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96-417�L �'rn�� S� �' q( Covncil File # �e � i ��, i�' f ;� s F`t � �; � ��,� � ordinance # . I Green Sheet # 3 �� ORDINANCE �--- 1 SAINT PAUL, MINNESOTA �� , Presented By Referred To 1 2 3 4 5 6 7 8 9 10 I1 12 13 14 Committee: Date A legislative ordinance to grant a franchise to Northern States Power Company for the use of streets and other public property within the City of Saint Paul for the provision of electric service for a term beginning July l, 1996 and ending June 30, 2006; and to fix all the terms and conditions of such franchise including the oompensation to be paid to the City under said franchise. 15 16 17 18 19 20 21 22 23 24 25 26 27 THE COUNCIL OF THE CITY OF SAINT PAUL DOES ORDAIN: Section 1 Northern States Power Company, a corporation organized under the laws of the State of Minnesota, hereinafter designated as"Company," being a public sexvice corporation providing electric service for all purposes within the City of Saint Paul, hereinafter designated as "City," under a franchise granted under Ordinance No. 96-34, which expires on June 30, 1996, is, together with its successors and assigns, hereby granted a franchise in accordance with the terms and conditions of this ordinance to use the streets and other public property located in the City £or such purpose for a term extend'mg from July 1, 1996 to June 30, 2006. The term "this ordinance" sha11 refer to the ordinance being adopted herewith. � �� 2 Section 2 a `-y�� 3 The franchise granted herein shall extend to the Company's use of all streets and 4 public property now being used by the Company in connecflon with electric service and of 5 such other streets and public properiy as may from tnne to time be designated by the CiTy. 6 Such franchise to use the streets and other public property located in the City shall include 7 such use for the purpose of erecting, laying, constructing, installing, maintaining and operating 8 poles, posts, wires, conduits, subways, pipes, manholes, service boxes, cables, conductors and 9 all other necessary and convenient facilities used in conducting, transmitting, distriburing and 10 supplying electric energy to and through the City for public and private use. 11 12 Section 3 13 (a) General. In locating its electric facilities, the Company shall in no way 14 unreasonably interfere with the safety and convenience of ordinary travel along and over said 15 streets and public property, nor interfere with other uses to which such places may be put by 1 b the City, and in the event it shall become necessary during the term of this franchise to 17 remove or relocate the physical properiy of the Company located within or upon any of the 18 streets or public properiy in the City, because of such interference or use by the City, or as a 19 result of any public improvement undertaken by the City, the Company shall, when so advised 20 by the City Council, remove and relocate said facilities without cost to the City, and shall 21 place the streets or public properiy in the same condition as they were prior to said removal 22 or relocation. However, after Companp has so relocated its facilities, the Company shall not 23 within five (5) years thereafter be required at its own expense to make any further relocation 24 of the same facilities; except that the Company may be required to f«rther relocate any such 25 facilities at its own expense where required because of the e�tension of public utilities to 26 previously unserved areas. Any relocation or removal of the Company's facilities made 2 � �l��G 1 necessary because of the ea�tension through or into the Ciry of a federally-aided state hlmk q{o �� 2 highway, included withiu the National System of Interstate Highways, shall be govemed by 3 the provisions of Minnesota Statutes 1971, Section 161.46, as supplemented or amended. 4 (b) Company Facilities on Non-public Property. The removal and relocation 5 provisions of Section 3(a) do not apply to electric facilities or equipment which are not 6 ]ocated on streets or other public properry of and within the City; provided, however, if the 7 result of any removal or relocarion of Company equipment or facilities on or in streets or 8 public property is that the Company fmds it necessary or desirabie to move, relocate, make 9 adjustments to or otherwise in any way modify its electric facilities or equipment on property 10 which is not a street or other public property, all of such changes aze and remain at the sole 11 cost and expense of the Company. In addition, the provisions of Section 3(a) do not apply to 12 electric facilities or equipment which were located on non-City property for which the 13 Company had an easement or other interest ox permit which made the use of such non-City 14 property lawful, and which non-City properry was thereafter acquired by the City for street or 15 other public use, if the City did not pay compensation or relocation assistance to the Company 16 at the rime of City acquisition. 17 m Section 4 19 (a) City Regulation. The Company sha11 be subject to such reasonable zegulations as 20 may be provided or authorized by ardinance with respect to its facilities described in Section 21 2. No poles, masts or conduits, or any other such electric facilities shall hereafter be installed, 22 erected or laid in the streets or public property by the Company except upon full compliance 23 with the requirements of such regulations as may be adopted or authorized by ordinance. The 24 reasonable regulations of the City may require the payment of appropriate pernut and other 25 fees related to such regulations; provided, however, that the Company sha11 not be obligated 26 to pay such fees under the electric franchise in excess of $15,000 in any calendar year from 3 �g �fli7l�i� 1 1997 through 2000, or in excess of $25,000 in any calendar yeaz from 2001 through 2005 or `� 2 in any Franchise Extension Period occurring after 2005; and further provided, that such lunit 3 shall be $7,500 for the remainder of 1996 and $12,500 for the period from 3anuary 1, 2006 to 4 June 30, 2006, if there is no Franchise Ea�tension Period. 5 (b) Pole Space and Street Lights. The Company shall reasonably make available to 6 the City space on its utility poles for City fire, water utility, and police facilities. Whenever 7 directed by the City Council by resolution, the Company shall make reasonable eactensions of 8 its street lighting facilities for the installation of street lights, without cost to the City, but said 9 facilities shall remain the property of the Company. 10 il Section 5 12 (a-1) Franchise Fee Imposed. During the term of the franchise hereby granted, and 13 during any Franchise Extension Period under Section 11(d), and, except for permit fees 14 authorized by Section 4(a), in lieu of any permit or other fees relating to the installation, 15 repair, maintenance and operation of its facilities, the Company sha11 pay to the City a 16 franchise fee as provided in this Section 5, such fee to be paid for each Company billing 17 month on or before the last day of the first full calendaz month following the Company billing 18 month. The franchise fee sha11 be the total of the monthly Meter Fee, Energy Fee and 19 Demand Fee, where applicable, for each Company Customer which is located within the City 20 and which receives electric service by means of Company electric facilities located within the 21 City, regardless of how such facilities are used or classified including, but not limited to, 22 those facilities used for or classified as transmission, delivery or distribution, or any 23 combination thereo£ The franchise fee far each Company Customer shall be deternrined by 24 applying the Meter Factor, Energy Factor and Demand Factor as indicated in the Schedule, 25 respectively, to (i} each and every Customer classified by the Company as a separate account, 26 (ii) the axnount of electricity in kilowatt hours delivered to each such Customer each month, 4 � ¢�i9�9G 1 and (iii) the Billing Demand for each such Customer to w a Demand Factor applies under �" 2 the Schedule and the terms of this ordinance. 1�1/1�c�9(� ��p —�17 3 (a-2) Definitions. The foliouing terms, as used in this ordinance, shail have the 4 meanings given. Substanti�•e provisions v,>hich may be contained in said definitions shall be 5 given full substantive effect. 6 (i) "Billing Demand" means demand in kilowatts as determined by the Company for 7 billing purposes in accordance with the Tariffs approved by the Commission and 8 contained in the Electric Rate Book from time to time, inc3uding but not limited to 9 contracted demands billed by the Company at a billing demand rate per kilowatt 10 greater than or equal to zero. 11 (ii) "Commission" means the Minnesota Public Utilities Commission, or any successor 12 agency or agencies, including an agency of the federal govemment which preempts ali 13 or part of the authoriry to regulate electric service now vested in the Minnesota Public 14 Utilities Commission. 15 (iii) "Customer Classification" or "Classification" means each and every classification 16 of Company Customers in the Schedule, all of which are based on the Tariffs 17 contained in the Electric Rate Book in effect on July l, 1996. The Classifications a�e 18 te shall be used for the purpose of computing and determining franchise fees under 14 this ordinance t�ess-sSuch Classifications are may be amended or added to from 20 time to time by agreement of the Company and the City under Section 5(k). 21 (iv) "Customer of Company" or "Company Customer" or "Customer" means any 22 electricity user located within the City which at any time during the term of this 23 franchise takes delivery of electricity by means of any Company electric facilities 24 located within the Ciry. Each and every Customer classified as a sepazate account by 25 the Company sha11 be deemed a sepazate Customer of the Company. t ��3 �-ag -9� E 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 (v) "Demand Factor" is the monthly monetary amount per kilowatt shown in the ��' �1 1 Schedule. (vi) "Demand Fee" means the monthly fee collected from each Company Customer which is subject to Billing Demand from the Company. The monthly Demand Fee is the product of the Bil13ng Demand as defined in Sec6on 5(a-2)(i) above for each such Customer times the Demand Factor specified in the Schedule. (vii) 'Blectric Rate Book" means the Company Electric Rate Book, as it may be revised from time to time, which contains Company electric service Tariffs, general rules and regulations, service rules, standazd contract and agreement forms, customer billing forms and notices and technical and special terms and abbreviations, as approved by the Commission. (viii) "Energy Factor" is the monthly monetary amount per kilowatt hour shown in the Schedule. (ix) 'Bnergy Fee" means the monthly fee coilected from each Customer of the Company based on the quantity of kilowatt hours of electricity delivered to each such Customer of the Company. The monthly Energy Fee for electricity is the product of the amount of electricity delivered to each such Customer each month expressed in kilowatt hours times the monthly Energy Factor specified in the Schedule. (x) "Meter Factor" is the monthly monetary amount per Customer shown in the Schedule. (xi) "Meter Fee" means the monthly fee collected from each Customer by applying the Meter Factor to each and every Customer. (xii) "Schedule" means the table in Section 15 of this ordinance showing the Meter, Energy and Demand Factors, where applicable, for each Customer Classificafion far each year of this franchise; provided, that the Meter, Energy and Demand Factars in effect for the yeaz 2006 pursuant to the Schedule shall aiso be used and be effective 0 �� i�� 1 during any Franchise E�ctension Period under 5ection ll(d) of this ordinance. All ��. •y �� 2 Customer Classifications shown in the Schedule on July 1, 1996, are set forth in or 3 detennined by the Eleclric Rate Book in effect on that date. 4 (�ii) "Tariff' means each and every service schedttle, tariff, service rider, surcharge 5 rider, rule contained in the general rules and regulations, rule of service, rider or 6 similar document which has been or is approved by the Commission, and includes any 7 modification, amendment or deletion thereof. 8 (a-3) Residential Customer Limitation. For residential Customers subject to the 9 limitations contained in Minnesota Laws 1979, Chapter 189, and for so long as such law shall 10 remain in effect, the franchise fee during any calendar yeaz or part thereof shall not be paid or i l collected during the billing months of January, February, March, April, November and 12 December. 13 (b-1) Other Energy Franchises. The annual dollar amount of the franchise fee 14 collected from a Company Customer, or a reasonable estimate of the franchise fee that would IS be collected from a prospective Company Customer, for electric service provided under this 16 franchise shall not be materially greater than the annual dollar amount of the franchise fee 17 that would be coilected for Similar Service to such Customer by another Energy Supplier 18 under the terms of a New Franchise, assuming comparable energy usage by said Customer. 19 (b-2) Definitions. For the purposes of Section 5(b-1) through Section 5(b-4} only, the 20 following terms shall have the meanings given. "Similar Service" shall mean the supply of 21 energy to a Customer for the same end-use purpose or function as the electricity which is or 22 could be furnished by the Company. 'New Franchise" shali mean a franchise granted to 23 another Energy Supplier after December 31, 1995, or an amendment to an existing franchise 24 held by another Energy Supplier after December 31, 1995. "Energy Supplier" sha11 mean a 25 supplier of energy other than the Company. , � �/ir/y� i b-3 Dis ute Resolution. The Ci shall �� ` ( ) p ty give the Company notice by certified mail of 2 the provisions of a proposed New Franchise atleast ninety (90) days before itis finally 3 adopted by the City Council. The Company shall state in writing its position and give the 4 factual bases for that position on whether the adoption of such New Franchise would violate 5 the prohibition in Section 5(b-1) above within sixty (60) days of the date of notice. The 6 Company's failure to respond will be a waiver of any rights, remedies, or causes of action it 7 may have under Section 5(b). If the Company's position is that the adoption of the proposed 8 New Franchise would violate Secrion 5(b-1) above, then at the request of either the Company 9 or the City, the issue of whether the proposed New Franchise violates Section 5(b-1) shall be 10 submitted to binding arbitration, using an azbitrator selected under the Commercial Arbitration ll Rules of the American Arbitration Association. The franchise fee terms of any New Franchise 12 must be consistent with the decision of the arbitrator. 13 (b-4) Consent of Company. Section 5(b-1) through Secfion 5(b-4) do not apply to 14 any proposed New Franchise to which the Company consents in wrifing. IS (c-1)) New Fees Starting Date. The franchise fee imposed in Section 5(a-1) to 16 Section 5(a-3) and in this ordinance ("New Fees") shall commence with the bills issued to 17 Customers by the Company effective with the Company's November, 1996, billing month, or 18 with bills issued to Customers for the first Company billing month commencing after the 19 Approval Date, whichever is later. 20 (c-2) Interim Fees. Until collection of the New Fees commences, the franchise fee 21 collected by the Company ("Interim Fees") shall be a franchise fee equal to eight percent 22 (8%) of the Company's gross earnings as hereinafter defined from all Customer 23 Classifications, such fee to be paid for each Company billing month on or before the last day 24 of the first full calendar month following the said Company billing month. The term "gross 25 earnings" means all sums, excluding said Internn Fees, received by the Company from the 26 provision of electric service used within the corporate limits of the City. g � �iir�� L-�� i (c-3) Collection; Adjustment. Neither the New Fees nor the Interim Fees imposed in 2 this ordinance shall exceed any amount which the Company may recover, prior to payment to 3 the City, by nnposing a surchazge equivalent to such fee in its rates for electric service to 4 Customers within the City. Both New Fees and Interim Fees aze subject to subsequent 5 adjustment to account for uncollectibles, refunds and conection of ertoneous billings. 6 (d) Annual Cap for Competitive Market Rider. There is hereby exempted from the 7 franchise fee any requirement that the Company pay or collect by such surcharge a franchise 8 fee in excess of six hundred twenty thousand dollars ($620,000.00) in any calendaz year 9 ("annual cap") from any large commercial and indushial class Customer receiving electric 10 service from the Company under that certain Competirive Market Rider, as originally 11 approved by the Commission on June 18, 1993, Docket No. E-002/M-93-301. Any Company 12 Customer receiving service from the Company under the Competitive Mazket Rider before the 13 effecfive date of this ordinance shall continue to be eligible for the annual cap. Any Company 14 Customer which has not received service under the Comperitive Market Rider from the 15 Company before the effective date of this ordinance which thereafter receives service under 16 the Competitive Market Rider is eligible for the annual cap if the Company provides written 17 certification to the City that it has verified such Customer's eligibility for service under the 18 terms and conditions of the said Competitive Market Rider and sets forth the findings and 19 basis for such certification. This annuai cap shall not be applicable to any Company Customer 20 which has not received service under the Competitive Market Rider from the Company befare 21 the effective date of this ordinance if the said Competitive Market Rider is amended or 22 modified in any way which materially changes the substanrive requirements a Customer must 23 satisfy to receive electric service under such Rider, or if such Rider is withdrawn, repealed or 24 for any reason becomes ineffective. 25 (e-1) Monthly Reports. The Company shall file monthly with the Director of the 26 Department of Finance and Management Services a report showing electric consumption and 9 �d ��f�� 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 revenues by classes of service for the preceding Company biliing month, and shall file a�� _y, quarterly report containing such further information as may be agreed to by the Company and the City, based upon the Company's electric operations within the City. Such monthly reports shall show on a monthly and cumulative yeaz-to-date basis (i) Company revenues by C�xstomer Classification from Customers in the City, exciusive of sales taa� and franchise fees, and (ii) the Meter, Energy and Demand Fees and the corresponding billing units (Customer accounts, delivered kilowatt hours and Billing Demand) for each category of Fees, by Customer Classification. Such monthly reports shall show any monthly adjustments as provided for in Section 5(c-3). In the event there is a significant fluctuation in the amount of franchise fees being collected and remitted, the Company will at the City's request meet and discuss with the City the cause or causes of such fluctuations. The Company and the City mutually agree to provide reasonable documentafion to assist in deterniining such cause or causes. (e-2) Auditor's Opinion. The Company will provide the City with an annual opinion from the Company's independent auditors that, in connection with the Company's annual audit, the auditors have reviewed the Company's computation of franchise fees consistent with generally accepted auditing practice and that such computation is in accordance with the terms and conditions of this ordinance. The Company and the City will each pay one-half of the Company's independent auditor's incremental fees for providing this opinion in connection with the Company's annual audit, based on reasonable and verifiable fees billed by the auditor. The City may at its option, not more than once a year, require that the Company's compliance with the terms and conditions of this franchise, including but not limited to the computation of franchise fees, be verified by a certified public accountant or comparably- qualified consultant at the expense of the City. (fl Reserved. (g) Reserved. 10 � �//�/�� 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 lb 17 18 19 20 21 22 23 24 25 26 (h) Placement of Customers. Bvery Company Customer, on the effective date of this� -y' ordinance, is subject to a Tariff in the Electric Rate Book, and based on such Tariff each such Customer is included in a Customer Classification in the Schedule, and shall remain in that Customer Classification, subject to the provisions of Section 5(j) and Secfion 5(k). The Company shall place each new Customer in a Tariff on the basis of the new Customer's reasonably expected chazacter of service, voltage, electricity consumption and Billing Demand, and shall on the basis of that Tariff place the new Customer in the most comparable Customer Classification in the Schedule for the purpose of collection of Meter, Energy and Demand Fees. (i) Reserved. (j) Movement of A Cnstomer. Subject to Section 5(k), if a Customer moves from one Company Tariff to another Company Taziff, where such movement is permitted by such Tariffs, the franchise fees to be collected from such Customer shall be computed on the basis of the franchise fees for the Customer Classification which is applicable to the Tariff to which such Customer has moved. Subject to Section 5(k), if a Customer changes service characteristics relating to voltage or electric consumpfion or both, and such changes cause the Customer to both (i) take a different electric service from the Company under the same Tariff, and (ii) meet the criteria for a different Customer Classification in the Schedule, then the Customer shall also be moved, for the purpose of collecring franchise fees, to the Classification in the Schedule most comparable to the Customer's Tariff and new service characteris6cs. (k) New or Amended Tariff or Classification. When the Commission orders or approves a new Tariff or Tariff revision (a °New Taziff') for inclusion in the Electric Rate Book, for which no Customer Classification exists, each Customer taking electric service under such New Tariff shall be placed in the Customer Classification in the Schedule most comparable to the New Tarif£ The placement shall be based on the reasonably expected �� !�?�� I character of service, voltage, electricity consumption and Billing Demand established for suc�h `+� `� 2 I3ew TarifE The New Tariff shall be one for which there is an approved surcharge rider, so 3 the collection of Meter, Energy and Demand Fees from a Customer taking service under the 4 New Tariff shall be, to the fullest extent practical, comparable to the fees collected if the 5 Ctiastomer received electric service under the former Tariff. If there is no approved surcharge 6 rider for the new Tariff, the Company shall continue to collect the Meter, Energy and 7 Demand Fees based on the Customer's former Customer Classification. 8 Upon mutual agreement of the Company and the City, this ordinance may be amended 9 to establish a new Customer Classification for any such New Tariff. 10 (1) Reserved. 11 (m) Customer and Franchise Fee Retention. The City and the Company agree that 12 changes in the electric industry may create situations in which Company Customers may 13 switch to alternate energy sources which would cause both the loss of City franchise fee 14 revenues and the loss of Company revenues and margins. In such situa6ons it will be to the 15 mutual best interests of the City and the Company to discus strategies to prevent or 16 ameliorate such losses, among which would be the amendment of franchise provisions relating 17 to the fees hereunder as an accompaniment to equivalent Company pricing and discount 18 changes. It is the intent of the City and the Company to enter into such discussions as the 19 need may azise in the future. 20 (n) Charter Requirement. The Company and the City recognize that the New Fees 21 provided for in this ordinance do not collect a franchise fee based on the gross earnings of the 22 Company derived from providing electric service within the City. If in any particulaz 23 calendaz yeaz, the franchise fees collected under this franchise in the aggregate or for any 24 Customer Classificarion or Customer do not equal five (5) percent of the said gross eanungs 25 of the Company, the Company as franchise holder is specifically relieved, as required and ia � �f/r7/yG 9�-�� i permitted in Chapter 16 of the Charter, of the obligation to make a franchise fee payment of 2 five (5) percent of Company gross eamings. 3 (o) Commission Approval. The Company shall use its best efforts to abtain the 4 approval of the Commission for a surchazge rider Tariff implementing the provisions of this 5 ordinance relating to the tune and manner of coilecrion of the francluse fees provided for 6 herein. 7 0 Section 6 9 The electric service of the Company and the rates to be charged by the Company for 10 eleclric service in the City shall be subject to the jurisdiction of the Commission. The ll Company shall provide reasonably efficient and adequate service to members of the public 12 within the City who apply for such service in accordance with the rules and regulations of the 13 Company. 14 15 Section ? 16 Cert�cation and Filing of Electric Rate Book. Within thirry (30) days after the 17 effective date of this ordinance, the Company will file with the City Clerk a copy of the 18 Electric Rate Book in effect on July 1, 1996, with a certificarion as to Its accuracy. During the 19 term of ttus franchise, the Company shall file with the City Clerk any proposed Tariff or 20 Taziff change filed with the Commission and any revisions to its Electric Rate Book approved 21 by the Commission. 22 23 Section 8 24 Except where required far a public improvement project, the vacation of any street or 25 public property, after the installation of electric facilities, shall not operate to deprive the 26 Company of its rights to operate and maintain such electric facilities, until the reasonable cost �3 � �/r7/�� 9�-4t� i of relocating the same and the loss and expense resulting from such relocarion aze first paid to 2 Company. 3 0 Section 9 5 Before this ordinance shall be finally adopted by the City Council, a public hearing 6 shall be held upon ten (10) days' published notice in the official newspaper and after said 7 hearing the City Council may pass this ordinance, revise or amend the same. The Company $ shall bear the costs of publication of the franchise ordinance and shall make a sufficient 9 deposit with the City Clerk to guazantee publication before the ordinance is passed. [[I] 11 Section 10 12 The Company sha11 indemnify and save the City whole and harmless from any and a11 13 claims far injury or damage to persons or property occasioned by ar arising out of the 14 conshuction, maintenance, operation or repair of said transmission and distribution system or 15 by the conduct of the Company's business in the City. The foregoing does not indemnify the 16 City for its own negligence except for claims azising out of or alleging the City's negligence 17 where such negligence arises out of or is primarily related to the consiruction, operation, 18 maintenance or repair of said systems, including, but not limited to, the issuance of permits 19 and inspection of plans or work. This section is not, as to third parties, a waiver of any 20 defense or immunity otherwise auailable to the Company; and the Company, in defending any 21 action on behalf of the City, shall be entitled to assert in any action every defense or 22 immunity that the City could assert in its own behalf. 23 24 Section 11 25 (a) Cure of Invalidity. If any secfion, provision or part of this ordinance shall be held 26 invalid, the Company and the City shall meet and discuss amendments to the ordinance to i4 f� �(�7/�tL - 1. cure the invalidity consistent ��ith the intent of this ordinance, which meetings and discussion � 2 shall be wzthout prejudice to the lau�fui rights of the Company and the City. ! �� ( 3 (h) Interim Fees under Ezisting Surcharge Rider; New Fees. The provisions of the 4 Company surcharge rider Tariff in the Electric Rate Book relating to the collection and 5 payment of Interim Fees to the City, shall continue in full force and effect from July 1, 1996, 6 up to the time l�'ew Fees commence �ith the bills issued to Customers effective v.�ith the 7 Company's November, 1996, billing month, or the first Company billing month commencing 8 after the Approval Date, ��.�hichever is later. The "Appro�°al Date" is the date of approval by 9 the Commission of the time and manner of collection of the New Fees which are provided for 10 in Section 5. On and after the date New Fees commence, and for the remainder of the term of I 1 the franchise, the provisions of this ordinance relating to the computation, collection and 12 payment of the said I�Tew Fees to the City shall apply. On and after July 1, 1997, if the 13 Commission has not approved the tnne and manner of collection of the New Fees and the 14 City is sfi11 being paid Interim Fees, either the Company or the City may give notice by 15 certified mail to the other that the remainder of the term of the franchise is a Franchise 16 Extension Period under Section 11(d) for the purpose of terminating this franchise. 17 (c) Reinstatement of Interim Fees. If any administrative agency or court of law 18 issues an order or enters a judgment that nnpairs in any way the ixnplementation of this 19 franchise or o£ the collection of the New Fees under Section 5 of this ordinance as to one or 20 more Company Customers, then in that event the approved Tariff surcharge rider in the 21 Elecuic Rate Book relating to the collection and payment of Interim Fees to the City, shall, at 22 the sole option of the City expressed in notice by certified mail to the Company, be effec6ve 23 if there is an approved surcharge allowing collection of the Interim Fees with respect to the 24 one or more Company Customers affected by such order or judgment upon the date of the ZS making of such order or entry of such judgment, and shall continue in fu11 force and effect 26 unti] the first to occur e� of (1) Tune 30, 2006, or (2) such order or judgment expires or is � s � �f-zq-�/� vacated, reversed, superseded or overruled. Any period of time after the Approval Date, q`-y,� 2 d 1T1Tla which the City is being paid Interim Fees under this Section 11(c), sha11 be deemed to 3 be a Franchise Extension Period under Section ll(d) for the purpose of teruiinating this 4 franchise. 5 (d) Franchise Extension Period. If this franchise has not been eatended or renewed, 6 or a new franchise agreement entered into, by and between the City and the Company before 7 its expuation date on June 30, 2006, this franchise sha11 be estended in its entirety, with all of 8 its rights and obligatians, for an additional ten (10) year period, to expire June 30, 2016 (the 9 "Franchise Extension Period"), subject to the following provisions. During the Franchise 10 Extension Period the franchise fee to be paid to the City by the Company in any year shall 11 continue to be computed, collected and paid as it was in the year 2006. During the Franchise 12 Extension Period, either the Company or the City can ternunate the franchise upon providing 13 two years' norice by certified mail to the other party. 14 (e) Commission Jurisdiction. Nothing in this ordinance confers or is intended to 15 confer jurisdiction or powers on the Commissaon or any other administrative agency ar court 16 of law, which it does not otherwise have by law. 17 18 Section 12 19 The Company shali, within thiriy (30) days after the passage, approval and publication 20 of this ordinance, file with the City Clerk its written acceptance thereof in form to be 21 approved by the City Attorney, and therein shall agree to abide by, keep and perform a11 the 22 terms, limitations, conditions and provisions of this ordinance. 23 24 Section 13 25 Upon any breach or failure to comply with any of the terms or conditions of this 26 franchise ordinance, either parly may bring an acrion at law or in equity to seek compliance �6 P�8 ��T/� 1 by the other with the said terms and conditions, money damages or any other appropriate q�—y,� 2 relief which may include, but is not limited to, termination and forfeiriue of the franchise 3 granted herein. 4 5 Section 14 6 This ordinance shall take effect and be in force after the public hearing prescribed in 7 Secrion 9 and thirty (30) days after its passage, approval and publication, and upon its 8 acceptance as provided in Section 12 hereof. E 10 Section 15 I1 The table shown herein is the Schedule defined in Section 5(a-2)(xii) of this ordinance 12 and is a part and provision of this ordinance. The Schedule provides, for each year of 13 the franchise and for each of the Customer Classificarions listed, the Meter, Energy and 14 Demand Factors for that yeaz or group of years. For example, the Factors shown for 1996 are 15 to be used for the years 1996 through 1999; the Factors shown fot the year 2000 aze to be 16 used for the years 2000 and 2001; the Factors shown for the yeaz 2002 are to be used for the 17 years 2002 and 2003; and so on. 18 (Note to Revisor: Please print the following Schedule here.) 19 20 21 22 23 24 25 26 17 � �'lfT��ls �y/ci/� g1 3 �1d L O� N W H O� b N O O O W Q� h tq N � � � 0 � O O O O m O O O 00 1� h N m � O O O O � �� O O O M W M K p W W W K H K K Q � K W w w = N� Z Z Z Z Z Z Q Y M O th O M O O �p N O e0 �'f O O O � � O O O o O O O 1� 'O �p N O O O O � a� p o 0 o w w w w o w w�� w��w o o�n ia w w I— N t�l Z Z Z Z Z Z L V w � a� ��,�� .�000� ��,�,�, tL a � o; m m rn w m rn n�o �n ry w w w o; 2 0` m m m o c o c m c o 0 0 0 0 o m ° 0 0 0 0 U° p o 0 o u� w w w p w�n u> �a �r w w o o �s w w w �} N N Z Z Z Z Z 2 O a F o 0 0 0 0 0 o u> �n o�n O o 0 0 � � m m C� W O� Cf Cl eD �p W N O; O; O; CI � W �� o 0 0 0 � o 0 0 o c o� o � � o o� o 0 0 0 0 'n .n v' u' o .s' u' u' u' 'n 'n o o r' u' w O� � � Z Z Z Z Z Z ` tC O W CO OS W W � � Cf M M M O fA ol N N � N O N O O O O O O O O O O O O N � O O O O O O �" O C O O O O O O O O O O O O C O O O O O O O R p 0 0 o G C O C C G C C C O � O C O G o O � N � W Z f9 1A iA f9 M t9 f9 M M M M M Z M 19 f9 M 19 19 Y A O oi N N W CO t7 t7 C� M M t� O O aD N W o� �y N n V N r s s � < < � �L M o N o O o o O o 0 0 0 0 0 o N O O O O O o d p O o c o 0 0 0 0 0 0 0 0 0 0 o c o 0 0 0 0 0 O 0. p O O � C C C o O C C O O G C o � O O O p O C F` N N ds Z fn tn w wa Vi w wa w H> M w t9 Z w W tA fA w w U W a� � o�� ,�MM�„� o �� LL a o ' � o d o 0 0 0 0 0 0 0 0 0 0 o v ° o 0 0 0 0 0 2 0 O o C o O O O p O O O O O O O C O O O o o O ^ U p O C � o C C C C O G G o O o o � O O O O C O N N fn Z tA fn Vi Vi V> tn M M W wi tH w Z M M M w M w V J � S O O N N OJ M W fh M �9 t+f th eh O N OJ W W � �- 1 �D R � N s- a^ a^ � V � � �- z ip o� o m o 0 0 0 0 0 0 0 0 0 0 o d o 0 0 0 0 0 z p� o> o c o 0 0 0 0 0 0 0 0 0 0 o c o 0 0 0 0 0 � p� a� o ° o 0 0 0 0 0 0 0 0 0 0 0 ° o c o 0 0 0 W � �.- «n Z «� «a fn w ur w v' ut `s vs w w Z w �n w w w ui F L � O O O O O O O O O O O O O O O O U Z�{ � < y N N N N N t7 M M M M � M d O N N N � O fV � tV C! tV N N �7 el ef d' eF eF O C eG fV N fV � O Ri tA Z t9 fA Yi tA fA us M M t9 w M t9 Z M W Mi W � r � / U °� L LL a � M O � O O O O � N N N N N N N d � O O O r O d N O fV � tV fV tV tV (J � � O e� el V et C N N tV tV v a � o w Z w w w w«n .» .n w w.a .a vi Z .n w w w N N W LL� � O N � N N �t1 O O O O O O O O N N N J � n d o 0 0 0 0 �.- .- v o 0 0 0 = p O � C tV C! N N N ef el et ef et et ef G V N tV N W��NN � �,�,��.�, �,.��,�,�,�,� .� �,.�� wY F- _, o 0 0 0 o a o 0 0 0 0 0 0 0 0 0 0 a W ��, �� op000 0 o 000 z � '- G N H fV fV tV eT V O a V O V C Cj fV fV fV � ,� �� t9 Z tA tA M t9 M eA w ai aa en �a w Z en tn es rn r Z � � � W� ��W Z � � ,� K N a K p� I V F' Q Y O �� z� m m z� y�a m w � O a o Z O g a a U� F' N � w C � (/� E v W t a CL 2 Q N a f R R � ❑ � � tA a W (n � C �� W W V �� W W W Z 2 W 2 2 3 p K CL I- H W K Q_ Q: F- i- F- Q C7 ❑ Q Q � f� v� � z u, ti Z Z y�� a z z z u = o w w U � � � � � � . . _ _ _ Z ❑ O � y y O O � 0 O 0 O O � O O O O � � � � O � 41 4+ Z Z 2 Z Z Z Z Z Z Z Z Z Z y Q Q Q W � N N � 47 ad A{ R5 4j' S7 46 4'{ �d �i{ 4j' AS W U U U 2 V V � � � � � � � � � � L � � H 7 7 7 O R A O O O O O O O O O O O O O y �� U ++ •- - U U U U U U U U U U U U U y y y J J ..i _.I J W W W W W W W W U ..I J J � :6 9 J ..! J J J U C7 CJ C� U� U� C� C� J J J J N N Q Q Q Q Q K K K 2� � R� d' K (O Q Q Q �Li� V �� 5�5�g�53 a y�� 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 .� Section 16 /�,;�E+�� -'�/ � Unless othen�7se provided, all notices which may be required to be or are given by either the Company or the City to the other shall be in wTiting and shall be either (a) deIivered by hand and receipted or (b) sent by first class United States mail, unless a different class of mail is required by a specific provision in this ordinance, postage prepaid, to the representatives at the addresses below: (a) To the Compan}•: President, �ese�a NSP Electric I�TOrthem States Power Company 414 Nicollet Mall Minneapolis, ?vlinnesota �9? 55401 with a copy to: General Counsel Law Departrnent, Fifth Floor Northem States Power Company 414 Nicoliet Mall Minneapolis, Minnesota 55401 (b) To the City: D'uector Department of Finance and Management Services (or its successor depariment or o�ce) City of Saint Paul 15 West Kellogg Boulevazd Saint Paul, Minnesota 55102-1616 with a copy to: City Attorney Office of the City Attorney City of Saint Paul 15 West Kellogg Boulevard Saint Paul, Minnesota 55102-1616 Either the Company or the City may change the above designated representatives and addresses by written notice as provided in this Section 16. �� -Z�� 19 z z 3 4 5 6 7 8 �`'� 6� � E^° � �, � � � ��t°�.��_:�i`�� h�. 911Rir.eu�n �1 c� • y �`i JUN °� 199� � �'-• - -. . .-•_ - 1 ��/..�" � ��v�/i.' ..'�i�:/u' I/� .�. %.iL' � / � \r� � �,/ ( �i.�i.9. ��// / � �� . . � Form Approved by City Attorney Adopted by Council: Date ` Adoption Certified by Council Se etary gl ff /r-g�j BY= �,--� �•��"�'�� Approved by Mayor for Submission to � � council Approved by Mayor: Date /� � " By: �E� ��'�n�11� sy: J�j�� ",. " 395��a IOFFICECOUNCIL DATEINRIA7ED GREEN SHEE � �'"y � t FINANCE 6 MANAG.�i1ENT SERVICES 4/16/96 MITIQ A INITIAIIOATE COMTACT FEASON & PNONE � DEPARTMENi DIREGTOR F � CITV COUNCII MARTHA LARSON 6-8766 ^u+�" �cmnsroANev ��. �s'%y yt �crtvc�arc NUYBEPiOfl MUST BE ON COUNCIL AGENDA 8Y (DATE) ROUTING � B ET DIREGTOR � FIN. & MGT. $ERVICES �IR. ORDER Mpypp�pRASSISTANn L/ � � A ril 24 1996 TOTAL # OF SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATURE) ACTION REQUE$TED: Passage of ordinance to renew the NSP electric franchise effective July l, 1996, to June 30, 2006. RECOMMENDAiIONS: Appmve (A) or Reject (R) pERSONAL SERYICE CONTRACTS MUST ANSWER TNE FOLLOWING qUE5T10NS: _ PLANNING COMMISSION __ CIVIL SERVICE COMMISSION �� Has this personRirm ever worked under a comrect for this tlepartment? _ qB COMMITTEE ,� �'ES NO 2. Has this personHirm ever been a city employee? _ S7AFF _ YES NO _DISTRICTCOUR7 .__ 3. DoesMiS er5on/fiRn p possess a skill not oortnairy possessetl by any currant ciry empbyee? SUPPORTS WHICH COUNqL OBJEGTIVE9 YES NO Explain all yes answers on separete aheet antl attech to green ahaet INITIATING PR08�,EM. ISSUE.OPP4JRTUNIN (Wfio, What. When, Where. Whyy See attachment to NSP gas franchise renewal. ADVANTAGES IFAPPROVED: See attachment... DISADYANTAGESIFAPPROVED: See attachment... DISADVANTAGES IF NOTAPPROVEO: See attachment... TOTAL AMOUNT OF TRANSAC710N $ COSTlREVENUE BUDGETED (CIRCLE ONE) VES NO FUNDIfdG SOUIiCE ACTIVITV NUMBER FINANCIAL INFORMATIOM (EXPLAIN) ��9 � �� SIIMMARY OF ATTACHED PROPOSED TECFiNICAL AMENDMENTS TO C. F. NO. 96-417: (For Second Reading) 1. Page 5, amend Section 5(a-2)(iii) de£inition of Customer Classification. 2. Page 15, amend line 26 to change "or" to "of." 3. Page 19, amend the Company address. . � 1 and (iii) the Bitling Demand for each such Customer to which a Demand Factor applies under 2 the Schedule and the terms of this ordinance. t�!lyt�u((,t ��p ��17 •3 4 5 6 7 8 9 10 11 12 13 !4 15 16 17 18 19 20 21 22 23 24 �5 (a-2} Definiflons. The foliowing terms, as used in this ordinance, shall have the meanings given. Substantive provisions which may be contained in said definitions shall be given full substantive effect. (i) "Billing Demand" means demand in kilowaits as detemiined by the Company for billing purposes in accordance wiffi the Tariffs approved by the Commission and contained in the Electric Rate Book from time to time, including but not limited to contracted demands biiled by the Company at a billing demand rate per kilowatt greater than or equal to zero. (ii) "Commission" means the Minnesota Public Utilities Commission, or any successor agency or agencies, including an agency of the federal government which preempts all or part of the authority to regulate electric service now vested in the Minnesota Public Utilities Commission. (iii) "Customer Classification" or "Classification" means each and every classification of Company Customers in the Schedule, all of which aze based on the Tariffs contained in the Electric Rate Book in effect on July 1, 1996. The Classifications a�e te shall be used for the purpose of computing and determining franchise fees under this ordinance �ess-sSuch Classifications a�e mav be amended or added to from fime to time by agreement of the Company and the City under Section 5(k). (iv) "Customer of Company" or "Company Customer" or "Customer" means any electricity user located within the City which at any time during the term of this franchise takes delivery of electricity by means of any Company electric facilities located within the City. Each and every Customer classified as a sepazate account by the Company shall be deemed a sepazate Customer of the Company. � �-�9 -9� � 1 cure the invalidity consistent with the intent of this ordinance, which meetings and discussion �4�fnip� � 2 shall be without prejudice to the lawful rights of the Company and the City. j . 3 4 5 6 7 8 9 10 11 12 13 � 15 16 17 18 19 20 21 22 23 24 �5 (b) Interim Fees under Exisring Surcharge Rider; New Fees. The provisions of the Company surcharge rider Tariff in the Electric Rate Book relating to the collection and payment of Interim Fees to the City, shall continue in full force and effect from July 1, 1996, up to the time New Fees commence with the bills issued to Customers effective with the Company's November, 1996, billing month, or the fust Company billing month commencing after ihe Approval Date, whichever is later. The "Approval Date" is the date of approval by the Commission of the time and manner of collection of the New Fees which are provided for in Section 5. On and after the date New Fees commence, and for the remainder of the term of the franchise, the provisions of this ordinance relating to the computation, collection and payment of the said New Fees to the City shall apply. On and after July 1, 1947, if the Commission has not approved the time and manner of collection of the New Fees and the City is still being paid Interim Fees, either the Company or the City may give notice by certified mail to the other that the remainder of the term of the franchise is a Franchise E�ension Period under Section 11(d) for the purpose of terminating this franchise. (c) Reinstatement of Interim Fees. If any administrative agency or court of law issues an order or enters a judgment that impairs in any way the nnplementation of this franchise or of the collection of the New Fees under Section S of this ordinance as to one or more Company Customers, then in that event the approved Tariff surcharge rider in the Electric Rate Book relating to the collection and payment of Interim Fees to the City, shall, at the sole option of the City expressed in notice by certified mail to the Company, be effective if there is an approved surchazge ailowing collection of the Interim Fees with respect to the one or more Company Customers affected by such order or judgment upon the date of the making of such order or entry of such judgment, and shall conunue in full force and effect 26 until the first to occur e� of (1) June 30, 2006, or (2) such order or judgment expires or is is �'f-zq-�b � 2 • 3 4 5 6 7 8 9 10 I1 12 13 14 15 16 17 18 �19 0 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 ff:? �9 40 Section 16 �� lv -�'� � Unless otherwise provided, all notices which may be required to be or aze given by either the Company or the City to the other shail be in writing and shall be either (a) delivered by hand and receipted or (b) sent by fust class United States mail, unless a different ciass of mail is required by a specific provision in this ordinance, postage prepaid, to the representatives at the addresses below: (a) To the Company: President, �ese�a NSP Electric Northern States Power Company 414 Nicollet Mall Minneapolis, Minnesota 334A� 55401 with a copy to: General Counsel Law Departrnent, Fifth Floor Northern States Power Company 414 Nicollet Mall Minneapolis, Minnesota 55401 (b) To the City: Director Department of Finance and Management Services (or its successor department or office) City of Saint Paul 15 West Kellogg Boulevazd Saint Paul, Minnesota 55102-1616 with a copy to: City Attorney Office of the City Attorney City of Saint Paul 15 West Kellogg Boulevazd Saint Paul, Miimesota 55102-1616 Either the Company or the City may change the above designated representatives and addresses by written notice as provided in this Section 16. �� -2�-�i� 19 �I� -�E �� • COMPARATIVE ORDINANCE - ELECTRIC: April 18. 1996 This ordinance is intended to show the changes in the proposed electric franchise in comparison to the existing franchise, and it is for comparative purposes only. The underlined material is new. The version that is controlling is the ordinance introduced and given first reading on Apri124, 1996. For questions, call Phil Byrne at 6-8728. u A legislative ordinance to grant a franchise to Northem States Power Company for the use of streets and other public property within the City of Saint Paul for the nrovision s� of electric service °'°�� for a term beginning July 1, 1996 and ending June 30, 2006; and to fix all the terms and conditions of such franchise including the compensation to be paid to the City under said franchise. THE COLTNCIL OF THE CITY OF SAINT PAUL DOES ORDAIN: Section 1 Northern States Power Company, a corporation organized under the laws of the State of Minnesota, hereinafter designated as "Company," being a public service corporation supplying electricity for all purposes within the Ciry of Saint Paul, hereinafter designated as "City," under a franchise ¢ranted under Ordinance No. �� 96-34, which expired on �4�k 3� June 30, 1996, is, together with its successors and assigns, hereby granted a franchise in accordance with the terms and conditions of this ordinance to use the streets and other public property located in such City for such purpose for a term eatending from Julv 1. 1996 to June • 30, 2006. The term "this ordinance" shall refer to the ordinance being adopted herewith. ��-�n C� Section 2 The franchise granted herein shall eatend to the Company's use of all streets and public property now being used by the Company in connection with electric st� service and of such other streets and public properry as may from time to time be designated by the City. Such franchise to use the streets and other public properry located in such Ciry shall include such use for the purpose of erecting, laying, constructing, installing, maintaining and operating poles, posts, wires, conduits, subways, pipes, manholes, service boxes, cables, conductors and all other necessary and convenient facilities used in conducting, transmitting, distributing and supplying electric energy to and through said City for public and private use. Section 3 � !a) General. In locating its electrical facilities, the Company shall in no way • unreasonably interfere with the safety and convenience of ordinary travel along and over said streets and pubiic property, nor interfere with other uses to which such places may be put by the Ciry e�, and in the event it shail become necessary during the term of this franchise to remove or relocate the physical property of the Company located within or upon any of the streets or public properry in the City, because of such interference or use by the City, or as a result of any public improvement undertaken by the City, the Company shall, when so advised by the City Council, remove and relocate said facilities without cost to the City, and sha11 place the sueets or public properiy in the same condition as they were prior to said removal or relocation. However, after Company has so relocated its facilities, the Company shall not within �r-(�8� five 5 yeazs thereafter be required at its own expense to 2 �1�-�t�1 • make any further relocation of the same faciliries °` �+ +'�° *�-�° �F''�°'�_... _,,,..,.,,«:,.., .,,e �:.., - - - - -- - - - - - - - -- - -. - Company may be required to further relocate any such facilities at its own expense where required because of the ea�tension of public utilities to previously unserved areas °-or-�-� . Any relocation or removal of the Company's facilities made necessary because of the extension through or into the City of a federaily-aided state trunk highway, included within the National System of Interstate Highways, shall be governed by the provisions of Minnesota Statutes 1971, Section 161.46, as supplemented or amended. fb) Comnany Facilities on Non-aublic Proaertv. The removal and relocation provisions of Section 3(al do not applv to electric facilities or eauipment which are not ` located on streets or other public pronertv of and within the City; provided, however, if the result of anv reznoval or relocation of Comoanv equipment or facilities on or in streets or public properiy is that the Companv finds it necessarv or desirabie to move. relocate, make adjustments to or otherwise in an�way modify its electric facilities or eauipment on �ronerlv which is not a street or other oublic prouertv, all of such chan�es aze and remain at the sole cost and exoense of the Comnany. In addition, the provisions of Section 3(al do not applv to electric facilities or equinment which were located on non-City.pronertv for which the Comoanv had an easement or other interest or pernut which made the use of such non-Citv pronerty lawful, and which non-Citv propertYwas thereafter ac uired bv the City for street or other nublic use, if the Citv did not nav comuensation or relocation assistance to the Companv at the time of CS acquisition. L� �f 6' N �� Section 4 (al City ReeulaHon. The Company ' °'�� shall be subject to such reasonable regularions as may be provided or authorized by #�� ordinance. N�o poles, masts or conduits, or anv other such electric facilities shall hereafter be installed, erected or laid in the streets or public vronertv by the Company except upon ��,'.��.:��. «�.�.,. ae...,_...,e.,. ,.r....�.�;,. . ,._ti.,. ,. ,.a.,... _ �er-ser� full compliance with the requirements of such re¢ulations as mav be adopted or authorized hv ordinance. The reasonable regvlations of the Citv mav require the pavment of aproropriate permit and other fees related to such reeulations; provided, however, that the • Companv shall not be oblieated to Dav such fees under the electric franchise in excess of $15,000 in anv calendar yeaz from 1997 throu¢h 2000, or in excess of $25,000 in anY calendaz vear from 2001 throueh 2005 or in anv Franchise Extension Period occurrine after 2005: and further nrovided. that such limit shall be $7,500 for the remainder of 1996 and $12,500 for the period from Januarv L 2006 to June 30. 2006, if there is no Franchise Extension Period. T'�° r� .:a •� � �:'-. °::�'.. ...�..,�� .v...,v..uvrt" ^'7 F�:tw_ `::i.W.j' .�� .�b.'�.�a xivrru--co !.f!lfrJ!7l7i_ _ .!!!�!1!!!��!R5_ _ 0 ►'iiS1Z.�"' • _Fe�!Rf��A b Pole Space and Street Lights. The Company sha11 reasonably make available to the City space on its ufility poles for City fire, water utiliTy, and police facilities. Whenever • 0 �'� - yi 7 . directed by the Council by resolution, the Company shali make reasonabie extensions of its street lighting facilities for the installation of street lighu, without cost to the City, but said facilities shall remain the properiy of the Company. Section 5 (a-11 Franchise Fee Imposed. During the term of the franchise hereby granted, and durin� anY Franchise Ea�tension Period under Section 11(dl, and, except for nermit fees authorized bv Section 4, in lieu of any permit or other fees relating to the installation, repair, maintenance and operation of its facilities, the Company shali pay �cto '�°� the City ^r� a franchise fee as provided in this Section 5�°� '�an=�-�e ��'°��'�°-�:-��`�- ..,., F.�,. ,.v �,.,. ,. ..>.. .. � ,.o_e:��c�=- ae��va such fee to be paid � • �ea�l�errEs for each Companv billin� month on or before the last day of the first full calendaz month foilowing the Companv billine month. The franchise fee shall be the total of the monthl�Meter Fee, Enert�v Fee and Demand Fee, where applicable, for each Companv Customer which is located within the Citv and which receives electric service by means of Comuany electric facilities located within the Citv, reeazdless of how such facilities aze used or classified includin2, but not limited to, those facilities used for or classified as transmission. deliverv or distribution, or anv combination thereof. The franchise fee for each Companv Customer shall be determined bv ap�l, in�e the Meter Factor, Ener¢v Factor and Demand Factor as indicated in the Schedule, resQectively, to �1 each and everv Customer classified bv the Comnanv as a separate account, (ii) the amount of electricitv in kilowatt hours delivered to each such Customer each month. and (iiil the �� Billing Demand for each such Customer to which a Demand Factor appiies under the Schedule and the terms of this ordinance. �-2) Defmitions. The followins terms. as used in this ordinance, shall have the meanings eiven. Substantive provisions which mav be contained in said defuutions shall be �ven full substantive effect. (il "Billin¢ Demand" means demand in kilowatts as deternuned bv the Comqanv for billingpurposes in accordance with the Tariffs approved bv the Commission and contained in the Electric Rate Book from time to time, including but not limited to contracted demands billed bv the Comnany at a billine demand rate oer kilowatt greater than or equal to zero. (ii) "Commission" means the Minnesota Public Utilities Commission, or anv successor • agencti or agencies, includin¢ an aeencv of the federal eovernment which preemnts all or Dart of the authoritv to reeulate electric service now vested in the Minnesota Public Utilities Commission. �iii} "Customer Classification" or "Classification" means each and everv classification of Companv Customers in the Schedule, all of which aze based on the Tariffs contained in the Electric Rate Book in effect on July 1, 1996. The Classafications are to be used for the puroose of computine and determinin¢ franchise fees under this ordinance. unless such Classifications are amended or added to from time to time bv a�reement of the Com�anv and the City under Section Sfkl. (iv) "Customer of Companv" or "Companv Customer" or "Customer" means anv electricitv user located within the City which at anv time durinQ the term of this � ��- �1? • franchise takes deliverv of electdcitv bv means of anv Comoanv electric facilities located within the Citv. Each and everv Customer ciassified as a sepazate account bv the Company shatl be deemed a sepazate Customer of the ComnanX �v) "Demand Factor" is the monthly monetarv amount per kilowatt shown in the Schedule. (vil "Demand Fee" means the monthlv fee collected from each Companv C�stomer which is subject to Billine Demand from the Companv. The monthly Demand Fee is the product of the Billine Demand as defined in Section 5(a-21(il above for each such Customer times the Demand Factor specified in the Schedule. �ii) "Electric Rate Book" means the Companv Electric Rate Book, as it may be revised from time to time, which contains Companv electric service Taziffs, eneral • rules and reeulations, service rules, standazd contract and agreement forms, customer billine forms and notices and technical and sDecial terms and abbreviations. as approved bv the Commission. (viii) "Enerev Pactor" is the monthlv monetarv amount per kilowatt hour shown in the Schedule. (ixl "EnerQV Fee" means the monthlv fee collected from each Customer of the Company based on the quantitv of kilowatt hours of electricity delivered to each such Customer of the Companv. The monthiv Energy Fee for electricitv is the oroduct of the amount of electricity delivered to each such Customer each month exoressed in kilowatt hours times the monthlv Energ;v Factor specified in the Schedule. � �� -�,7 • fx) "Meter Factor" is the monthlv monetary amount per Customer shown in the Schedule. (�) "Meter Fee" means the monthlv fee collected from each Customer bv apolvin�,the Meter Factor to each and everv Customer. j�il "Schedule" means the table in Section 15 of this ordinance showing the Meter, Ener¢v and Demand Factors, where applicable, for each Customer Classification for each yeaz of this franchise; �rovided, that the Meter, Energ�and Demand Factors in effect for the veaz 2006 pursuant to the Schedule shall also be used and be effective during anv Franchise Extension Period under Section 11(d) of this ordinance. All Customer Classifications shown in the Schedule on July 1, 1996, aze set forth in or determined bv the Electric Rate Book in effect on that date. • (xiiil "Tariff' means each and every service schedule, tariff, service rider, surchazge rider. rule contained in the �eneral rules and regulations, rule of service, rider or similar document which has been or is annroved bv the Commission, and includes any modification, amendment or deletion thereof. (a-31 Residential Customer Limitation. For residential Customers subject to the limitations contained in Minnesota Laws 1979, Chapter 189, and for so long as such law shall remain in effect, the franchise fee durine any calendar veaz or nart thereof shall not be uaid or collected durin@ the billine months of January. Februarv, Mazch, April. November and December. . . ' "" • "' " "' ' ' " " " "' ' ' ' " "" ' " . RT,ISl9 � �� -y� � �- ---------- - -- - - -- --- - - -- - - --- - --- - --- -- - ��:,� (b-1) Other Ener� Franchises. The annual dollaz amount of the franchise fee collected from a Companv Customer, or a reasonable estimate of the franchise fee that would be collected from a nrospective Comnanv Customer, for electric service provided under this franchise shall not be materially�?reatez than the annual dollaz amount of the franchise fee that would be collected for Similar Service to such Customer bv another Enerev Suonlier under the terms of a New Franchise, assumin compazable energy usaee by,said Customer. (b-21 Definitions. For the purooses of Section 5(b-11 through Section 5(b-41 onl�e followinQ terms shall have the meanings �iven. "Similar Service" shall mean the supplv of • energYto a Customer for the same end-use puroose or function as the electricitv which is or could be furnished bv the Com�any. "New Franchise" shall mean a franchise granted to anothet Enex�v Supnlier after December 31, 1995, or an amendment to an existing franchise held bv another Energy Supplier after December 31, 1995. 'Bnergv Supolier" shall mean a suonlier of energy other than the Compan� (U-31 Disnute Resolution. The City shall give the Companv notace bvi certified maii of the nrovisions of a�onosed New Franchise at least ninetv (901 davs before it is finallv adonted bv the Citv Council. The Companv shall state in writine its position and give the factual bases for that nosifion on whether the adoption of such New Franchise would violate the nrohibition in Section 5(b-1) above within sia�tv (601 davs of the date of notice. The Comroanv's failure to respond wiil be a waiver of anv rights, remedies, or causes of action it � ° �C�-�fr� � mav have under Section 5(bl If the Companv's position is that the adoDtion of the proposed New Franchise would violate Section 5(b-11 above, then at the reauest of either the Comoanv or the Citv, the issue of whether the nroposed New Franchise violates Section 5(b-1) shall be submitted to bindint azbitration, using an azbitrator selected under the Commercial Arbitration Rules of the American Arbitration Association. The franchise fee terms of anv New Franchise must be consistent with the decision of the azbitrator. (b-41 Consent of ComQany. Section 5(b-11 throu¢h Section 5(b-41 do not ap�lv to anv proposed New Franchise to which the Companv consents in writin¢. (c-111 New Fees Starting Date. The franchise fee im�osed in Section 5(a-11 to Section 5(a-31 and in this ordinance ("New Fees"1 shall commence with the bills issued to Customers bv the Comroanv effective with the Companv's November, 1996, billina month, or • with bills issued to Customers for the first Comnanv billine month commencine after the Approval Date, whichever is later. (c-2) Interim Fees. Until collection of the New Fees commences, the franchise fee collected bv the Companv ("Interim Fees") sha11 be a franchise fee equal to ei¢ht percent (8%1 of the Com�anv ¢ross earnings as hereinafter defined from all Customer Classifications, such fee to be paid for each Company billing month on or before the last dav of the first full calendaz month following said Companv billing month. The term "gross earnings" means all sums, excluding said Interim Fees s�k�ge, received by the Company from the rorovision of electric service a used within the corporate limits of the City.-^^a ^�^^ °°^�,.a:.,.. .. ..,«., ae,.:.,ea a,.... ...,i,... .,. _..:,ae...:..i • 10 `1 � ' �� •� . a .." '"' ' ' '"' ''L9}_!_.�5!E73R!!5!El7T-f!!1!'t!_t5'' ''' ' ''' "' "'!�i!!SR'R! (c-31 Collecfion; Adjustment. Neither the New Fees nor the Interim Fees ��ise €ee imposed in this ordinance �g shall � exceed any amount which the Company may recover, prior to payment to the City, by imposing a surcharge equivalent to such fee in its rates for electric service to Customers within the City. Both New Pees and Interim Fees aze s�ect to subsequent adjustment to account for uncollectibles, refunds and correction of � - � . _!�:se+s!��!±�s!�s��_ . ----- ----- - - ---' 'rs- - ° - - ---- --- _ — '''e!�s!�!�ierA - -• - - - - • -- - - - e!e��r_e!�eras!�r_�+etr_fR�te!!Re . � „�•• � � .. .• � .. .•. � .�. . .. �� .. .. �' '�: : a�,-�s:se��•r�n� -•- -• -•• •- •- ••- • - - .. . - •- - • - -- -- - • -- - - �zr�.- _ - - ntzte;� (dl Annual Can for Competitive Market Rider. ° `There is hereby exempted from the franchise fee any requirement that the Csompany pay or collect by such surchazge a franchise fee in excess of six hundred twenty thousand dollazs ($620,000.00) in � 11 �l`6� �f i � any calendar yeaz ("annual cap") from any large commercial and industrial class Customer - -- - - --- -- - - -• - -. ... •-- - - • • • - -- - -- - - '- ''�� receiving_electric service from the Companv under that certain Competitive Market Rider, as ori¢inallv anuroved bv the Commission on June 18, 1993, Docket No. E- 002/M-93-301. Anv Companv Customer receiving service from the Companv under the ComDetitive Mazket Rider before the effective date of this ordinance shall continue to be elieible for the annual cap. Any ComDany Customer which has not received service under the Comoetitive Mazket Rider from the Comnanv before the effective date of this ordinance which thereafter receives service under the Com�etitive Mazket Rider is eligible for the annual � � if the Comuanv provides written certification to the Citv that it has verified such Customer's elieibilitv for service under the terms and conditions of the said Competitive Market Rider and sets forth the findin¢s and basis for such certification. This annual can shall not be apolicable to anv Comnanv Customer which has not received service under the Comuetitive Mazket Rider from the Comnanv before the effective date of this ordinance if the said Comoetitive Mazket Rider is amended or modified in anv wav which materiallv chan¢es the substantive requirements a Customer must satisfv to receive electric service under such Rider, or if such Rider is withdrawn, repealed or for anv reason becomes ineffective. (e-1) Monthly Reports. The Company shall file monthly with the Director of the Department of Finance and Management Services a report showing electric consumption and revenues by classes of service for the preceding Comnanv billing month, and shall file a � 12 �� l� . quarterly report containing such fiuther information as may be agreed to by the Company and the City, based upon the Company's electric operations within the City. Such monthly reports sha11 show on a monthlv and cumulative veaz-to-date basis (i Companv revenues bv Customer Classification from Customers in the Citv, exclusive of sales tax and franchise fees. and ii the Meter. Ener¢v and Demand Fees and the corres�onding billin�units (Customer accounts, delivered kilowatt hours and Billine Demandl for each categorv of Fees. bv Customer Classification. Such monthlv re�orts shall show anv monthlv adjustments as provided for in Section 5(c-31. In the event there is a si¢nificant fluctuation in the amount of franchise fees bein¢ collected and remitted, the Companv wiil at the Ci 's reqnest meet and discuss with the Citv the cause or causes of such fluctuations. The Companv and the Citv mutuallv a¢ree to provide reasonable documentation to assist in determinine such cause or � causes. (e-21 Auditor's Opinion. The Companv will provide the City with an annual opinion from the Comvanv's independent auditors that, in connection with the Companv's annuai audit, the auditors have reviewed the Com�anv's computation of franchise fees consistent with �enerallv accented auditine practice and that such computation is in accotdance with the terms and conditions of this ordinance. The Com�anv and the CitY will each oaY one-half of the Compands independent auditor's incremental fees for providine this oninion in connection with the Company's annual audit, based on reasonable and verifiable fees billed by the auditor. The City may at its option, not more than once a yeaz, require that the Companv's compiiance with the terms and conditions of this franchise including but not limited to the • 13 �G �� -� • computation of franchise fees be verified by a certified ax� nublic accountant or compazablv-qualified consultant at the expense of the Ciry. �f Reserved. � Reserved. (hl Placement of Customers. Everv ComQanv Customer, on the effective date of this ordinance. is subject to a Tariff in the Electric Rate Book, and based on such Tariff each such Customer is included in a Customer Classification in the Schedule and shall remain in that Customer Classification, subiect to the nrovisions of Section 5(jl and Section 5(kl. The Companv shall place each new Customer in a Tariff on the basis of the new Customer's reasonablv expected character of service, voltaee, electricitv consum�tion and Billing Demand, and shall on the basis of that Tariff place the new Customer in the most • compazable Customer Ciassification in the Schedule for the purpose of coilection of Meter, Energv and Demand Fees. (il Reserved. (il Movement of A Customer. Subiect to Section 5(kl, if a Customer moves from one Company Tariff to another Comroanv Taraff, where such movement is �ermitted by such Taziffs. the franchise fees to be collected from such Customer shall be computed on the basis Qf the franchise fees for the Customer Classification which is applicable to the Tariff to which such Customer has moved. Subiect to Section 5(k), if a Customer chanaes service chazacteristics relatinQ to voltaQe or electric consumption or both, and such chanees cause the Customer to both (i) take a different electric service from the Companv under the same Taziff, and (ii) meet the criteria for a different Customer Classification in the Schedule, then the • 14 c��i�i • Customer shall also be moved. for the purpose of collectine franchise fees. to the Classification in the Schedule most comparable to the Customer's Tariff and new service chazacteristics. (kl New or Amended Tariff or Classification. When the Commission orders or approves a new Tariff or Taziff revision (a 'New TatifF') for inclusion in the Electric Rate Book. for which no Customer Classification exists, each Customer takin¢ electric service under such New Tariff shail be nlaced in the Customer Classification in the Schedule most compazable to the New Tarif£ The nlacement shall be based on the reasonablv expected chazacter of service. voltaee, electricity consumgtion and Billing Demand established for such New Taziff. The New Taziff shall be one for which there is an apnroved surcharge rider, so the collection of Meter_ Energy and Demand Fees from a Customer taking service under the • New Taziff shali be, to the fullest extent practical, comparable to the fees collected if the Customer received electric service under the former Tazif£ If there is no approved surcharge rider for the new Taziff, the Companv shall continue to coliect the Meter. Energ,v and Demand Fees based on the Customer's former Customer Classification. Upon mutual aereement of the Comoanv and the Citv, this ordinance mav be amended to establish a new Customer Classification for anv such I�3ew Taziff. � Reserved. �ml Customer and Franchise Fee Retention. The Citv and the Comnanv aeree that chanees in the electric industry mav create situations in which Companv Customers may switch to alternate enerev sources which would cause both the loss of Citv franchise fee revenues and the loss of Companv revenues and maz�ins. In such situations it wi11 be to the • 15 ��f�� ! mutual best interests of the Citv and the Companv to discuss strateeies to prevent or ameliorate such losses, among which would be the amendment of franchise provisions relating to the fees hereunder as an accompaniment to equivalent Com�anv Dricing and discount chanees. It is the intent of the City and the Comoanv to enter into such discussions as the need mav arise in the future. jnl Charter Requirement. The Companv and the Citv recoenize that the New Fees provided for in this ordinance do not collect a franchise fee based on the gross earninss of the Companv derived from nrovidin� eleciric service wathin the Citv. If in anv uarticulaz calendaz yeaz. the franchise fees collected under this franchise in the ag¢regate or for any Customer Classification or Customer do not equal five (5) percent of the said ¢ross earnin�s of the Companv, the Companv as franchise holder is specifically relieved, as reauired and • oermitted in Chapter 16 of the Charter, of the obligation to make a franchise fee pavment of five (51 percent of Companv sross earnines. �ol Commission Approval. The Comnanv shall use its best efforts to obtain the anDroval of the Commission for a surchazge rider Tariff implementing the provisions of this ordinance relating to the time and manner of collection of the franchise fees provided for herein. Section 6 The electric service of the Company and the rates to be chazged by the Company for electric service in the City sha11 be subject to the jurisdiction of the p••'�'�� T�T�"a�'',�� Commission �` `�° °�e. The Company shall provide reasonably efficient and adequate • fC.� � � � �� service to members of the public within the City who appiy for such service in accordance with the rules and regulations of the Company. Section 7 Certification and Filine of Electric Rate Bool�. Within thirtv (301 days after the effective date of this ordinance, the Companv will file with the Citv Clerk a copv of the Electric Rate Book in effect on Jul�l. 1996, with a certificarion as to its accuracv. Durine the term of this franchise, the Comnan�shall file with the City Clerk anv oronosed Taziff or Taziff chante filed with the Commission and any revisions to its Electric Rate Book aporoved b�the Commission. , � - - - - - - - "�r�s�+s' " �"-�4 Section 8 Except where required for a public improvement project, the vacation of any street or public ro ert gFet�, after the installation of electric facilities, shall not operate to deprive the Company of its rights to operate and maintain such electric facilities, until the reasonable cost of relocating the same and the loss and expense resulting from such relocation aze first paid to Company. � 17 ��'��7 � Secrion 9 Before this ordinance shall be finally adopted by the Council, a public hearing shall be held upon ten (10) days' published notice in the official newspaper and after said hearing the council may pass this ordinance, revise or amend the same. The Company shall beaz the costs of publication of the franchise ordinance and shall make a sufficient deposit with the City Clerk to guarantee publication before the ordinance is passed. Section 10 The Company shall indemnify and save the City whole and harmless from any and all claims for injury or damage to persons or property occasioned by or arising out of the construction, maintenance, operation or repair of said transmission and distribution system or • by the conduct of the Company's business in the City. The foregoing does not indemnify the City for its own negligence except for claims arising out of or alleging the City's negligence �� where such negligence azises out of or is primarily related to the construction, operation, maintenance or repair of said systems, including, but not limited to, the issuance of permits and inspection of plans or work. This section is not, as to third parties, a waiver of any defense or immunity otherwise availabie to the Company; and the Company, in defending any action on behalf of the City, sha11 be entitled to assert in any action every defense or immunity that the City could assert in its own behalf. fF:3 �G�� 7 r� �� Secrion 11 � Cure of Invaliditv. ', ; Iif any section, provision or part of this ordinance shall be heid invalid, �' °'��" -�� "�'°"' " �`''�' "�"`'��, " ��~' the Company and the City shall meet and discuss amendments to the ordinance to cure the invaliditv consistent with the intent of this ordinance, which meetings and discussion shall be without prejudice to the lawfixl rights of the Companv and the Citv. (bl Interim Fees under Existine Surcharge Rider: New Fees. The nrovisions of the Companv surcharee rider Tariff in the Electric Rate Book relatine to the collection and pavment of Interim Fees to the City shali continue in fuli force and e£fect from Julv 1 1996 � un to the time New Fees commence with the bills issued to Customers effective with the Companv's November, 1996. billine month, or the first Companv billing month commencin¢ after the Approval Date whichever is later The "Apuroval Date" is the date of aporoval bv the Commission of the time and manner of collection of the New Fees which are provided for in Section 5. On and after the date New Fees commence, and for the remainder of the term of the franchise, the provisions of this ordinance relatine to the comnutation, collection and �avment of the said New Fees to the Citv shall ap�lY. On and after Julv 1. 1997, if the Commission has not approved the time and manner of coliection of the New Fees and the Citv is still being,Paid Interim Fees either the Companv or the Citv mav give notice bv certified mail to the other that the remainder of the term of the franchise is a Franchise Extension Period under Section 11(dl foz the pumose of tertninatins this franchise. • 19 �� , (cl Reinstatement of Interim Fees. If anv administrative a�encv or court of law issues an order or enters a judgment that im�airs in anv wav the imDlementation of this franchise or of the collection of the New Fees under Section 5 of this otdinance as to one ar more Companv Customers. then in that event the approved Tatiff surchazge rider in the Electric Rate Book relating to the collection and pavment of Interim Fees to the Citv, shali, at the sole ontion of the City expressed in notice bvi certified mail to the Companv, be effective if there is an approved surchazee allowing collecrion of the Interim Fees with resnect to the one or more Com�anv Customers affected b�such order or judement upon the date of the makine of such order or entrv of such jud¢ment, and shall continue in full force and effect until the first to occur or (1) June 30. 2006. or (2� such order or iudgment expires or is vacated, reversed, superseded or overruled. An�period of time after the Apnroval Date, • during which the Citv is bein¢ paid Interim Fees under this Section 11(cl. shall be deemed to be a Franchise Extension Period under Section 11(dl for the,purpose of terminatine this franchise. (dl Franchise Extension Period. If this franchise has not been extended or renewed, or a new franchise agreement entered into, bv and between the City and the Companv before its expiration date on June 30, 2006, this franchise shall be extended in its entiretv, with all of its riQhts and obligations, for an addirional ten (101 year oeriod, to expire June 30. 2016 (the "Franchise Ea�tension Period"), subiect to the following provisions. Durin¢ the Franchise Extension Period the franchise fee to be paid to the Citv bv the Companv in anv veaz shall continue to be comguted, collected and paid as it was in the year 2006. During the Franchise � 20 �`�- �(�� Extension Period, either the Companv or the Citv can terminate the franchise upon �rovidin� two veazs' notice by certified mail to the other partv. �el Commission Jurisdicrion. Nothine in this ordinance confers or is intended to confez iurisdiction or powers on the Commission or anv other administrative agencv or court of law, which it does not otherwise have bv law. Section 12 The Company shall, wiUun thirty (30) days after the passage, approval and publication • of this ordinance, file with the City Clerk �� its written acceptance thereof in form to be approved by the City Attorney, and therein shail agree to abide by, keep and perform all the terms, limitations, conditions and provisions of this ordinance. Section 13 Upon any breach or failure to comply with any of the terms or conditions of this franchise ordinance, either party may bring an action at law or in equity to seek compliance by the other with the said terms and conditions, money damages or any other appropriate relief which may include, but is not limited to, termination and forfeiture of the franchise granted herein. Section 14 This ordinance shall take effect and be in force after the public heating prescribed in • Section 9 and thirty (30) days after its passage, approval and publication, and upon its acceptance as provided in Section 12 hereof. 21 ��,-�i�� Section 15 The tabie shown herein is the Schedule defined in Secrion 5(a-2)(�ciil of this ordinance and is �art and provision of tlus ordinance. The Schedule provides, for each veaz of the franchise and for each of the C�stomer Classificarions listed. the Meter, Ener�v and Demand Factors for that veaz or eroup of vears. For example, the Factors shown for 1996 are to be used for the veazs 1996 through 1999; the Factors shown for the vear 2000 aze to be used for the veazs 2400 and 2001: the Factors shown for the vear 2002 aze to be used for the years 2002 and 2003: and so on. (Note to Revisor: Please orint the followine Schedule hereJ • � 22 £��f 3 ��. V Ql N Ql N p1 N N O O O QI � � � N J � 0 � � 0 � � ' 4f A h N � � � � O Z.' C C C m � O C G G O O '' � = N � 2 2 Z w w w w Z w w w w w w w Z Z w w w w .ry 3 ° Q Y � o�n o � o o�n �n o m a R' � o i ,.� d m � o 0 0 0 � q o o n�o �n oi o ° o, o � • O a � N Z 2 Z w w w w o w w w w w w w a o w w w w � � � N Z 2 Z � a� LL Q � t .. O O � Q�i O A T 0 Q�i A � N N h Yf N N �} N Ci Z Z Z N N N q Z w N N q W N W Z Z q W N N O � = p 3 ~ � O O O O�i O W � � N h N T 01 T Q � � LLI O O1 � O O O N W W � p W W W w H N N C � N W W N W �� p'� Z Z Z Z Z Z U N � v W M O W a0 W CO t0 Pf e� pf P1 M ' O W O x."' O C p p p ' p O O O O O O O O N p �� m O O O O O O O O O C O � � N � p Z C C o C p C G G o O G G ° � � o 0 0 0 p� N N f9 W W N N W N W N N Z q N N N W W � Y n o m m m w �� c� o �o m o� w ao � N n e � e- �- .� Ol t�f N �' O O O O O G O N � � � � � W O a� o ° o �� g=. �� o 0 0 0 o c ° o o o o o o a ° ° c c c o 0 0 0 0 0 0 0 0 '^ f � N N W Z W W W W W W W f9 N N N N Z N W q W q q V �� V = U. Q � !� � Q � � � � N � � � M � � Q � m N � � 1�+ V O � Q Q O O O O O S O O O O O O C � � U ^ O O O O O O O O G C O O G O O C G C C C Z N N {N Z W N W N W N W N W W N N Z N W W N N y� T / v } � Q �(J r � � < � � � � N T' M � t+l af O O 6� c9 Cf 0 � O tD � C 31 O O O O O O O O O O O O m p � ' � N N Z �� O o C O O O O O O O O O O O O C O p O O O O y rY� W� r O O O C C O C C O C O G � P' Vf Z W f9 w w K W N W M W W q Z K W N W H q � ? O � � O O O O O O O O O O O O O O O O O O Z � fV C N N N N N M � � q � � � tV tV fV tV fV p p �p Q � � � C O N N N N N � � O O W w o w w w w w w w w w w w w Z w w w w w w p !y U N � 2 LL. Q , Q o � O a N Q OI � O O O O O N N N N N N N� y p O O O O O D U O fV C tV N C1 N fV at Q q Q Q Q .p C C W Q � ry N �+� Z w w w w w w w w w w w w Z o w q w w w w 'a � � o in �n v� �n u� o 0 0 0 0 0 0 o E J �`' a o o � I � o a o 0 0 .- .- � o 0 0 0 0 0 � �/ S O tV fV fV tV fV O C < Q C ?� O Z < W K N K q � W LL V N N p l Z H W N q W W q Vi q W q Ni O y � } � a �1=�. � o0000 0000eoa, N w " o �� o 0 0 0 0 0 0 0 0 0 0 0; � o 0 0 o a o ; � G O Q� fV iV N fV C! Q R C a} p Q Q C {7 Cl C/ fV� C1 N p� � T Yi Z q ViI f9 N q W W N W Vi W� NI Z W N fA q N p � Z � Q yl � � Y o�y � Na � ZQ�(W z � �� I U F 4 � � O � � C CS Ol � � W � J Q' U' Z a � 1 V � O Z O� t- H O� N a ', m- , y '� C�j � � (n E a`� w H a C C Q u a 1 C C�' = C' m a ¢ tW a 2 : � � E c c rc � z rt z� 0 3 � o o r W �a tnl �� w w v�� z s w z z a� c0i �'n 3 o z s Z Z a c c z�� F F c� a a a¢ u� r J I�,D Z u. tZ __ y ti �i �i 2 2 Z y 2 �� O W W � W C � V . . � . . . � , . � . � � . � z o o c, Z E � N N O G O O C C O O O O C C C J J J � I � N N z z z z a z z z z z z z z � a a a �� R A �a w ar ad aa oe oa ea �a m ea m ro w cai c � z c E �I U U � � � � � � r2 g f � f � � f F�- > > j > > �n L OI R � O O O O O O O O O O O O I O 1 +�+i c.i u � c� c� c� c� u v c� c� c� c� `° � f� a c� x J N� y y J J J J �! W W W W W W W � W U J J J t1t a'� h � �� N' N Q Q Q Q Q C) C9 C9 V� U' C) U' I U� J J 1 J C9 L 7 � �C 6 C Q C C C C C m Q Q Q Q C W �II� �I CI CI N N f!)I (n N J J J J� J.3 Ji _]i a N y Vf J ti� s �1(0 ��7 � Section 16 Unless otherwise tsrovided, all notices wluch ma�be required to be or aze given by either the Compan�or the Citv to the other shall be in writine and shall be either (a) delivered b�hand and receipted or (bl sent bv first class United States mail, unless a different class of mail is required b�specific provision in this ordinance. posta�e preoaid, to the representatives at the addresses below: (a) To the Com�anv: President. Minnesota Electric Northern States Power Comoanv 414 Nicollet Mall Minneapolis, Minnesota 55402 � with a copy to: General Counsel Law Department, Fifth Floor Northern States Power Companv 414 NicolieY Mall Minneapolis. Minnesota 55401 (bl To the City; Director Department of Finance and Management Services (or its successor department or officel Citv of Saint Paul 15 West Kelloee Boulevard Saint Paul. Minnesota 55102-1616 with a conv to: City Attornev Office of the Citv Attorney Citv of Saint Paul 15 West Kellogg Boulevazd 5aint Paul, Minnesota 55102-1616 � 24 �C�-�i� � Either the Comnanv or the City may change the above designated renresentatives and addresses bv written notice as provided in this Section 16. • � 25 Council File ��✓�� Green Sheet # � 1 2 � � 4 � 6 7 8 9 10 11 12 13 14 15 16 . 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 • 39 40 41 42 43 RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presented By Re£erred To Committee: Date WHEREAS, ?�Torthern States Po�� Company (hereafter, "Company") is a public service corporation orsanized under the laws of the State of Minnesota, which, as a public utility under the laws of Minnesota, at present provides electric and gas service within the City of Saint Paul under franchises which wili expire on June 30, 1996, such franchases being Ordinance I�TO. 96-33 (gas) and Ordinance No. 96-34 (electric), which expire on June 30, 1996; and WHEREAS, the Council of the City of Saint Paul has tu�o ordinances under consideration, Ordinance No. 96-417, the "electric franchise," and Ordinance No. 96-416, the "gas franchise,° (coliectively, the "franchises") which will grant the Company two franchises commencing on July 1, 1996, and running through June 30, 2006; and WHEREAS, under Minnesota law, these franchises will confer on the Company the right to use City streets and other public property for the purpose of operating its electric and gas utility business, in return for which the law authorizes the City to require that the Company pay the City franchise fees to raise revenue, to defray the increased municipal costs that accrue as a result of the urility operarions in the streets and public property, or both; and WHEREAS, these &anchises employ a different method for computing the amount of the fees than has been applied in the former franchises; and WHEREAS, the Council desires to state that, in the adoption of these franchises, it relies on certain revenue projections which were prepared and relied on by the representatives of the City and the Company in negotiating these franchises for the purpose of making determinations as to the acceptability of these franchises; and WHEREAS, the Council desires to adapt the following fmdings of fact (a) to affum the factual bases for the franchises, (b) to clarify the intent of the Council in adopting the francluses and the various franchise fee provisions in them, (c) to ratify the assumptions used by the City and Company representatives in negotiating and preparing the pending ordinances, and (d) to state the underlying assumptions on which the Council relied in adopting them; now, therefore, be it RESOLVED, that the Council adopts and ratifies the following Findings of Fact as to the franchises, indicating w�here necessary if the Findings relate specifically and exclusively to either the electric or the gas franchise: � 5�-ZG- f�i � 2 3 4 • 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 � 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 � 49 50 51 I. FINDI\GS OF THE COUNCIL Electric Franchise ° 1. l��ew Basis for Franchise Fees. The franchise fees required to be paid by the Company in this ordinance aze based on a different formula than the franchise fees which have been paid under past franchise agreements between the Company and the City. Franchise fees in pre��ious agreements were based on a percenta�e of the Company's a oss eamings. After October 31, 1996, franchise fees ��ill no longer be collected based on the gross eamines eenerated by the Company's sale of electric energy within the Ciry. Because of the potential for competition in the sale of electric energy, the Company and the Ciry are agreeing to implement a different franchise fee formula in this ordinance. Current go� reeulation generally prevents customers from having a choice in determining their electric enerey supplier. It is likely that these regulations will change in the near fuhue to allow competition in the sale of electric energy throueh the transportation of electric energy for other suppliers, which is called "wheeline." It is anticipated that the Company w711 continue to distribute electric energy through its facilities in the City. However, under wheeling arrangements, electric energy may be supplied by other entities, but � by the Company to various Company customers in the City. If w�heeling were to occur under a gross eamings franchise fee formula, the City v,�ould lose franchise fees and the Company could be put at a competitive disadvantage. The City would lose franchise fees because the Company's gross revenues on which the franchise fees would be based would include only the price chazged for distributing the electric energy and would not inciude the gross revenues derived from the production and transmission of the electric energy outside the Company's service area. The Company couid therefore be put at a compeutive disadvantage under a gross earnings formula because the franchise fee would be applied against the total revenue it obtained for selling electric energy in the City, which couid include revenue received from producing the electric energy, while the gross earnings franchise fee could not be charged on the revenue obtained by Company competitors for producing electric energy. 2. Revenue Stability and Competitive Neutrality. To protect against the risks of wheeling to the Company and the City the franchise fees in this ordinance are an aggregate of two or three components depending upon customer electric energy use and classification. The components aze (1) a monthly volume fee based on the amount of electric energy delivered to each customer over Company electric facilities (hereafter, the "Energy Fee"), (2) a monthly meter fee (hereafter, the "Meter Fee") based on the number and type of ineters or meter-equivaIent customer accounts, and (3) a monthly amommt based on the peak electric energy demand for certain Company customers (hereafter, the "Demand Fee"). It is the intent of this franchise that any electric energy which is delivered to Company customers which are located within the City is subject to the imposition of the franchise fees as provided in this ordinance and agreement, and in the electric franchise. 3. Fee Formula Approach. The Company and the City have converted the previous gross eamings franchise fee formula to the new multi=factor formula in the following manner. It was agreed that a multi-factor formula for franchise fees would minimize fluctuations in franchise fees due to weather volatility and minimize burden shifts between customer classes from the existing gross earnings formula. To accomplish this, it was agreed that calendaz }•ear 1994 represents normal weather and typical 2 �j�j �{-Z6-clG i 2 3 4 • 6 7 8 9 10 12 12 13 14 IS 16 17 18 19 20 21 22 23 24 25 26 • 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 � 49 50 51 �'ll-y�� electric energy consumption patterns, and therefore a��erage meter counts, peak demand units, and energy units consumed from the 1994 base period were used to project revenues over the term of the franchise. In particular, the 1994 data �;�as used for tu�o purposes in the projection of franchise revenues: (i) After customer ciass revenue targets were agreed to for each class, franchise fee factors for meter, energy and demand were determined for each yeaz of the franchise by dividing the annuaI revenue for each class by the actual 1994 meter, energy and demand units and by further adjusting the factors to meet the mutual objectives of the Company and the City. (2) All revenue projections for future years assumed that in those future years meter counts, peak demand units, and energy units would be equal to the actual 1994 counts. To provide moderate growth and stability in franchise fees over the term of the franchise, a Meter Fee was applied to all customer classes, and one or more of the Meter, Demand, and Energy Factors ��ere increased by moderate amounts for the various classes in the years 1996, ?000, 2002 and 2004. Gas Franchise 1. New basis for franchise fees. The franchise fees required to be paid by the Company in this ordinance aze based on a different formula than the franchise fees which have been paid under past franchise agreements between the Company and the City. Franchise fees in previous agreements were based on a percentage of the Company's gross earnn�gs. After October 31, 1996, franchise fees will no longer be coilected based on the gross eaznuigs generated by the Company's sale of gas within the City. Because of the potential for continued competition in the sale of gas, the Company and the City are agreeing to implement a different franchise fee formula in this ordinance. Due to changes in govemment regulations, certain gas customers, primarily lazge commercial and industrial customers, have been abie for several yeazs to purchase gas on fhe open mazket from other gas suppIiers and use the Company's gas distribution system for transportation of the gas. As a result the City has in the past lost franchise fees because it only received franchise fees based on the amount paid to the Company for the use of its gas transportation system and not on the greater doliaz amount paid for the transportation gas delivered to the Company system. It is anticipated that transportation gas may soon be available to more Company customers which would result in a greater erosion of City francluse fees under a gross earnings formula. 2. Revenue Stabiiity and Competitive Neutrality. This franchise fee formuIa is intended to protect the City against further losses in revenue which would have occurred under a continuation of the gross earnings franchise fee. The franchise fees in this ordinance aze an aggregate of two componenYs: a monthly volume fee based on the amount of gas delivered to each customer over Company gas facilities (hereafter, the "Volume Fee"), and a monthIy meter fee (hereafter, the "Meter Fee") based on the number and type of ineters or meter-equivalent customer accounts. To protect fhe City against further losses in revenue, it is the intent of this franchise that any gas which is delivered to Company customers which aze located within the Ciry through or by means of Company facilities or equipment which is ]ocated within the City is subject 3 �B �-z� -9� `��-ti�� to the imposicion of the franchise fee as provided in this gas franchise. Loss of future gas franchise fees is also minimized by requiring existing Company customers not now classified as eligible to take transportation gas to continue to pay franchise fees based on their current customer ciassification. • 5 6 3. Fee Formula Approach. The Company and the City have converted the previous 7 gross earnings franchise fee formula to the new multi-factor formula in the follou�ing 8 manner. It ��•as agreed that a muIti-factor formula for franchise fees would minimize 9 ftuctuations in franchise fees due to weather volatility and minimize burden shifts 10 beriveen customer classes from tlie existing gross earnings formula. To accomplish 11 this, it was agreed that calendaz } 1994 represents normal weather and typical gas 12 volume consumprion patterns, and therefore average meter counts and volumes 13 consumed from the 1994 based period were used to project revenues over the term of 14 the franchise. In particular, the 1994 data �vas used for two purposes in the projection I S of franchise revenues: (1) After customer class revenue targets and subtazgets were agreed to for each class, franchise fee factors for meter and volume were determined for each year of the franchise period by dividing the annual revenue for each class by the acttial 1994 meter and volume units and by further adjusting the facts to meet the mutual objectii•es of the Company and the City. (2) All revenue projections for furiue years assumed that in those future yeazs meter counYS and volumes would be equal to the actual 1994 counts. � 26 To provide moderate growth and stability in franchise fees over the term of the 27 franchise, a Meter Fee was applied to all customer classes, and one or more of the 28 Meter and Volume Factors were increased by moderate amounts for the various classes 29 in the years 1996, 2000, 2002 and 2004. Both Electric and Gas Franchises 1. Charter Requirement. The Council of the City of Saint Paul fmds and determines that the franchise fee formulafion provided for in ttris ord'mance will provide a franchise fee to the City in a sum equal to aY least five (5) percent of ttte gross earnings of the Company derived or accruing from the exercise or enjoyment by the Company of the franctuse within the City as provided herewith, and that such formulation sadsfies the requirements of Chapter 16 of the Charter of the Ciry of Saint Paul, including Sections 16.06 and 16.07 ihereof. If in any particulaz calendar yeaz, the franchise fees collected for this franchise do not equal five (5) percent of the said gross eamings of the Comgany, the Company as franchise holder is specifically relieved of the collection and pa}ment of the difference beriveen the franchise fees actuaIly paid and five (5) percent of Company gross earnings. and, be it C� 4 f�� ZG -� IL FR�1nCHISE FEE REVENUE PROJECTIONS �� 7 3 FURTHER R�SOLVED, that the attached Eahibit A(noting that (l) the 1996 4 projection is an annualized amount « the New Franchises in I996 are for six months, of � 5 which four months are Interim Fees and nio months are New Fees, and (2) the projeciion of 6 fee revenue for the year 2006 is approzimately half of the amount for the year 20Q5) sets 7 forth the projected fee re��enues on r�-hich the Council has retied in approving the franchises in 8 Ordinance Nos. 96-41b and 96-417, that the said E�ibit is hereby incorporated in this 9 Resolution as if it was set forth fully herein, and that the data contained therein are adopted 10 and ratified by the Council as a basis for the adoption of these franchises. and, III. RELL4.\CE ON AGREEMENT WHEREAS, representatives of the City and the Company have entered into a Memorandum of iJnderstanding, under «hich the City and the Company r��i�l execute an Agreement prior to the effective date of the franchises, which latter Agreement �711 confirm agreement on a number of issues arising oat of the negotiation of the franchises, including but not limited to a recognition of the importance of the placement of all Company customers in certain ctasses far the payment of francIuse fees, the need for maintaining City revenne despite changes in Company rate tariffs for customers, and the Company's promises to coilect franchise fees from customers; now, therefore, be it ZS FURTHER RESOLVED, that the Council of the Ciry of Saint Paul relies on the . 26 promises, undertaking and mutual recognitions contained in such Agreement in adopting these 27 franchises. and, be it IV. AGREEMENT FINALLY RESOLVED, that the Mayor and appropriate city officials aze hereby authorized to execute that certain Agreement relating to matters ancillary to the New Franchises which the Company has pre��iously agreed, on April 12, 1996, to sign on or before the effective date of the proposed New Franchises. Adoption Certified by Council Secretary � BY' Approved by Mayor: Date By: Requested by Department of: fi � �cs- �u � � �� +� �� Byc� , ' j� 't,i� Form Approved by City Attorney By: .�L(f �( - Z�v "7(� Approved by Mayor for Suhmission to Council �'„ / B • � ' �'� e�l�� Adopted by Council: Date 'a � � � � � � a'S = 0 y � � d � � L �f � N � Q� �� O� V N � � P � o � H .N � � � � � N 0 � 1-- C �� ° m � � � LL � � W r d � � � W W ° W � W C/� y N = R . U U � E u. o n. � cn u z r:,. �.,-� n 4 GR S � DEAARiMENT DtiiEG'�OA� / A A ��`�(�k ASS�GN �Cf7YATiORNEY �� ,iY �I(/ HUYBERFOR ROUTIHG � BUDGET DlRECTOR OflDEF � �qyOR (DR ASS�STANn ! T6TAL # Of SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATUFiE) 3°5�� o��Fl % iN1TiAL/DATE dTYCOUNQL C1N CLERK FIN. 8 MGT. SERYICES D�R, Passage of resolution stating City Council intent in adopting the rSP electric and gas franchises e£fective July 1, I996, to June 30, 2006. NtW'nMEND4TiON5: ApprO�e {A) Or Re)ett {F) _ PCANNING COMMISS�ON __ CIVIL SERVICE CONMISSION _ LIB COMMITiEE _ _ STAFF , _ DISTRICT COUAT _ SUPPOPTS WNICH COUNpL 08JECTIVE? PERSON0.0 SERVICE CONT0.ACTS MUST ANSWER TNE FOLIOWING QUESttONS: i. Has Mis personfirm ever worked untler a contract far this department? YES NO 2. Has lhis persontlirm ever been a ciry employee? YES NO 3. Does tAis DersonMirm possess a skili n6t norma�ly possessed by any current ciry employee? YES NO Explsin all yea anewera on aepara2e sheet and attach to green aheef IING PPOBLEM, IS3UE. OPPORTUNITY (W�p. W�eL Wbeq Where, W�y): The gas and electric franchises use a different method to compute the franchise fees payable to the City, based on a delivery rate structure as opposed to the percentage of NSP gross earnings. This resolution states the £actual basis £or the franchise, clarifies the intenz of the Council, ratifies the assumptions used by the negotiators, and states the assumptions on which the Council relies in adopting the franchise ordinances. The resolution will be very useful in resolving future uncertainties or misunderstandin= as to what the franchise ordinaaces mean and how they are to be interpreted. None. Reso2ution of future disputes might be more difficult and Iess favorable for the City AMOUNTOFTRANSACTION S COST/REVENUE BUDGE7ED (CIpCLE ONE) YES NO FUNDIHG SOUACE ACTIVI7Y i1NANCIAL MFORMATlOM (EXPLAIN) ��T`�t� ,, � Interdepartmental Memorandum CITY OF SAINT PAUL DATE: April 29, 1996 TO: Mayor Norm Coleman Council President David Thune Councilmember Jerry Blakey Councilmember Dan Bostrom Councilmember Dino Guerin Councilmember Mike xarris Councilmember Roberta Megard Councilmember Janice Rettman FROM: Martha G. Larson, ��1��' Director of Finance and Management Services Joseph M. Reid, Budget Director Gregory N. Blees, Council Fiscal Policy Director , SUBJECT: Proposed NSP Franchise Agreement The purpose of this memo is to provide you with an overview of the financial and budgetary issues that surround the proposed new gas and electric franchise agreements with NSP. Our primary focus will be the revenue-related aspects of this new franchise; we will also address certain non-fee-related provisions of the proposed agreements and how those may have financial implications for the City as wel1. Included with this memo are attachments which contain graphs and other financial analyses that further expand on some of our points. BasecZ on the history of our NSP franchise revenue collections and our expectations regarding the City's future financing requirements, we believe that this negotiated franchise arrangement will provide the City with a reliable source of financing over the next ten years. We believe that this revenue stream is necessary for the City's financial stability and to help the City control the growth of the property tax levy. The loss of or a reductian in this revenue stream will very likely mean higher property taxes or fewer City services. Finally, our evaluation of the financial impacts of the new franchise fee � �l`�-�l �? • Mayor Norm Coleman and City Council Page 2 April 29, 1996 structure on the citizens of Saint Paul shows the fee distribution to be reasonable for all classes of utility customers. Background The City has the right, under its Charter and state law, to require all providers of utility services in the City to have a franchise to use city streets and property to do so. In return for the use of property that belongs to the public, utilities must pay a revenue fee for that use. This is appropriate public policy because the City has made a significant investment in the construction and maintenance of its streets and right of way. This public property has become subject to dramatically increasing demands for use by a wide variety of users, from cable to fiber optic communication, from phone lines to gas and electric, and from water mains to sewer systems. As required by the Minnesota Public Utilities Commission (MPUC), NSP passes this fee along as a surcharge to its Saint Paul • customers. Both in its application to NSP and in the resulting payment by Saint Paul customers, the franchise fee is a user fee, which is determined by the amount of the service consumed and is applied to all users of that service. (The other utility service providers in Saint Paul: District Heating, District Cooling, and the Saint Paul Port Authority as owner of Energy Park Energy System, all have franchises too; their franchise fees are based on a percentage of the total amount billed by those providers to their customers, similar to NSP's current franchise fee structure.) The City presently receives approximately $14 million annually (approximately $3.5 million in gas franchise and $10.5 million in electric franchise revenues) from the NSP gas and electric service franchises. This revenue is reported as a financing source for the City's general £und. Based on the 1996 budget, this revenue represents approximately 10 percent of the City's total general fund financing. Approximately 44 percent the remaining general fund financing comes from State aid (LGA and HACA), and approximately 30 percent of it comes from property taxes. The current gas and electric franchise arrangement was last negotiated in 1984; it was extended from its original expiration date of March 31, 1996, to June 30, 1996. • q �-�/�7 � Mayor Norm Coleman and City Council Page 3 April 29, 1996 Current Ree Structure The current gas and electric franchise fees are based on a percentage of the total amount billed by NSP to their customers, which varies between 5 and 8 percent, depending on the customer class and whether the service is gas or electric. Thus, the City's franchise revenues rose and fell with the level of NSP's customer billings. Those billings were determined by the amount of service consumed (higher consumption in hot summers and cold winters) and by NSP's billing rates. The billing rates themselves were affected by the market price of gas and electricity, and by NSP's own operating costs. Effect of Gas Transportation Over the past 16 years, the City's revenues from franchise fees have varied significantly. In general, electric franchise fees have seen modest growth, at or below the level of inflation, from around $6 million to $10 million annually. Gas franchise fees, however, fell from a high of approximately $8 million in 1984 to � around $4 million today. (See Attachment A which reflects our historical franchise revenue levels, compared to inflation.) The primary cause for the drop in actual gas franchise revenues was the introduction of gas transportation into the utilities industry in the mid-1980's. In shart, large commercial gas customers had the option of purchasing their gas from suppliers other than NSP, and having the gas transported to their sites through the NSP gas distribution system. (This was a nationwide trend, mandated by Federal energy regulators to introduce competition into this marketplace.) However, when those customers bought their gas from non-NSP suppliers, NSP's billings covered only the charge for distribution - which was approximately 16 percent of what the bill would have been if it included also the sales price of the gas itself. Because the City's franchise fees were based only on the NSP bill, our franchise fees collected from those transportation gas customers fell dramatically. Other factors, such as the decline in the market price of natural gas, conservation efforts, and the reduction in franchise fee percentages (negotiated as part of the 1984 franchise contract), also contributed to the decline in the City`s franchise fee revenue streams over the term of the current franchises. At present, there is no equivalent to gas transportation in the electric industry. However, we believe that the same concept, • ci�-G�� • Mayor Norm Coleman and City Council Page 4 April 29, 1996 referred to as electric "wheeling", will be introduced in the next few years. Other industry e�perts and regulators concur that it is only a matter of time before the electric industry is opened to competition. Large commercial users are the first targets for gas and electric service competition, but ultimately, small commercial and perhaps even residential customers may be able to buy their service from providers other than NSP. (Please refer to the report at Tab 9 from Schedin & Associates, the consulting firm which assisted us in developing the proposed new franchise arrangement with NSP, for further discussion of these trends in the energy industry.) City Objectives for Renewed Franchises Revenue Stabilitv Our primary objective for the new franchise agreement with I3SP was to preserve the present level of franchise fee revenues, ensuring stability in this revenue stream and providing for modest growth in those fees over the ten-year term of the franchises. We believe that the proposed new franchise agreement • with NSP achieves those objectives. In 1983, the City received approximately $17.5 million in total franchise fee revenue. By the year 2005, we project that the City will receive approximately the same level of revenue - not adjusted for inflation - so that in essence, the proposed new franchises will in ten years simply return us to the revenue levels we experienced thirteen years ago. (See Attachment B which reflects our historical and projected franchise fee revenues.) Our projections of future franchise fee revenue are based on the amount of energy consumed by Saint Paul NSP customers in 1994. We have mutually agreed with NSP that 1994 represents a relatively "average" year in terms of weather and energy usage; therefore, this is a reasonable and conservative basis for future revenue projections. Our projections also do not reflect any growth in the consumption of energy over the ten-year franchise period. Any increases in energy usage over the term will generate more revenue than we have projected. Any decreases in energy consumption, which we expect to come primarily from weather (cool summers, warm winters), will decrease our franchise revenues below our projections. The objective of franchise fee revenue stability was developed in light of the City's expected financial environment. Based on various proposals introduced in recent leg�slative sessions, the � �Yl�-�c7 � Mayor Norm Coleman and City Council Page 5 April 29, 1996 City could reasonably experience significant cuts in the level of LGA and HACA it receives. Also, Federal funding, although not a major source of general fund financing, is expected to decrease. Finally, City elected officials have committed to holding the line on the City's property tax levy. The predictability of franchise fee revenues over the next ten years will provide the City with a reliable revenue stream and enable the City to minimize service cuts or revenue increases from other City fees, assessments and charges. Because of the future uncertainty regarding the City's other major general fund financing sources, we believe it is very important to solidify wherever possible our other sources of revenue. Stability in those financing sources allows us to make realistic, multi-year plans for spending and reduces the risk that in any given year, radical cuts in services must be made to balance the City's budget. Stability in financing sources is a key consideration by the rating agencies who evaluate our financial condition when assigning credit ratings. � The negotiated franchise fee structure includes a meter charge component: a fixed monthly amount applied to each gas and electric meter (or NSP customer account). This element of the franchise fee structure is expected to be very stable; there has been relatively little fluctuation in the total number of gas and electric meters for NSP customers in Saint Paul. This aspect of the franchise fee helps to ensure stability in the overall franchise revenue stream. Similarly, the delivery-based structure of the negotiated franchise fees helps maintain the stability of the City's franchise revenues by protecting the City against future erosion of the revenue stream due to electric wheeling. Protection Aaainst Electric Wheeling We also want to protect the revenue stream from the same type of reduction caused by gas transportation, when electric wheeling becomes a reality. Our experience over the past ten years with falling gas £ranchise fees was a strong motivator for the City to establish a delivery rate franchise fee structure to protect against such future losses. The delivery rate franchise fee structure in the proposed new arrangement is based on units of energy delivered to Saint Paul customers (regardless of who generates the electricity or sells the gas)-. Although the • ��u» • Mayor Norm Coleman and City Council Page 6 April 29, 1996 • franchise fee will sti11 be collected by NSP, the fee is tied to customers' consumption of energy, and not to the NSP bill itself. Distribution of Franchise Fees Across Customer Classes Franchise Fees Paid by Tax Exempt Customers The NSP franchise fees are collected from all customers in Saint Paul. This means that tax-exempt entities who use gas or electric services pay this fee. Tax-exempt properties account for almost 25 percent of the City's total market value. Those entities do not pay property taxes. Significant Saint Paul tax- exempt utilities customers would include entities like the Metropolitan Waste Control Commission, the State Capitol Complex and other local and Federal government agencies, colleges and universities, hospitals, schools, and other non-profit entities such as museums. The franchise fee represents a revenue stream collected from tax-exempt users of City services which place a burden on our physical infrastructure. To the extent that the City's financing is raised from franchise fee revenues, rather than property taxes, both residential and commercial taxpayers benefit. This is because the same amount of revenue generated by franchise fees is received from a larger base - NSP utilities customers. Were the same amount of revenue to be raised through property taxes, the burden of this would fall only on residential and commercial taxpayers (and even there, the greater burden would be borne by residential property). (See Attachment C.) Distribution of Francl2ise Fees Paid by Different Customer Classes It was also our objective to have the relative distribution of franchise fees paid by different customer classes be fair and reasonable. In the negotiation process, we sought and obtained an equal voice in determining the allocation of fees which would be passed through to the customers. We understand the need for fairness and reasonableness when establishing the various rate structures for residential, commercial and inclustrial utilities customers. Our parameters for evaluating various fee structures included a review of projected effective rates (total franchise fees paid by a customer class, divided by total NSP billings to that class). (See Attachment D.) • cl�-�i� • Mayor Norm Coleman and City Council Page 7 April 29, 1996 We believe the new fee structure is a fair compromise between the need to keep residential fees at a manageable level, and the need to maintain a competitive business climate for Saint Paul's commercial and industrial customers. (See Attachments E and F.) Non-Franchise Fee Issues Finally, there are a number of non-£ee-related issues in the proposed new arrangement that will have an impact on the City`s other revenues and costs. These are summarized below. In summary, we are comfortable with the resolution of each of these issues, in terms of their potential financial impact on our £uture operations. Permit Fees Under the present franchise contract, NSP does not pay any permit fees to the City for accessing the right of way or for the degradation of our physical infrastructure caused by digging up streets and sidewalks, etc. The proposed new arrangement will • require NSP to pay up to $15,000 annually (each, for gas and electric) in permit fees, with this cap increased to $25,000 for each annually in the year 2001 and thereafter. While this does not provide all of the leverage sought by Public Works to use those fees to manage NSP's interference in the right of way and to recover all potential costs associated with shortened useful lives of our streets due to their access, it does represent a significant change in direction by NSP and an improvement over the prior contract. Non-Franchise Use of the RicTht of Wav The present NSP franchise is for the right to deliver gas and electric services to Saint Paul customers. We believe that their use of the public right of way is limited to this purpose,,and we have maintained the same language to that effect in the proposed new contract. Should they wish to use the right of way for other purposes (say, for the delivery of telecommunications services at some point in the future}, we believe they must notify us and obtain a franchise to do so, where this is not specifically prohibited by law. Although we have not yet encountered such a situation with NSP, we believe it is important for us to protect our right to control and receive compensation for private use of our right of way. • ��i� • Mayor Norm Coleman and City Council Page 8 April 29, 1996 Rollover and Interim Fee Provisions As we previously noted, maintaining this significant revenue stream for the City was a key objective in our negotiations with NSP. The proposed new franchise contract has provisions in it that allow the arrangement to be "rolled over" for another 10 year period, with an option for either the City or NSP to terminate with two years' notice. The proposed contract also has provisions for the current franchise structure to remain in effect if the MPUC delays approval, and to be put back into effect if the MPUC suspends application of the proposed fee for any reason. These provisions provide us reasonable assurance that the fees will continue to be collected and remitted to us while the franchise fee structure is under MPUC review or renegotiation with 13SP. C� � �i� • CITY OF SAINT PAUL FINAL REPORT � Northern States Power Company Franchise Fee Evaluation Prepared by: Schedin & Associates Inc. 12 South Sia�th Street 920 Plymouth Building - : • Minneapolis, Minnesota 55402 Apri130, 1996 �� Introduction Schedin & Associates Inc. (S&A) was engaged by the City of Saint Paul (City) to assist in the negotiations with Northem States Power Company (NSP) regarding the renewal of the gas and electric franchises. S&A advised the City's negotiating team throughout the process on technical issues related to the gas and electric industries, regulatory issues, and fee design concepts. S&A also participated in the last sevezal negotiation sessions with NSP and reviewed and cross-checked revenue projections and estimated customer impacts based on complex computer models developed by the City. S&A also reviewed the proposed franchise agreement language related to the techn3cal issues on the fee structure to help assure that the intent of the proposal negotiated by City Staff and NSP was embodied in the language of the agreements. • Specifically S&A assisted the City by: Providing insight to City Staff regarding the changing regulatory environment in which NSP is operating; � 2. Evaluating the impact of competitive pressures put upon NSP by large industrial customers to keep electric and natural gas rates low so these customers can remain competitive in their markets; Helping City Staff in understanding how utility electric and gas rates are designed; Providing input in developing flexible computer modeling of rate desig�s, fee structures and revenue projections; 5. Assessing electric and natural gas historical pricing trends, thereby allowing City Staff to better understand factors affecting escalation of future energy prices; 6. Analyzing projected franchise fee revenue and related NSP biliings by customer classes to assess the impacts of different franchise fee structures and rates on various customer ciasses and within customer ciasses; �� Page 1 9�� . 7. Providing technicai assistance in analyzing detailed components of NSP's billing structures and potential changes as these affect the propased franchise fee structure; 8. Preparing two reliability reports - one for electricity and one for natural gas. Based on the independent work conducted by S&A, and based on S&A's review of the work conducted by City Staff, this report will address the foliowing areas: • Alternative Franchise Fee Structures Existing City franchises Potential impact of derea lation: gas transportation and electric wheeling "Volumetric" or "usage" based fee structure and benefits • Developing a Usage-Based Franchise Fee Structure - Establishing base year for projecting franchise fee revenue - Developing energy usage (volume and demand) estimates and customer meter information - Developing unit fees for various classes of customers � - Modifying proposed fees to achieve objectives negotiated by the parties • Reliability criteria for gas and electric service City of Saint Paul's Franchise Fee The City presently receives electric and gas franchise fees from residential customers, small-volume commercial and industrial customers, and large-volume commercial and industrial customers located within the City. NSP owns and operates the principal electric and natural gas distribution systems in the City. The City's franchise fee for NSP is presently based on a percentage of the customer's monthly NSP electric and gas biil. NSP collects the monthly fee for the City. Current franchise fee levels are shown in Table 1. � Page 2 ��y�� . Table 1. City of Saint Paul Franchise Fees Applied to Residential, Small-Volume C&I and Large-Volume C&I Customers Customer Ciass Residential Customers (six summer months): Small Commercial and Industrial Customers: large Commerciai and Industrial Customers: Fee Appfied to Customer s Monthlv NSP Bill Eleciric Gas S.0% 8.0% 8.0% 8.0% 8.0°!0 5.0% Deregulation: Imnact on Franchise Fees Franchise fees paid to the City for NSP's natural gas service have been significantly reduced because of deregulation within the natural gas industry. A deregulated electric power indushy could similarly adversely impact electric franchise fees. On April 24, 1996, the Federal Energy Regulatory Commission (FERC) issued an open access Final Rule for the wholesale restructuring of the electric industry (FERC Docket No. RM95-9-00). While this Final Rule does not order utilities, such as NSP, to wheel electric power to large industrial customers, it does put in place the initiai foundation of non-discriminatory wheeling. Many of the marketers and brokers supplying natural gas in the deregulated gas market have received licenses from FERC to sell wholesale electric power. Marketer and brokers of natural gas are strategically preparing themselves for the deregulated electric market so they can supply their customers with both electricity and natural gas. Re-designing the appiication of franchise fees within the City at this time will not only protect against further erosion of gas franchise fees but will also help to protect the City in the likely event of electric deregulation. Large commercial and industrial users of natural gas typically purchase their natural gas in a deregulated marketplace. Under the deregulated scenario, these users now receive rivo principal gas bills rather than only one. One bill (the larger one) is issued by Non-NSP suppliers for obtaining gas at the wellhead and transporting it via interstate pipelines to a point near the Twin Cities area called the Citygate. The other biil is issued by NSP (or Minnegasco or other gas utility) for transporting the gas from the Citygate to the commercialfindustrial user's facility. This latter bill includes the local distribution component of the transportation gas process. Customers taking advantage of the deregulation scenario are said to be purchasing "transportation gas." Priar to deregulation, the commercial/industrial user would receive one "bundled sales-gas service" bill from NSP, all of which was subject to a gross earnings franchise fee. Page 3 ��7 Figure 1 is a simplafied diagram showing natural gas supply to the City. Gas is � initiaily purchased by a marketer or broker (and NSP) at the gas well in Oklahoma, Texas, or other locations such as Canada. The gas flows from the vvellhead or gathering system on an interstate pipeline to the Citygate where the local distribution company, such as NSP, then redistributes that gas to customers within the City. Figure 1. Simplified Diagram of Natural Gas Supply to City of Saint Paul � Under deregulation, the City's present franchise fee is not applicable to the larger of the two gas bills because the larger bill is rendered by a non-NSP broker or marketer outside the City. Under Minnesota law, the franchise fee is only applicable to energy suppliers who use public streets and property to provide service within the City. The City, therefore, only receives franchise fee revenues from the smaller bill rendered by the local utility. In the-natural gas industry, the smaller distribution portion of a customer's bill is approximately 25°l0 of the total • cost. Presently, within the City, approximately 75 commercial/industrial Page 4 G �/�7 customers aze taking advantage of natural gas deregulation by purchasing • transportation gas. This number is likely to grow. If all current gas non- transportation customers were to begin receiving only local transportation service from NSP, the City would see a potential decrease in gas franchise fee revenue of approximately 75%. Figure 2 is a simplified diagram of how electricity is supplied to the City. Under a deregulated electric market, mazketers and brokers will deliver electric power to the NSP system who will then redistribute the power to customers. End-use customers will purchase the electricity from a mazketer or broker and pay NSP a small fee for local transmission and dish Like natural gas, marketers and brokers of electric services would be exempt from the existing electric franchise fee. Figure 2. Simplified Diagram of Electric Power Supply to City of Saint Paul r L_ Although deregulated electricity is not yet applicable to NSP's retail customers, the State of Minnesota is investigating this option along with many other states. The electric term comparabie to transportation gas is "wheeled" electricity or "wheeling." Within Illinois, two investor-owned utilities have spoken out strongly t in favor of electric deregulation and have already set up experimental programs Page 5 �� which have been approved by the Illinois Commerce Commission. The City of • Saint Paul has over 600 lazge commercial and industrial customers that could potentially begin wheeling electric power to their facilities. Under the deregulated electric market, the City could zealistically see a si�ificant decrease in electric franchise fee revenue if the City continues with a gross earnings franchise fee. Based on S&A's experience, the NSP distribution portion of customer's electric bill in a deregulated electzic market should be no higher than 25% of the total cost. Therefore, the City could experience a 7�% reduction in franchise fee revenue from customers which wheel electricity under a gross earnings franchise. Alternate Franchise Fee: Usaee Based Fee In 1992, S&A prepared a report for the City which investigated natural gas franchise fee erosion and included preliminary evaluation of a"volumetric" or "usage-based" franchise fee rather than a fee based on gross earnings. Since NSP must "transporP' or "wheel" through its system a1t of the energy purchased from a marketer or broker, the customer's energy usage would be recorded on NSP's meters. Therefore, essentially a11 electric and gas energy delivered to customers in the City through NSP's distribution system would be subject to the usage-based • franchise fee. Exceptions could potentially occur only when a customer by-passes the NSP system either by directly connecting to a gas pipeline, switching to an aiternate fuel source (such as No. 6 fuel oil) or constructing on-site electric power generation. Benefits of a UsaQe-Based Fee to I3SP S&A has found that local utilities who provide bundled services are at a competitive disadvantage when offering total gas supply/transportation packages to transportation customers. This is because local utilities (called Local Distribution Companies or LDC's) are subject to the fuil assessment of state and local franchise fees on the sale of gas supplied by the LDC while marketers and brokers of gas not supplied by the LDC are not subject to the fees. LDC's in states such as Iilinois are therefore fighting for fee parity. However, a usage-based franchise fee, such as the one proposed for the City, places the local utility on an equal footing with outside marketers and brokers. The fee would be collected on energy delivered, regardless of suppiier. • '._- : �1�, �% � 7 Unit Charge Franchise Fee Concept � The City's current franchise fee formula caiculates the fee based on NSP revenue. NSP's revenue includes ail costs of producing purchasing, and distributing energy to the customer. Energy sales to customers are measured in kilowatt hours (Kwh) for electricity or hundred cubic feet (Cc fl for natural gas. While the unit cost of energy ($/Kwh or $ICc fl may vary from customer to customer, the measurement units of energy remains the same . Under the unit charge concept, the City's franchise fee is based on volume of energy delivered to a customer by NSP rather than the revenue received by NSP for delivering the energy to the customer. This concept is the same whether NSP is delivering electricity (Kwh) or natural gas (Cc�. The revenue that NSP recovers from its customers generally includes costs for producing, purchasing and delivering energy as well as a return for its ratepayers. NSP generally calculates a customer's bill based on three billing components: 1. The first billing component is a flat customer charge that typically recovers some portion of the fixed costs for having a customer connected to the electric or natural gas distribution system. The customer costs typicaliy • include costs such as those incurred to install the meters, read meters monthly, and render customer bills. The customer charge is paid monthly regardless of how much electricity or natural gas is used by the customer. 2. The second portion of a customer's bill is the energy or commodity portion. This is a volumetric charge for each Kwh or Ccf used by the customer. Electric and gas usage by most customers varies monthly because usage is affected by weather, production levels and other factors. Bills for residential and small commercial customers generally only contain a customer charge and volumetric energy charges. 3. The third component of a customer's bili is the demand charge. Demand is the term used to identify the rate at which energy is consumed over a specific period of time. Utilities measure the rate at which energy is delivered because delivery facilities must be sized to meet a customer's maximum consumption rate. Natural gas demand is measured in Ccf per day. Electric demand, called kilowatts (Kw), is Kwh used per hour. For example, if a customer uses 1,000 Kwh during a one-hour period, their average demand over that hour is 1,000 Kw. However, since customer demand fluctuates, NSP uses a I S-minute interval: for measuring demand. • Utilities generally measure demand for only large commercial and Page '1 �'� ��` � industrial customers because of the high metering costs. NSP, in designing • its rates, sets a minimum monthly billing demand based on either contracted amounts or some prior demand level. The City's proposed franchise fee incorporates these same minimum demand levels. Base Revenue Objectives An important factor for projecting franchise fee revenue under a unit charge concept is setting the proper base year for energy usage, i.e., how many Kwh and Ccf will be consumed by customers during a typical year. The base year is the annual energy usage by customers under normal heating and cooling conditions. If a summer is wanner than normal, more Kwh will be consumed by cusiomers. Whereas, if the summer is cooler than normal, less Kwh wiil be consumed. Setting annual usage for the base year to high wiil inflate revenue projections. Similarly, setting annuai usage for the base year to low will understate revenue projections. While individuai monthly or yearly revenue projections may fluctuate from the base year projection, revenue over a longer period shouid be fairly stable. Utilities commoniy develop a base pear (cailed a test year) that is used to set their . gas and electric rates for customer classes and make revenue projections. Test year usage is generally revised when utilities adjust their rates, and may not always reflect energy sales during the most recent year. The City's approach for setting its franchise fee revenue projections is based on a similaz approach used by utilities such as NSP. For determining franchise fee revenue projections for the City, electric and natural gas usage during the year 1994 was used because usage during 1994 was conservative and also fairly representative of usage in other years. The following Figures 3 and 4 plot usage of customers within the City and temperature data in Heating Deg�ee Days and Cooling Degree Days for the period 19$6 through 1995. C� I�� -�� Figure 3. Annual Natural Gas Volumes (Cc fl- All Customers Ccf Volumes Used vs. Heating Degree Days for Year 240,000 � ' �CCF USED ' 235,000 I i N � v @ 230,000 � �� I � t 225,000 � �— ¢ �. 220,000 i 215,000 I 6,000 6,500 30-Year Nortnal Heating Degree Days (HDD) for Mp1sSt. Paul is 7,981 per year 30.Year Nomial �/ HDD �9gg 1995 M � � 1993 _ 1989 i � � t997 i ♦ � i y� t98D 7986 ♦ i � � 1992 l i — !-- 7,000 7,500 Heating Degree Days for the Year � � 8,000 8,500 Figure 4. Annual Electricity Used (MWH) - All Customers MWH Volumes Used vs. Cooling Degree Days for Year ,� � 30.Year Nortnal C�D , I 3,050 � 3,000 I 2,950 2 a 2.900 g y 2,650 � L 2,800 ¢ � 2,750 2,700 2,650 2,600 200 300 400 30-Year Normai Cooling Degree Days (CDD) for MpisSt. Paul is 682 per year 1,000 1,100 1,200 � Develonment of Franchise Fee Structure Once usage for the base year was agreed to by City Staff and NSP, franchise fee revenue by customer class (residential, connmercial, industrial) was analyzed. Historical franchise fee revenue (collected on a gross earnings basis) was separated by customer class. Separating franchise fee revenue by customer class allowed the City and NSP to analyze franchise fee revenue collected from classes under a Page 9 500 600 �700 800 900 Cooling Degree Days for the Year ��-ui� usage-based charge compared to a historical gross earnings charge. Among other i things, this analysis recognizes that the unit cost of providing service varies between customer classes. For example, the average cost of electricity is appro�mately 8.0¢ per Kwh for a residentiai customer compared to a cost of approximately 4.5¢ per Kwh for a lazge industrial customer. While the unit charge is lower for a large industrial customer, this customer typically uses electricity much more uniformly and consequently is less costly to serve than a residential customer. Franchise fee revenue was then divided by base yeaz billing units for each ciass to arrive at an equivalent per unit charge. However, since NSP's rate structure includes meter charges, enezgy charges and demand charges (where appropriate), it is appropriate to develop a similar franchise fee structure that includes a meter fee, energy fee, and demand fee. The base-line per unit fee was then adjusted to recognize that franchise fee revenue would also be collected from a meter and demand fee. Compared to a franchise fee based on only a single billing determinant or on grossing earnings, the proposed franchise fee structure would increase revenue stability from year to year. If the franchise fee was based only on the energy fee � component, a cool summer would lower the amount of energy delivered to residential customers used for air conditioning and subsequently lower City fee zevenue. However, since a portion of franchise fee is derived from a"fixed" meter charge, potential franchise fee revenue reduction due to a cool summer will be less than a fee based solely on energy use. In summary, a franchise fee based on a meter fee, energy fee and demand fee has the following advantages. It allows parity to be established among customer classes. 2. It allows parity to be established within customer classes. Franchise fee revenue stability is increased by changing from a gross earnings structure and by adding a meter, energy, and demand fee component. 4. Such a fee structure is flexible because its components can be modified to achieve the goals and objectives of the City and NSP. � Page 10 ��- y,� Revenue Projection • Attachment A is S&A's suminary review of base year usage volumes and 10-year franchise fee projections. T1iis summary analysis is based on usage data provided by the City and NSP and the fee structure agreed to by the City and NSP. Results show that the City should collect franchise fee revenue of appro�cimately $160 million over the 10-year franchise agreement. This revenue projection does not include any assumptions for load growth in electricity and natural gas usage. Therefore, if any load �owth occurs in the City, revenue over the 10-year period may exceed $160 million. In addition, it was not necessary to predict growth in NSP revenue to arrive at a revenue estimate because NSP revenues are not relevant in a usage-based franchise fee structure. However, for purposes of estimating customer effective rates (the fee as a percentage of total NSP bill) over time, projecting NSP gas revenue growth of 1.65% (1996 - 1997) and 3.3% (1998 - 2005), and NSP electric revenue growth of 0.0% (1996 - 2000) and 33% (2001 - 2005) is reasonable. ,� � Page 11 � 0 m � • a a F z w • � 2 U � ¢ � � �� z F_ a Z W Q W � � � W O � �Z U � ti U � F�- U w � W 0 Z Q � Q � Q � j a z } � � � � � W � z W W � w W � Ll..1 � _ U Z C1 � W i _ ' <6 W I 0 � � f", W �� W, L j W� �I � .` V � Z ; i � Q W �� LL; ❑ W H U w;L I � �" �f �IR � a �z � � � � � � r {� � T O N O � p r � � � r Cfl lf") Cfl 1� KS � �- M � O ff3 ER fA M � EFl M O � (p � M � � � � �ri ri ai �n ui v o c` °� � M M � (p h � � � N r tt� N M m N n r N � m rn a v o �n a m cD rn � o r- v_ rn �n r- � � s °' v � � a � m a rn � m � � rn ° o ° o � � d (O O N V � � � 0 0 � � N N N a> N z v c � LL L R � O � � d 7 _ d � d � a� d LL 0 � a � Z N 'a � � U � L � y U a� � a `� � o rn� �Nv a� U � N c c � � � m � ,O � y U E � � � 0 � � > m `o a, � t � � rn � a� rn �a � 0 � c a � � � U � S � U N O N � •— � � ic j � U � � U a � � � � cu � } � . o � �I � � � Z�vni� ��i�� z N R T � N � Q � m m � � � N � � W U � R �! t`LL � j m 0 v U C N u: 0 Q � c 0 d L U � � O N m • a a f- Z W • � _ U F H Q • � V J W � �N � W '"' Q � Z U Q w a V"� ~ � � (n J = U � � � W � U LL J W = � �... = Z U O Q � � LL � � m (D O N W O M T �.� � o � ° o � ti � ° m_ v ;b .,. 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I � l i i ,, , m M � N N N � a�— � � (4 c'� O SU��I� �ned�}g �o; pa�a��o� aaj as�y�ue�� a 0 V O � O N O � 0 0 0 � a� w � � o� � `a � � +.' a� �� 3 m M Of y °f U o� 0 m � � � � � � � � a � M � N w d d LL ■ � N LLI a • ia � c"' Q . a U � R 7 V N d � � � a 0 0 m m a 4 � � � 0 LL z m U N H 7 N W � J � � � LL W W ii W W 2 U � °lG� u �`? C� � � 0 � e� � U O � M > � m �} m C� � •— m v � o� � � � W N R � a z � � � d 'o L a t � , � ; ' I ! � I � I i i I i I I \ \ y I I j I i I, � { � ' � I � , � � I� � I I . I !� i �� i N N T T e�- S�o�,i!w �ned•}g o; saa3 as�yaueaj dSN a a 0 M O N O O L a r o � M L pj l4 � a ° o� V �f * a �m « � U y � W � m d � � � o> m o� � � � �, N r • � �, � ; a 0 Y � ui 0 � F- � W � W � a � a�-�� MEMORP.NDUM OF UNDERSTANDING This Memorandum of Jndersta:.ding is entered into by Northern States Power Company, a N.innesota corporation ("NSP") and the City of Saint Paul, a Minnesota municioal corporation ("City") on this 12th day of April, 1996. Recitals . 1. The existing frar_chise agreements under which NSP provides gas and electric service withia the City expire on June 30, 19°6, (Ordinance No. 96-33, the ��?xistir.g Gas Franchise��; Ordinance No. 96-34, the "Existing Electric Fraachise"; or collectively, the "Existing Franchises"). 2. The negotiating teams for NSP and the City have now agreed on � the terms and conditions under which the Existing Franchises should be renewed and enacted into new franchises (the "Proposed Gas Franchise" attached to and made part of this Memorandum of Understanding as Exhibit A; the "Proposed Electric Franchise" attached to and made part of this Agreement as Exhibit B; or collectively the "Proposed rranchises"). NOW, TFiEREFORE, IT IS AGREED BY TFIE PARTIES: . 3. The City negotiating team agrees to seek introduction of the Proposed Franchises before the City Council. The City negotiating team will recommend introduction, passage znd approval o£ such extensions, but NSP recognizes that the team members cannot bind the City. Further, during the period of time before the first � reading of the Proposed Frar.chises and their final adoption, the 3 �� City team may recommend technical amendments to the Proposed � Franchises to whic� both th= City negotiating team and NSP agree as being necessary to implement the intent of the negotiating teams for the City and NSP which underlies the Proposed Franchises. Nothing herein shall prevent the City from exercising any of its lawful authority relating to franchises, collection of fees, or regulation of the public.right of way or other public property of the City. 4. NSP agrees to consent to and sign the Proposed Franchises pursuant to Ch aD�2Y 16 of the City Charter when adopted by the Council and approved by the Mayor so long as there are no modifications or changes to the Froposed Franchises as attached hereto as Exhibits A and B other than such modifications or changes � to which both the City negotiating team and NSP agree as provided in Section 3 above. 5. NSP agrees to execute the Agreement attached hereto as Exhibit C on or before the effective date of the Proposed Franchises. 6. NSP agrees that if the City Council has not finally approved the Proposed Franchises by May 22, 1996, it will, pursuant to Chapter 16 of the City Charter, consent to and sign ordinances extending the Existing Franchises for a three month period up to and including September 30, 1996, if such ordinances are adopted by the Council and approved by the Mayor so long as such ordinances extend the Existing Franchises without change or modification. 7. NSP and the City agree that each shall be entitled to seek � equitable relief, including injunctive relief and specific 2 �lC�- � i ? performance, in the event o_ any breach cf the provisions ot this � Nemorandum of Understanding. Such remedies shall not be deemed to be the exclusive remedies for a breach of this Memorandum of Understanding, but shall be in addition to all other remedies available at law or equity. The City and NSP shall each have the right to enforce the terms o= this Memorandum of Understanding. CITY O" SAINT PAUT.� BY �� G�� Timothy arx � Its City Attorney NO �1 • It S r L_ a 3 �ll�'�}f7 April 17, 1996 � AGREEMENT Northern States Power Company, a corporation organized under the laws of the State of Minnesota, hereinafter designated as '�Company," and the City of Saint Paul, a municipal corporation, hereinafter designated as "City," for themselves, their successors and assigns, hereby agree as follows. This Agreement is made as of this day of , 1995. 1. For the purposes of Sections 2, 3 and 4 of this Agreement, the words ��Company�� and "City" sha11 include, without limitation, each and every of their respective officers, employees, agents, attorneys, consultants and all other persons acting on their behalf, present and future, whether or not such persons are employees, independent contractors, in an attorney-client relationship, or under a contractual duty to defend and indemnify the Company or the City. 2. For the purposes of this Agreement, the words "Deletion of Language" shall mean: (1) the removal of any language, provisions or words from any draft or proposal relating to the renewal of the Company gas � and electric franchises, whether made or expressed orally or in writing; S2} the failure to insert any language, provisions or words into any draft or proposal relating to the renewal of the Company gas and electric franchises, or into any of the renewal ordinances themselves, including Ordinances I3o. 96-33 and 96-34 and their renewals, whether made or expressed orally or in writing; and (3) changes in the language, provisions or words of Section 4 in each of Ordinance No. 96-33 and Ordinance No. 17210 relating to the obligation of the Company and the City to make reasonable good faith efforts to advise each other of plans and programs, both long and short range, for the construction of improvements and facilities in public streets and other public property. 3. The Company and the City shall not use any Deletion of Language which occurred during the course of discussions and negotiations relating to the renewal of the Company gas and electric £ranchises in Saint Paul, or during the period from August 1, 1995, until the date of this Letter Agreement, in any way or in any proceeding where that use is or may be adverse to the interests of the other � party as evidence of or argument about the meaning or interpretation of any other language or provisions in any gas or electric franchise, past, present or future, between the Company and the City. • ��-�� 4. In addition, and without intending any limitation to the foregoing, no reference to or use of any Deletion of Language shall be made by the Company in proceedings, suits, claims, actions or litigation in any way relating to the July, 1993, gas explosion at Third Street & Maria Avenue in Saint Paul, including Ali Artoli, et al. v. City of Saint Paul, et al., Court File No. CS-93-9555, all cross-claims therein, or in any other litigation, action, claim, administrative matter, rate case, or matter of any kind. 5. For the purposes of this Section and Sections 6, 7, 8, and 9 below, every capitalized term has the meaning provided to it in the renewed gas and electric franchises which, if adopted by the City and accepted by the Company in 1996, shall collectively be referred to as the "Renewed Franchises". The Company agrees that the inclusion of each Company Customer in a Customer Classification under the Renewed Franchises on an accurate and timely basis is necessary for the City to receive the appropriate franchise fees to be collected £or the City under the Renewed Franchises. The Company further agrees (i) that there is nothing in its Gas or Electric Rate Books in effect as of the date of Chis Agreement which would affect or any way prevent the Company from collecting the franchise fees which are to be collected from its Customers and paid to the City under the terms of the Renewed Franchises and (ii) that it wi11 not propose and has no knowledge of any proposed changes to � its Gas and Electric Rate Books which would affect or in any way prevent �he Company from collecting the New Fees which are to be collected from its Customers and paid to the City under the terms of the Renewed Franchises. 6. The Company agrees and recognizes that the estimates, used by both parties during negotiations of the Renewed Franchises, of the franchise fee revenue the City will receive under the Renewed Franchises is, in part, based on the Company Tariffs and associated Customer Classifications which existed as of January 1, 1996. The City agrees and recognizes that the Company needs to implement the Renewed Franchises without undue administrative burden and needs to have flexibility in structuring and implementing new Tariffs which may necessitate changes in Customer Classifications. The intent of the Company and the City is to minimize the administrative burden on the Company and to provide the Company flexibility in structuring and implementing new Tariffs, while preventing the City from receiving reduced franchise revenue due to changes in Company Tariffs during the term of the Renewed Franchises. 7. The Company will use reasonable good faith efforts to collect both Interim or New Fees, as the case may be, from all Customers. In the event that errors occur which result in either New Fees or Interim Fees not being collected from any Customers, the Company will use reasonable good faith efforts to remedy such errors in • order to collect the franchise fees required to be collected and paid to the City pursuant to the Renewed Franchises, such reasonable good faith efforts to include, but not be limited to, filing additional or amended surcharge riders with the Commission. �l��r�7 • In the event that (a) Minn. Stat. § 216B.?0 is modified by amendment, repeal or federal preemption so that the Company is no longer the exclusive provider of electric service in the City of Saint Paul to one or more Company Custoners in the City, and (b) Interim Fees are being paid or are required to be paid under Section 11(c) of the electric frar_chise, the Company and the City shall be required to meet to negotiate changes to the structure and amount of Interim Fees to prevent the Company from losing the affected Customers and the City from losing franchise fees from such affected Customers. The City and the Company shall each be reasonably required to consent to changes which reasonably achieve and balance the mutual objectives indicated. When agreement is reach on such changes, the collection of franchise fees may be stopped or reduced immediately upon reaching an agreement, where necessary to carry out the agreement of the Company and the City. 8. The Company will submit to the City, for the City's review and comment, the draft surcharge rider the Company proposes to file with the Commission to implement the collection of the New Fees established by the Renewed Franchises. � 9. The Company and City agree that the estimated total cost of obtaining the annual independent audit opinion set forth in Sections 5(e)(2) of the Renewed Franchises for the first year such opinion is provided after the Approval Date is ten thousand dollars ($10,000.00). NORTHERN STATES POWER COMPANY Its CITY OF SAINT PAUL Mayor or Deputy Mayor Its Director, Aepartment of Finance & Management Services Approved as to form: Assistant City Attorney � ��-yi'� Northern States Power Company Law Department Cary R. Joh�on vice Pruident and General Counsel David A.I.awrenm Assistant Generai Coun.ael Wrimr i Direc[ Dial Number Mr. Fred Owusu City Cierk Ciry of Saint Paul 15 West Kellogg Blvd., Room 170 St. Paui, MN 55102-1616 414 Niwllet Mall Minneapolis, Minnuou 55401 Tdephoce (6tt) 330-6600 Fax No. (612) 330.5827 June 13, 1996 Re: Acceptance of Gas and Electric Franchise Agreements with the City Dear Mr. Owusu: A+mrnns Smphen C. Lapadat Harold l. Bagiey James L Altman Cheri L Brix Michuel C. Connelly lohn W. Haine Chandra G. Hausmn Samea P. )ohnson leffrry C. Paulson Brvcc A Coi[ On May 15, 1996, the City Councii adopted Ordinance No. 96-416 and Ordinance No. 96-417, the Gas and Electric Franchise Agreements, respectively, with Northern States Power Company. The Company herewith files with the City an Acceptance of each of the Franchise Agreements. As required by Section 12 of the two Agreements, the Company is filing these Acceptances with the City within 30 days of the passage, approvai and pubiication of the Ordinance. Very truly 7ack F. SjoM1dm Ascisrant Geneiai Counsel ��j/ C� Haroid J. Senior Ai RECEIVEC JUN 131996 CITY CLERK 1 �/ ✓ HJB/JAG enciosures cc: Mr. Philip Byrne, Assistant City Attorney �(�-4i� June �a-, 1996 To the Honorable Mayor and Members of the City Council Saint Paul, Minnesota Re: Acceptance af Electric Franchise Mayor, Council Chair, and Counci{ Members: The undersigned, Northern States Power Company, does hereby accept and agree to abide by, keep and perForm all of the terms, limitations, conditions and provisions of Council File No. 96-417, being Ordinance No. 96-417, adopted by the Cauncii on May 15, 1996, and approved by the Mayor on May 21, 1996. NORTHERN STATES POWER COMPANY BY � ��' ��-�. Robert . Erickson Director, Customer Service % n > And ' �'�/ Sutton Piombon Assistant Secretary APPROVED AS TO FORM: �. City Attorne �� c �,�,,� �� 1��-.�� s��%� St7MMARY OF ATTACIiED PROPOSED TECHNICAL AMENDMENTS TO C. F. NO. 96-417: (For Second Reading) 1 2 Page 5, amend Section 5(a-2)(�,ii) definition of Customer Classification. Page 15, amend line 26 to change "or" to "of." 3. Page 19, amend the Company address. °I�-yt7 Initiatiag Department: Department Services o£ Finance and Management Contacts: Martha Larson 6-8796 Tim Marx 6-8717 Must be on Covncil Agenda: Action Requested: April 24, 1996 Passage of two ordinances pursuant to Chapter 16 of the City Charter to renew the gas and electric franchises for Northern States Power Company (NSP) from July 1, 1996 to June 30, 2006. Initiating Problem, Issue, Opportunity: The current franchises under which NSP provides gas and electric service within the City expire on June 30, 1996. Negotiating teams from NSP and the City have reached an agreement, subject to City Council approval, on the terms and conditions under which the franchises should be renewed for a period of at least 10 years to June 30, 1996. Under the City Charter a public hearing is required before a franchise ordinance can be adopted. The public hearing is tentatively scheduled for May 8, 1996. More detailed information about the proposed franchises will be provided in advance of the public hearing. Advantages if Approved: The franchises would be renewed. The franchise fee revenue stream, which currently totals about $14 million annually, would continue without interruption, and the City would continue to regulate NSP's use of the public right of way under the franchises. Disadvantages i£ Approved: None. Disadvantages if Not Approved: Failure to adopt the ordinances would cause uncertainty in the future franchise revenue stream and the City's ability to regulate use of the public right of way by NSP. a c. - y i�1 NOTICE OF PUBLIC HEARING BEFORE THE COUNCIL OF THE CITY OF SAINT PAUL PLEASE TAKE NOTICE that a public hearing will be held, pursuant to Section 16.03 of Che Charter of the City of Saint Paul, on Wednesday, May 8, 1996, on ordinances to grant to Northern States Power Company gas and electric franchises for a ten year period beginning July l, 1996 and ending June 30, 2006. The hearing will be in the City Council Chambers on the third floor of the Saint Paul City Hall and Ramsey County Courthouse, 15 West Kellogg B1vd., during the regular meeting of the City Council which begins at 3:30 p.m. k � 2 3 4 5 6 7 8 9 9�-4�'1 cure the invalidity consistent with the intent of this ordinance, which meetings and discussion shall be without prejudice to the lawful rights of the Company and the City. (b) Interim Fees under Existing Snrcharge Rider; New Fees. The provisions of the Company surcharge rider Tariff in the Electric Rate Book relating to the collection and payment of Interim Fees to the City, shall continue in full force and effect from July 1, 1 up to the time New Fees commence with the bills issued to C�stomers effective with Company's November, 1996, billing month, or the first Company billing month after the Approval Date, whichever is later. The "Approval Date" is the date the Commission of the time and manner of collection of the New Fees by are provided for 10 in Section 5. On and after the date New Fees commence, and for th�mainder of the term of 11 the franchise, the provisions of this ordinance relating to the co�tation, coilection and 12 payment of the said New Fees to the City sha11 apply. On and�after July 1, 1997, if the A 13 Commission has not approved the time and manner of col�ection of the New Fees and the 14 City is still being paid Interim Fees, either the Compa�°y or the City may give notice by 15 certified mail to the other that the remainder of th�'term of the franchise is a Franchise 16 Extension Period under Section 11(d) for the p'urpose of ternunating this franchise. 17 18 19 20 21 22 (c) Reinstatement of Interim issues an order or enters ajudgment If any administrative agency or court of law impairs in any way the implementation of this franchise or of the collection of th� New Fees under Section 5 of this ordinance as to one or more Company Customers, Electric Rate Book the sole option of in that event the approved Taziff surcharge rider in the to the collection and payxnent of Interim Fees to the City, shall, at expressed in notice by certified mail to the Company, be effective 23 if there is an ap oved surchazge allowing collection of the Interim Fees with respect to the 24 one or mor ompany Customers affected by such order or judgment upon the date of the 25 makin of such order or entry of such judgment, and shall continue in full force and effect 26 untiYthe first to occur or (1) June 30, 2006, or (2) such order or judgment expires or is i s � ��17�RG � 2 3 4 5 6 7 (a) To the Company: President, Minnesota Electric Northern States Power Company 414 Nicollet Mall Minneapolis, Minnesota 55402 with a copy to: General Counsel Law Deparhnent, Fifth Floor Northern Staxes Power Company 414 Nicollet Mall Minneapolis, Minnesota 55401 , (b) To the City: Director Department of Finance (or its successor dep City of Saint Paul 15 West Kellogg oul� Saint Paul, M' sota Management Services or office) 55102-1616 with a copy . City Atto y Office of e City Attorney City of aint Paul 15 W t Kellogg Boulevard Sai Paul, Minnesota 55102-1616 38 Either the 39 address 40 qc.-y�� Section 16 Unless othenvise provided, a11 notices which may be required to be or aze given by either the Company or the City to the other shali be in writing and shall be either (a) delivered by hand and receipted or (b) sent by first class United States mail, unless a�different class of mail is required by a specific provision in this ordinance, postage prepa�d, to the representatives at the addresses below: or the City may change the above designated representatives and by written notice as provided in this Secrion 16. �9 � r��17/9G ac.,yr'l Interdepartmental Memorandum CITY OF SAINT PAUL DATE: April 17, 1996 TO: Nancy Anderson Assistant Council Secretary FROM: Philip B. Byrne� Assistant City Attorney RE: Public Hearing Please place the attached Notice on the Council Agenda. It gives notice of a Council Hearing on the award of gas and electric franchises to Northern States Power Company to be held May 8, 1996. The Notice will be published in the Legal Ledger 10 days before the hearing in order to comply with the Charter requirement for published notice of such hearings on franchise ordinances. , �;Ae v.F�xlILE�� A)iii�"E� P � �,k� ��ti � ' ��J V�la„� � , /�'rG . � c,� �., wo � �si�_ .��,� ,� �' X�, s, �-- ��- � l� � ", NSP FRANCHISE AGREEMENTS Background and Analysis ..� � �� ..� �� .�� `� � � � � �� What is a franchise aud a•hat are franchise fees? Gas and electric utilities like I�TSP are required by law to obtain a franchise to operate in the City. A � franchise is a conlract which sets forth the ri�ts and obligations of the City and NSP. The negotiated agreement would begin July 1, 1996 and end June 30, 2006. Franchise fees are the lawful compensarion the CiTy receives for allowing NSP to use the increasingly valuable City owned right of way and property for its operations in Saint Paul. State utility regulations requ'ue NSP to collect the fees only from its Saint Paui customers. NSP pays the fees it collects to the City. How imuortant are franchise fees to the Citv? • Current revenue: Projected revenue: 1983 revenue: w • • . • $14 million or 10% of the general fund. $17.8 million in 2006 (2% per yeaz growth compared to historical inflation of 33%) $173 million or about the same as 2006 projected revenue The negotiated agreements change the franchise fee structure to increase revenue stability by minoring NSP's rate structure and basing the fee primazily on the amount of energy consumed. • Increased fee stabiliry will help control the proper[y tas levy. • Who will nav the franchise fees? Who navs pronertv taxes? • Residents and commercial entities benefit from City revenue being raised in franchise fees. The total amount of franchise fees estimated to be collected and the total amount of properiy tases currently paid are distributed as foilows: Customers/Properties Franchise fees Propertv taYes Residential ' 27% 45% Commercial 28% 43% Industrial 45% 12% • Tax-exempt properties (colleges, hospitals, the state and federal governments, etc.) aze included in the commerciaUindustrial categories. 25% of the estimated mazket value of Saint Paul properry is tax-exempt. Ta�c-exempt properry does not pay property tases for City services but does pay franchise fees. How will utiliiv customers' franchise fees chan�e? • Moderate adjustments for residential consumers: an average 75 cent monthly increase in 1996 over 1995 or $9 a yeaz; in 2004, $2 more a month or $24 more per yeaz compazed to 1995. Residential customers do not pay the franchise fee during the six winter months. Moderate adjustments for commercial consumers: an average $2.60 monthly increase in 1996 over 1995 or $32 a year; in 2004, $7.80 more a month or $94 more per yeaz compazed to 1995. Fee stability for industrial consumers: an average $83 monthly decrease in 1996 over 1995 or about $1,000; in 2004, about $45 more a month or $548 more per year compazed to 1995. In 2004, the estimated net effective rates (percent of fee in relation to NSP bill) will be 4.6% (residential), 8.4°l0 (commercia]), and 6.9% (industrial). Prepared by Ciry negotiafing team May 6, 1996; revised May 7, 1996 based on coaected infomiation ptovideA by Ramsey County 2 �'�/ Interdepartmental Memorandum • �RfT1� CITY OF SAINT PAUL April 29, 1996 To: Mayor Norm Coleman Council President Dave Thune Councilmember Jerry Blakey Councilmember Dan Bostrom Councilmember Dino Guerin Councilmember Mike Harris Councilmember Roberta Megard Councilmember Janice Rettman From: Timothy E. Marx, City Attorney� �//"�� Martha G. Larson, Director Fin ��and Management Services v Gregory N. Blees, Council Fiscal Policy Director Philip B. Byrne, Assistant City Attorney • Re: NSP Franchise Agreements The City`s negotiating team for the renewal of the gas and electric franchises for Northern States Power Company (NSP) recommends that the City approve the agreements negotiated with NSP. Under Chapter 16 of the City Charter, franchise agreements must be adopted by ordinance after a public hearing and then accepted by t�e affected utility. The public hearing is scheduled for Wednesday, May 8, 1996 at 5:00 p.m. The fourth reading of the ordinances would then occur on May 15, 1996. In an April 12, 1996, memorandum of understanding, NSP has agreed to accept the negotiated agreements if adopted by the City and to execute an accompanying agreement. The remainder of this memorandum summarizes the basis for our recommendation. Accompanying this memorandum is detailed background information including the ordinances and a proposed resolution which we recommend the City adopt to provide additional legislative history for the franchise ordinances. A table of contents for this material is set £orth on page four of this memorandum. • 1 �G ��7 Legal Basis for Franchise Agreements • Under Minnesota law and the City Charter, gas and electric utilities are required to obtain franchises from the cities in which they operate. Franchise agreements set forth the terms and conditions under which utilities can operate within cities and establish the compensation cities are to receive for a utility's use of the public right of way. The public right of way is an increasingly valuable resource, and franchise agreements and municipal franchising power are an important tool for managing this resource. The proposed agreements with NSP preserve the City's ability to manage the public right of way while at the same time allowing NSP use of the right of way to provide gas and electric service. City Fiscal Stability and Controlling Property Taxes The key objectives in the negotiations with NSP were to (1) maintain franchise fees as a stable source of City revenue to help control property taxes and (2) develop a fee structure that was fair for all utility users. The negotiated agreements achieve these objectives: A Stable Revenue Source to Control Propertv Taxes • • Current franchise fee revenue is about $14 million annually. Franchise fee revenue should grow over the next ten years, but only moderately. Projected revenue for 2006 is $17.8 million. This is approximately the same amount as was collected in 1983. This represents annual growth of 2 percent, well below historical inflation of 3.3o If franchise revenue kept pace with inflation, revenue in 2006 would be $20 million. Although franchise fee revenue growth is expected to be modest, the changes made to the fee structure (consumption based fee in place of a gross earnings charge) should make it a stable source of general fund revenue that will help City officials minimize growth in the property tax levy. • The modest revenue growth to be generated by the franchises over the next 10 years includes franchise fees paid by tax- exempt properties which do not pay property taxes but do pay user fees such as the franchise fee. Tax-exempt property accounts for about 25% of the total market value of the City. A Fee Structure that Limits ProDertv Tax Burdens • It is estimated that commercial customers and industrial customers will together pay almost 75% of the franchise fees over the next 10 years. The commercial share will be about 27% • and the industrial share will be 45%. Residential utility 2 �� -�cn customers will pay just over 25% of the franchise fees. � 1 z `c� �FSS'a In contrast, residential property owners rrently bear � of �.3Ft the property tax burden. Commercial prop rty bears � of the property tax burden and industrial abou - ��o Conse ently,� residential and commercial property owners should benefit from'��4/ F having City revenue raised from franchise fees as opposed to� property taxes. Moderate adjustments to franchise fees for residents and commercial users over a 10 year period is, therefore, reasonable. It is also acceptable to provide franchise fee stability to industrial properties which pay a larger proportionate share of these fees. In addition, it is the larger industrial customers which most often have the opportunity to use non-franchised sources of energy for which franchise fees are not paid. It is not in the City's interest to provide an incentive to use non-franchised energy sources. A Balanced Fee Structure for all Enerw Consumers • Residential consumers, on average, will likely see about a 75 cent per month increase in 1996 over 1995, or $9 a year. In 2004, compared to 1995, these consumers will pay about $2 more a month or $24 more per year. The net franchise fee effective rate (the franchise fee as a percentage of the total NSP bill) � for residential consumers is projected to be 4.6o in ten years compared to 3.10 currently. � Commercial consumers, on average, will likely see about a $2.60 monthly increase in 1996 over 1995 or $32 a year. In 2004, compared to 1995, commercial consumers will pay about $7.80 more a month or $94 more per year. The net franchise fee effective rate for commercial consumers is projected to be 8.4o in ten years compared to 8% currently. • Industrial consumers, on average, will see an approximately $83 monthly decrease in 1996 over 1995 or about $1,000. In 2004, compared to 1995, industrial consumers will pay about $45 more per month or $548 per year. The net franchise fee effective rate for industrial consumers in is projected to be 6.9% in ten years compared to 7.8o currently. 1 These figures are annual figures. However, under state law, residential consumers do not pay the franchise fee during the • months from November through April. 3 ��-��7 � NSP FRANCHISE Gas Franchise Ordinance 1. Section Summary 2. Ordinance 3. Comparison to Existing Ordinance Tslectric Franchise 4. Section Summary 5. Ordinance 6. Comparison to Existing Ordinance Resolution of City Findings 7. Draft Resolution Franchise Fee Analysis and Fiscal Issues 8. Memorandum from Finance Director, Budget Director, and Council FisCal Policy Director Table of Contents INFORMATION Financial and Fee Analysis Attachments: � A. NSP Gas & Electric Fees: Actual v. CPI Inflation B. NSP Franchise Fees: Actual and Estimates for Next Franchise Period C. General Comparison of Class Burden: Property Taxes vs. NSP franchise Fees D. Average Annual Franchise Fees and Effective Rates E. Total NSP Franchise Fees: CPI Inflated, Actual and Estimates thru 2005 F. Projected NSP Gas & Electric Fees vs. 3.3o CPI Inflation i Energy Consultant Report 9. Report of Schedin and Associates Other 10. Memorandum of Understanding between City and NSP 11. Miscellaneous Side Agreement between City and NSP � ��-�� • SUMMARY - GAS FRANCHISE ORDINANCE April 19, 1996 This is a section-by-section summary of the proposed gas franchise ordinance (No. 96-416). If you have additional questions, please call Tim Marx (6-8717) or Phil Syrne (6-8728). Seetion 1 This section grants the franchise for a term of 10 years_ At the end of that period, if there is not an agreement on a new franchise, the franchise is extended for an additional 10-year period commencing July 1, 2006_ {gee Section 11(d)). Both the City and NSP can terminate the additional 10-year period on two years' notice. As the Charter requires, it is neither an exclusive nor perpetual franchise. 3ection 2 The franchise allows NSP to continue to use the streets and public property which they now use, and such additional property as may be designated by the City from time to time. The franchise, particularly Sections 1 and 2, restricts NSP from using public property for any purposes other than the operation of the gas � utility. Section 3 Section 3(a) requires NSP to relocate its gas facilities at its own expense to make way for public improvements and City uses. However, if NSP has had to remove and relocate particular facilities once, it does not have to move those same facilities at its own expense again for five years. In that case, while NSP would still have to move its facilities, the costs would have to come out of the overall project costs. The present language provided that NSP did not have to move its facilities within the ].0 years following the first relocation if the City had actual knowledge of the second project at the time they ordered the first relocation. Section 3(b) clarifies NSP's obligations with respect to its facilities on private property. Section 4 Section 4 provides that NSP is subject to City regulation in its use of tl�e public right of way, including the payment of permit fees up to a fixe@ amount beginning at $15,000 per year for each franchise, and going to $25,000 a year for the last 5 1/2 years of the franchise. The notice provision which is the basis for the current NSP cross-claim against the City in the Third & Maria • litigation has been deleted both from this proposed gas franchise and from the proposed gas franchise. �Co-Ll�� • • Section 5 Section 5 provides for the imposition and structure of the franchise fees to be paid by NSP. 5(a-1): The gas franchise fee consists of two components which are computed each month: a meter fee residential and business; and a volume charge at varying rates for residential and business customers based on the amount of gas consumed, regardless of whether NSP only delivers the gas for another utility. 5 a-2 : This section contains the definitions that are used tY�roughout the ordinance. 5(a-3): Franchise fees are not collected from residential customers during the winter season, the six-month period from November through Apri1. 5(b-1) to 5(b-4): These sections replace the former prohibition against the City imposing a lesser franchise fee percentage rate against another energy supplier with a prohibition based on a bottom-line dollar amount. Under these sections, the dollar amount that an NSP customer would pay in franchise fees cannot be materially greater than what the customer of another energy supplier would pay in franchise fees for the same energy supply. There are definitions of terms and provisions to resolve disputes by arbitration. 5(c-1): The new "delivery rate" structure for franchise fees will commence with the November, 1996, billing month. It will take NSP that long to incorporate this new system into their new computer billing system. 5 c-2 : If NSP's surcharge rider allowing collection of these fees is not approved by the Minnesota Public Utilities Commission (hereafter, "MPUC") by that date, the existing gross earnings will continue until the approval date. 5(c-3): NSP may adjust the franchise fees for billed amounts it cannot coZ].ect or must refund. 5 d: This section in the electric franchise is the 1993 "annual cap" provision. There is no similar provision in the gas franchise. 5 e-1 : This section provides for monthly reports by NSP in more detail than had been given, or necessary, in the past. 5(e-2): As an additional safeguard to the City's own ability to audit NSP's collection of franchise fees, this section provides for the Company's auditors to give an opinion to the City on the accuracy of the computation of City franchise fees at the same time 2 �i�-�� ., LJ they do NSP's own annual audit. The City and NSP will split the added incremental cost of that opinion. 5(f) and 5(a): Reserved for future use. 5 h: This section provides for the placement of a11 NSP customers, existing and new, into ciassifications in the Schedule in Section 15 in order to enable the collection and payment of franchise fees. 5 i : Also reserved. 5(j): This section provides for the placement of NSP customers which grow, or change their gas service, into other classifications in the Schedule to enable continued collection and payment of franchise fees. 5(ki: This section provides for the continued collection and payment of franchise fees from NSP customers which are subject to MPUC-ordered changes in their tariffs or rate classes. 5(1): Also reserved. . l J 5 m: This section states the intent of the City and NSP to discuss further changes to the franchise if necessary to avoid losses in NSP customers and resulting Iosses in franchise fees. 5 n: Given the fact that this franchise does not provide a gross earnings franchise fee, this section provides, to the extent necessary, relief from the Charter requirement that a franchise holder pay five percent of its gross earnings. 5 0: This section requires NSP to use its best efforts to obtain MPUC approval for the new "delivery rate" structure of franchise fees. Section 6 This section is unchanged from the past, and recites that NSP gas service and rates are subject to MPUC regulations. It requires NSP to provide reliable service to the public in the City. Section 7 NSP is required to file its Gas Rate Sook, and any changes, with the City Clerk, as well as any changes which it proposes to submit to the MPUC. 3 �t�"u�7 , Section 8 Unchanged, this section allows NSP to have its gas facilities remain in a vacated street or public property after the vacation. Section 9 Also unchanged, this section provides for the publ.ic hearing, and for NSP to bear the costs of publication of the ordinance. Section 10 Also unchanged, this section requires NSP to indemnify the City against claims or damage that result from the operation of the gas utility, including claims arising out of the City's issuance of permits to NSP for work in the street. 3eetion 11 11 a: This section replaces the old concept of severability of the invalid provisions of an ordinance with a mutual obligation to discuss changes if any part of the ordinance is held invalid. 11 b: This section provides for the present gross earnings franchise fees to continue to be collected until the later of . November, 1996, or approval of the proposed "delivery rate'� fees by the MPUC. If this approval has not been given by July 1, 1997, the City or NSP may terminate the franchise on two years' notice. During this time, the gross earnings fees wili continue. 11 c: If there is an judicial or quasi-judicial arder or judgment that impairs the collection of the "delivery rate" fees as to one or more NSP customers, such customer(s) will be returned to the gross earnings fees until the matter is resolved. In this instance the City may give a two year termination notice and pursue other options. 11 d: If there is no franchise in place and agreed to on June 30, 2006, this proposed franchise will be extended for an additional 10 years e�cpiring June 30, 2016. During this additional 10 years, either the City or NSP may give notice of termination of the franchise after two years. 11 e: This section states that nothing in the franchise is intended to confer additional jurisdiction any court or agency, including the MPUC. Section 12 Unchanged, this section provides for acceptance of the � franchise by NSP. 4 q�-y�'7 June �a . 1996 To the Honorable Mayor and Members of the City Council Saint Paui, Minnesota Re: Acceptance of Gas Franchise Mayor, Council Chair, and Cauncii Members: The undersigned, Northern States Power Company, does hereby accept and agree to abide by, keep and perform all of the terms, limitations, conditions and provisions of Councii File No. 96-416, being Ordinance No. 96-476, adopted by the Councif on May 15, 1996, and approved by the Mayor on May 21, 1996. ANY RPPROVED AS TO FORM: Keith H. Wietecki � ___ �� V k/l M ` ' � City Attome ' Sutton Plombon Assistant Secretary �i� � L� • Section 13 Also unchanged, this section recites the ability of NSP and the City to enforce this franchise by appropriate legal means. Section 14 The effective date of this ordinance is the same as for all ordinances, with the additional requirement of NSP acceptance. Section 15 The Schedule of the "delivery rate" section. Section 16 charges and customer classifications on which fee structure operates is adopted in this This section provides the procedures by which the City and NSP give each other notice under the various provisions of the franchise ordinance. 5