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Attachment 1 546 Budget and Levy Scenarios 547 From the Base Budget, I have created several scenarios for the 2026 budget that will address the 548 needs for additional staffing in public safety (Fire and Police Department staffing) and additional 549 investment in our capital funds. Given the levy increase needed to sustain operations into 2026, I 550 have explored the creation of franchise fees for the electric and gas utilities to serve as an 551 alternative revenue source. With the imposition of franchise fees, there is an opportunity to free 552 up existing levy dollars that can be reallocated to address the public safety needs and the capital 553 fund needs. One strong advantage of franchise fees is that it would be a sustainable funding 554 source that can be relied on for 2026 and beyond. Below are details about the imposition of 555 franchise feesand how they potentially could be utilized to address priorities moving forward in 556 the City’soperations and capital budget. 557 558 Franchise Fees 559 Under Minnesota Statute (216B.36), cities can impose a fee on utility companies (franchise fees) 560 that use the public rights-of-way to deliver service. The City can determine the amount, structure 561 and use of collected franchise fees. Generally, they are structured in two ways: a flat rate per 562 utility account ora percentage of consumption used by each utility account. For this discussion, I 563 am utilizing a flat fee structure in order to provide certainty for the city and utility customers on 564 what the monthly/annual charges would be. A percentage fee on utility costs would vary from a 565 month to month and annual basis, leaving to uncertainty to the City on how much would be 566 collected and uncertainty for the customer on what they owe each month. Given the variability of 567 climate, having a flat fee would smooth out the variables of extreme weather and the resulting 568 change in customer bills. From initial conversations with Xcel Energy, they are notnot opposed 569 to our effort to implement franchise fees as they consider these fees a local government decision. 570 571 Based on analysis of energy and natural gas consumption of Roseville’s customer accounts, Xcel 572 has estimated that an electric and gas franchise fee could generate between $2.1 to $2.8 million 573 annually for the City. Below is a table prepared by Xcel showing the amounts that franchise fees 574 could generate based on different rates. 575 Customer Classification - ElectricOption 1Option 2Option 3 Residential$ 3.00$ 3.50$ 4.00 Small C&I Non-Demand$ 4.00$ 4.65$ 5.30 Small C&I Demand$ 22.00$ 25.65$ 29.30 Large C&I$ 329.00$ 383.60$ 438.45 Total Annual Collection $ 1,642,008$ 1,914,739$ 2,188,060 Customer Classification - GasOption 1Option 2Option 3 Residential$ 3.00$ 3.50$ 4.00 Small C&I Non-Demand$ 4.00$ 4.65$ 5.30 Small C&I Demand$ 22.00$ 25.65$ 29.30 Large C&I$ 329.00$ 383.60$ 438.45 Total Annual Collection $ 476,616 $ 567,283 $ 648,070 Total Estimate Fees (Annual)$ 2,118,624$ 2,482,022$ 2,836,130 Annual Cost for Residential Account$ 72.00$ 84.00$ 96.00 576 577 16 Qbhf!49!pg!49: