consultants are sandburs

Friday, October 11, 2013

RAMSEY - FRANCHISE FEES - What if Connexus passes-through franchise fees the city imposes, and there is a civil disobedience collective refusal to pay?

Think of Ghandi or Martin Luther King and the sit-in. Nonviolence. But disobeying.

First, think of this scenario -

If a per meter flat fee is imposed, and Connexus were to choose in its discretion to pass it through exactly that way. On the bill, "monthly per meter franchise fee pass through ............. $8.00" and a substantial number of taxpayer-ratepayers - ones with REAL Tea Party spirit - pay for the power part, but decline to pay that line item?

If you pay for your power the utility has no business shutting it off, right?

Second scenario: Ramsey imposes $8 per meter, Connexus says okay, we have 17,000 meters, so we are stung monthly a total of 17,000 x 8 = $136,000 per month extra operating cost; for last month; and in that month we sold 136,000,000 kWh of power (conveniently so for illustrative numbers). Then they say, well that works out to an additional $0.001 per kWh; and they bill accordingly, increasing each bill by the proportional city sting on a consumption basis, even though the city imposed its imposition on a per meter basis.

Then if you do not pay the full billing, for power, they CAN shut you off. No question there.

And pass through billing to end-use consumers of a per-meter franchise fee sting on a consumption basis IS justifiable accounting and billing - just as with a debt service cost of the ultimate GENCO in the system, Great River Energy for its plants in North Dakota in the case of Connexus, the GENCO amortizes its monthly capital costs on a per kWh of power sold its wholesale power distribution customers, which is passed through that way - i.e., where the GENCO capital cost is fixed without regard to the amount of power consumed, with consumption being variable depending on demand.

Ramsey can tell Connexus what it stings them; the statute says a franchise fee sting can be imposed; but under MS Sect. 216B.36 there is no guidance/requirement of how the city stings or how the utility stings through to taxpayers/ratepayers. The City has no statutory authority to tell franchised utilities how to pass fee stings through. Moreover, as a cooperative, Connexus is not regulated to do a pass through any particular way. The PUC lacks authority over it that way, as does the city in saying - in accounting detail - how the bulk monthly dollar amount of a pass through gets passed through.

It is a mess. It is bad, bad, bad taxation. Clearly the legislature declined collectively to be good law makers. They should have never legislated such an indirect and regressive tax; but they did. A responsible city would decline to go there. Ramsey is being irresponsible. A responsible city would lobby, through LMC or however else it lobbies, to have the levy limit raised, and would then levy what's needed as revenue, for what it chooses to fund at the level it chooses. The entire franchise fee, simply, is bad law - flawed law - passed by flawed humans serving as legislators, and Ramsey need not go there.

Obviously those are personal feelings, and those on council have the authority and responsibility to act as they think best, with none obligated to think as you or I do.

End of story? Perhaps the final post here about Ramsey franchise fee stinging? Perhaps not.

Ponder this. If there is a refusal to pay a pass through fixed per meter franchise fee as such, the City gets no tax lien and there is a question of the right of a utility to cancel service for non-payment of a backhanded flow-through tax that is not a part of utility energy-service provision. How, is the thing to be enforced? Non payment of direct honest straightforward taxes results in a lien. MS Sect. 216B.36 does not authorize any lien attachment to citizen property if the citizen does not pay. How is that to be enforced? If Connexus says the fee was not paid, Ramsey, we have no cash to flow through, sorry about that, what then? The bottom line seems the boot of power will be placed on any nonpaying citizen, either by shutting the gas and power off, or by city pressure. And if a lien is not authorixed the argument would be it is implied legislative intent, the lien would be pursued, and nonpayers might find the cost of a defense in court massively outweighs paying up. So, yes, the notion of a possible groundswell of nonpayment is a hypothetical, but ...

Also, why not tax the cell phone towers and land line infrastructure, via a franchise fee there?

Well, you know, it just might be next ...

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