consultants are sandburs

Wednesday, October 09, 2013


Here, for a regulated utility, and "administrative" costs of a utility's pass-through of a town's franchise fee (Connexus is not a regulated utility - it is a cooperative able to charge what the market will bear without ever having any fairness hearing). As a practical matter, the PUC can for regulated utilities specify franchise fee pass-through constraints from which Connexus is wholly unconstrained. Using Connexus as a tax collector where it can set its own rules is asking for difficulties that would not attach for a firm constrained under PUC practices and oversight. See, also, this correspondence of a regulated entity.

See specific exemption language, MS Sect. 216B.01, compare IN RE NATURAL GAS PIPELINE, 707 NW 2d 223 (Minn.App. 2005)(municipal utilities, along with cooperatives are exempted from most of Ch. 216B constraints per Sect. 216B.01 express language).

See, In the Matter of a Petition by Minnesota Power for Approval of a Rider for Facilities Franchise Fee, an Unpublished Court of Appeals opinion, online here, growing out of the City of Cohasset v. Minn. Power, 776 N.W.2d 776 (Minn. App. 2010), rev'd by 798 N.W.2d 50 (Minn. 2011) litigation noted in an earlier post.

There a PUC decision on franchise fee pass through by the involved utility was upheld; because of the PUC's jurisdiction. With cooperatives exempt from the bulk of Ch. 216B, except for express franchise fee mention; Sect. 216B.36, Connexus likely might have a differing pass through situation. This opinion suggests that any "franchise fee" imposition Ramsey might place upon the high voltage power lines passing through it, if lawful, would be subject to PUC jurisdiction over pass through affairs, if the owning utility or utilities are under PUC jurisdiction, a fact question for which I do not know the answer. Since it's an unlikely hypothetical, of only slippery slope argument value, it is not worth too much attention. The bottom line point of focus, PUC regulation or exemption from regulation is a factor in franchise fee thinking.

There is a PUC Docket No.: E,G-999/CI-09-970, "In the Matter of Updating Language to Comply with Minnesota Statute and Rule Changes – Municipal Franchise Fees," where only fragmentary items were tracked down online, this online item - where we can guess what transpired - stating:

On April 2, 2013, the City of Wabasha repealed its electric and gas franchise fee ordinances with Xcel Energy (Xcel or the Company). According to Xcel, The fee had become effective February 1, 2013, and had been passed by the sitting City Council in November 2012. In January 2013, a new City Council was seated, and Xcel became aware through informal discussions with the City, that there may be issues within the City with the fee and it was possible the fee would be repealed.

Bless the ballot box. The federal House runs with all seats up for reelection every two years. Ramsey might consider that.

That and previous posts are about all that will be posted here on the question of the statutory authority underlying Ramsey's consideration of imposing a "franchise fee" indirect and regressive tax upon its citizens. How Ramsey proceeds under its statutory authority is the open question, and it is more a question of policy decision making than constraints imposed by law.

More should we, vs can we. Policy questions include sunset specification vs ongoing entrenchment of yet another form of tax, how to structure a "franchise fee" if one is imposed, things of that nature, and opinions can vary.

It seems clear road upkeep is a public function and Ramsey's engineering department makes a case for upkeep and estimates costs but is not a policy setting authority within the city. Staff can recommend policy but the council, subject to state law and the city's charter, holds policy setting power.

County Board Member Look spoke at the public hearing, in his capacity as a Ramsey citizen and resident and not on behalf of the County Board, with a suggestion that the franchise fee question might properly be put to a citizens' vote. How that squares with Charter considerations regarding franchise fees remains an open question. Whether the council stays with its current franchise fee thinking also remains an open question. The public consensus at the Oct. 8 public hearing was strongly against taxation via franchise fee. Some spoke in favor of the idea, with at least one suggestion that a tiered approach might be better than flat-feeing the thing, if it is to happen.

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