CCP 11242025 - Laserfiche WebLink

Home

REQUEST FOR COUNCIL ACTION Date: 11/24/2025 Item No.: 7.j. Department ApprovalCity Manager Approval Item Description:Consider Adopting Ordinances to implement Gas and Electric Franchise Ordinances and Gas and Electric Franchise Fees 1 2 Background 3 Under Minnesota Law, statutory cities have the authority to grant franchises to privately-owned public 4 gas and electric utilities for the use of public rights-of-way. The franchise agreement, which takes the 5 form of an ordinance, sets expectations between the city and the utility company, including how the 6 company constructs, operates and maintains equipment located on public grounds and rights-of-way. 7 Roseville's 20-year franchise agreement with Xcel Energy expired in 2018. 8 9 Both the City and Xcel are interested in entering into a new franchise agreement. Based on the work of 10 the City Manager, the City Attorney and Xcel, the City Council is being asked to consider approving four 11 ordinances; 1) Electric Franchise Ordinance with Xcel; 2) Gas Franchise Ordinance with Xcel; 3) Electric 12 Franchise Fee Ordinance; 4) Gas Franchise Fee Ordinance. 13 14 Electric and Gas Franchise Ordinances 15 In summary, the ordinances grant Xcel Energy a 20-year franchise to construct, operate, repair, and 16 maintain electric and gas transmission and distribution facilities within the City of Roseville. This includes 17 the right to use public rights-of-way and public grounds to provide electric service to residents, 18 businesses, and the City itself. Under the ordinances, the city retains the right to require permits for 19 work in public areas. However, if electric and gas franchise fees are imposed, the City agrees to waive 20 permit fees. The City currently averages about $50,000 annually in revenue from Xcel Energy through 21 permits. To make up for that loss in revenue, staff is proposing to allocate each year a portion of the 22 franchise fees collected from Xcel to cover the lost revenue for the operational costs as part of their 23 permits. 24 25 Lastly, under the franchise ordinances, the City may impose a franchise fee for electric and gas 26 services. The franchise fees are charged to all customers, including those properties that are tax- 27 exempt. (It is estimated that about 84 properties in Roseville are tax-exempt and subject to the franchise 28 fee. These tax-exempted properties are estimated to generate around $175,000 in annual franchise 29 fees). The City can determine the amount, structure and use of collected franchise fees. Generally, they 30 are structured in two ways: a flat rate per utility account or a percentage of consumption used by each 31 utility account. 32 33 Franchise Fee Ordinances 34 Over 100 cities have franchise fees in Minnesota. In Ramsey County, 12 of the 15 cities have utility 35 franchise fees as shown in the table below. 36 Page 1 of 4 Qbhf!:7!pg!384