Subdivision 3. Pavment. The said franchise fee shall be payable to the City in accordance with the terms set forth in Section 9 of the Franchise. Subdivision 4. Surcharqe. The City recognizes that the Minnesota Public Utilities Commission may allow Company to add a surcharge to customer rates of city residents to reimburse Company for the cost of the fee. 1 Subdivision 5. Enforcement. Any dispute, including enforcement of a default regarding this ordinance will be resolved in accordance with Section 2.5 of the Franchise Agreement. Subdivision 6. Effective Date of Franchise Fee. The effective date of this Ordinance shall be after its publication and ninety (90) days after the sending of written notice enclosing a copy of this adopted Ordinance to NSPM by certified mail. Collection of the fee shall commence as provided above. Subdivision 7. Previous Franchise Fee Superseded. This Ordinance supersedes and replaces the previous franchise fee ordinance between City and NSPM, City Ordinance No. 933. Passed and approved: , 2015. Mayor Attest: City Clerk SEAL 2 SCHEDULE A Franchise Fee Rates: Electric Utility The franchise fee shall be in an amount determined by applying the following schedule per customer premise/per month based on metered service to retail customers within the City: Class Amount per month Residential $ 1.65 Sm C & I —Non-Dem $ 1.65 Sm C & I —Demand $ 8.25 Large C & I $33.00 Public Street Ltg $ 3.30 Muni Pumping —N/D $0.75 Muni Pumping —Dem $ 8.25 Franchise fees are 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. 3 RESOLUTION NO. 15-xxx RESOLUTION AUTHORIZING PUBLICATION OF ORDINANCE BY TITLE AND SUMMARY WHEREAS, the City of Cottage Grove has adopted Ordinance No. xxx relating to a change in electric franchise fees for the City, WHEREAS, Minnesota Statutes, Section 412.191, Subdivision 4 allows publication of the title and summary in the case of lengthy ordinance, WHEREAS, the following summary would clearly inform the public of the intent of the ordinance. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Cottage Grove, County of Washington, State of Minnesota, that the City Clerk shall cause the following summary of Ordinance No. xxx to be published in the official newspaper in lieu of the entire ordinance: Public Notice The City Council of the City of Cottage Grove has adopted Ordinance No. xxx, providing for the change in franchise fees on electric service. XCEL ENERGY ELECTRIC FRANCHISE FEE SCHEDULE Class Fee per Premise Residential $ 1.65 Small C & I — Non-Dem $ 1.65 Small C & I — Demand $ 8.25 Large C & I $33.00 Public Street Lighting $ 3.30 Muni Pumping—N/D $0.75 Muni Pumping-Demand $ 8.25 The full text of Ordinance No. xxx is available for inspection at the Cottage Grove City Hall during normal business hours. Passed this 2nd day of December, 2015. Myron Bailey, Mayor Attest: Joe Fischbach, City Clerk