Agenda - Council - 07/08/2003 - Laserfiche WebLink

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INTRODUCE ORDINANCES IMPLEMENTING A GAS FRANCHISE FEE ON CENTERPOINT ENERGY, MINNEGASCO, A DIVISION OF CENTERPOINT ENERGY RESOURCES CORP., A DELAWARE CORPORATION, FOR PROVIDING GAS ENERGY SERVICE WITHIN THE CITY OF RAMSEY, AND IMPLEMENTING AN ELECTRIC FRANCHISE FEE ON CONNEXUS ENERGY, A MINNESOTA COOPERATIVE, AND THE CITY OF ANOKA, A MUNICIPAL ELECTRIC DISTRIBUTOR, FOR PROVIDING ELECTRIC ENERGY SERVICE WITHIN THE CITY OF RAMSEY, MINNESOTA. By: Diana Lund, Finance Officer Background: The attached Ordinances were presented to Council for review and discussion at its regular meeting of May 27, 2003 and introduced at a public hearing on June 24, 2003. Information regarding franchise fees has been submitted to the public in the Ramsey Resident, Cable TV and the Anoka Union. The effected companies of Connexus Energy, City of Anoka, and CenterPoint Energy, Minnegasco were mailed copies of the City's proposed ordinances. Section 5, Biannual review was added to the proposed ordinance to include a 6-month reviewal period and an annual limit of franchise fees collected to be $525,000. A sunset clause has been added to Section 7. The franchise fee ordinances are set to expire on December 31, 2006. Franchise fees can be set in three ways: a percent of the utility's gross revenues within the City; a charge per unit of energy used; or a flat money fee for every meter or property in the City. The franchise fees that have been discussed with all companies is a percentage of gross revenues. After the franchise fee programs are in place, the companies will make quarterly payments to the City. The City of Ramsey is proposing a franchise fee of 4.5% of gross revenues on all users. At 4.5%, the City would receive approximately $525,000 in franchise fee revenue per year. Franchise fee revenues would be used for the City share of Street Maintenance costs and the labor associated with the maintenance and repair of City streets. Staff feels that using a percentage rate on all users would be more equitable than a flat rate for every property in the City or a per-unit charge of energy used. A comparison of what franchise fees may mean to the typical resident versus a property tax adjustment is difficult to make due to the variation in home valuations. Franchise fees will relate specifically to each individual homeowners use and lifestyle. However, for informational and discussion purposes, an "average" homeowner may pay $75 per year for gas and electric franchise fees.