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Xcel Energy® <br /> UTILITY THE BASICS OF UTILITY SERVICE <br /> Electric and natural gas utility companies provide essential services to <br /> FRANCHISE the public. In Minnesota,the state has designated electric utility service <br /> providers for each part of the state.These utilities have the exclusive <br /> AGREEMENTS <br /> authority and obligation to provide service to all customers in their <br /> designated service territories. <br /> f w <br /> State law allows utilities to use the public rights of way to locate their <br /> poles,wires and natural gas pipes. Public rights of way typically include <br /> 14 ; public roads, highways, streets, bike lanes and sidewalks. Local governments <br /> that have the responsibility to manage the rights of way have an interest in <br /> utilities'activities in them. <br /> SCOPE OF FRANCHISE AGREEMENTS <br /> A franchise agreement provides clarity by setting expectations between <br /> the city and the utility company.This includes requirements for how the utility <br /> constructs, operates and maintains its equipment located in the public rights <br /> of way. Franchise agreements also address things like tree trimming and <br /> roadway restoration when a utility project has been completed. In addition <br /> to the conditions in franchise agreements,cities may require utilities to <br /> obtain permits for work within the rights of way. <br /> In some cases, a city elects to enact a franchise fee to cover its costs related <br /> to the utility's activities in the rights of way.As part of the agreement, the <br /> utility collects the fee from its customers in the city and provides it to the city <br /> each month. <br /> Although franchise agreements are common,they aren't required for services <br /> and not all cities and utilities choose to use them. Franchise agreements do <br /> not change the utilities'state-designated service territories or the utilities' <br /> obligations to provide service to their customers.Additionally,franchise <br /> agreements do not set energy gy goals,determine the mix of energy resources <br /> 1� used by a utility, set energy prices, set service standards or any of the other <br /> policy decisions that are made by Minnesota Legislature and regulated by the <br /> Minnesota Public Utilities Commission. <br /> PRACTICAL USE OF FRANCHISE AGREEMENTS <br /> Xcel Energy has more than 350 franchise agreements in Minnesota.These <br /> agreements enhance strong working relationships with the communities <br /> Xcel Energy serves by providing clear expectations while supporting consistent <br /> and efficient operations and service. <br /> I \ Franchise agreements used in Minnesota work well for both utilities and cities, <br /> and help serve the public's interests. <br /> FRANCHISE AGREEMENT BETWEEN <br /> XCEL ENERGY AND THE CITY OF MINNEAPOLIS <br /> Xcel Energy and the city of Minneapolis have a franchise agreement that <br /> expires in December 2014.As part of the agreement,the city receives <br /> an annual franchise fee of about$17 million. <br /> i <br />