Proposed ordinances for a franchise agreement and franchise fees with Aquila gas company will generate money for the city.
Aquila is buying out Northern Minnesota Utilities gas company and the city is working with Aquila to draft a new franchise agreement, said Brad Swenson, Wadena city administrator, in an interview. Previously, the city had a franchise agreement with Northern Minnesota Utilities but it didnt include franchise fees, he said.
The major change is the franchise fee, Swenson said.
The franchise fee will be added as a line item on each customers bill. Aquila will give the franchise fees to the city of Wadena, and the money will be added to the general fund, Swenson said.
He estimates the franchise fees will generate between $35,000 and $40,000 each year based on a customer count. Wadena has franchise agreements with Charter and Arvig and the agreements include franchise fees, Swenson said.
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At a special meeting Monday, the Wadena City Council discussed parts of the franchise agreement with City Attorney Mark Hansen and Aquila representatives.
Aquila reviewed the proposed ordinances for a franchise and franchise fee and requested a few changes. Aquila proposed having an automatic renewal of the franchise after 10 years for an additional 10 years if action isnt taken by either party to terminate the franchise. Hansen said he was OK with having an automatic renewal included in the agreement. Also, Aquila wanted some language in the agreement to be changed, and Hansen said he thought it would be OK to change some of the language.
The gas company also requested removing a provision requiring a construction performance bond because it said there is no risk of Aquila not paying any amount owed to the city. Hansen said that he would research whether the city should have that provision in the agreement.
Aquila requested eliminating alternative franchise fees in the ordinance. But Hansen thought the city should have the option of starting with a flat fee and changing to a different way of billing in the future. Swenson said the city will be using a flat fee but thought the city should leave in alternative franchise fees as an option.
The start date for the franchise fee would be after Aug. 1 and billed in September, according to Aquilas proposal.
The franchise fee with Aquila will be a flat fee rather than a percentage, Swenson said. Proposed franchise fees are $2 per month per customer for residential, $5 per month per customer for a commercial firm and $20 per month per customer for commercial interruptible, industrial firm and industrial interruptible. A proposed transportation cost for companies that can buy gas on the open market hasnt been decided yet.
Aquila was concerned about the high fee for transportation customers. Hansen and Aquila will figure out the legalities involved with the transportation customer fee.
Hansen and Aquila will work on the agreement and could have a final franchise agreement ready for approval by the June City Council meeting.
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