|Denver Presents New Franchise Agreement with Xcel Energy
|FOR IMMEDIATE RELEASE:
Monday, April 24, 2006
Lindy Eichenbaum Lent, City of Denver
Ethnie Groves, Xcel Energy
Denver Presents New Franchise Agreement with Xcel Energy
Denver Residents Expected to Vote on the Agreement in August
(DENVER) After two years of negotiations, the City and County of Denver and Public Service Company of Colorado, an Xcel Energy company, have reached a new 20-year franchise agreement, replacing the existing 1986 franchise agreement and related implementing agreements that expire on December 31, 2006. Details of the new franchise agreement and implementing agreements were released Monday, beginning the public process that is expected to culminate in an August 8, 2006, election.
State law requires a public utility to enter into a franchise agreement with local governments to serve customers in its jurisdiction. A franchise agreement grants permission to operate and maintain public utilities in the local government’s right-of-way. Through the agreement, the City allows the utility to use the City’s right-of-way to upgrade its equipment, install new power and natural gas lines, move its facilities to make way for new buildings or developments, excavate and replace streets and alleys, and bury pipes and lines. The City is compensated for the use of its right-of-way by a franchise fee, collected from customers, on whose behalf Xcel is operating, maintaining and improving its system. Section 1.1.13 of the Denver City Charter requires that all public utility franchises be approved by the voters of the City.
“Because these franchise fees are so vital to the City’s budget, providing critical funds for key city services, we have worked to strike the best deal possible for the City and for our residents,” said Mayor John Hickenlooper. “We are pleased with the economic benefits this agreement will provide to the City and our residents, the customer service enhancements it will yield for Public Service Company customers and the environmental benefits it will deliver for our region as a whole.”
A copy of the franchise agreement and four implementing agreements are available online at www.denvergov.org/mayor, and a summary of the key points is below:
- The City of Denver is expected to receive $22 million in revenue from the existing Xcel franchise agreement in 2006, which goes into the General Fund to help fund public safety, parks and recreation, public works and other City services. In addition to these funds, under the new agreement, the City will receive approximately $2 million in additional revenues each year due to a change in an exclusion, putting Denver on par with the standard Colorado franchise fee. These additional revenues will be targeted to low-income energy assistance programs described below.
- The franchise agreement expands the company’s obligation for relocating its facilities and infrastructure to include City projects at least 50% funded by government entities, including RTD. This will help facilitate the build-out of FasTracks.
- The franchise agreement also subjects Public Service Co. to all right-of-way permit requirements, including inspection and acceptance by the City of its work.
- Public Service Co. has also agreed to performance standards for repairs, new and modified service, relocation, bury lines, traffic signal installation, and street light repairs and to pay if it fails to meet certain standards.
- Public Service Co. also agreed to and did conduct a power study for DIA to determine the causes of power fluctuations.
Customer Service Benefits
- Denver anticipates funding new low-income assistance and energy efficiency programs for individuals and non-profit agencies with the additional $2 million in revenues from the elimination of the exclusion.
- Public Service Co. will contribute an additional $2 million over the 20-year term of the franchise to these programs facilitated by Denver Human Services.
- Public Service Co. will partner with the City, Denver Housing Authority and the Governor’s Office of Energy Management and Conservation on a low-income residential demand side management pilot program aimed at reducing energy costs.
- Public Service Co. will continue to invest 1% of its gross revenues from electricity sales to bury electric lines in Denver.
- Through a proposed agreement reached at the Public Utilities Commission, Public Service Co. has agreed to new reliability performance standards for its customers.
- To help meet its Amendment 37 renewable energy requirements, Public Service Co. agrees to partner with Denver on a proposed solar power plant, subject to regulatory approval. The company has also agreed to contribute a $200,000 match for the proposed solar pilot project.
- Public Service Co. has agreed to partner with Denver on future environmental programs, such as the Pilot Municipal Demand Side Management Program; green building outreach program; Business for Environmentally Sustainable Tomorrow program and to develop new programs during the 20-year term of the franchise.
- The company and the Denver Water Board reached a separate agreement, subject to regulatory approval, by which Xcel has committed to purchase up to 22 megawatts of hydroelectric power from Denver Water over the next 20 years.
- In dry years, Public Service Company’s Shoshone Call (right to control water in the river) pulls water past storage reservoirs on the Colorado River for the Shoshone power plant in Glenwood Springs. Under a new agreement, the company will relax the Call during dry conditions, allowing upstream reservoirs to store more water, benefiting Denver Water and West Slope entities.
- The franchise agreement and implementing agreements will be presented to Denver City Council’s Public Works committee on Wednesday, April 26, 2006. The ordinances referring the franchise measure to the ballot and approving the implementing agreements will be filed on Thursday, April 27, 2006. The first reading of the ordinances will take place at City Council on Monday, May 1, 2006, with a presentation at the weekly Mayor-Council meeting on Tuesday, May 2, 2006. The five publications required by Denver Charter will occur between May 2 and June 1, 2006. Second reading of the ordinances will occur at City Council on Monday, June 5, 2006, with the franchise election scheduled for Tuesday, August 8, 2006. Per the Denver Charter, Xcel will be required to pay the cost of the franchise election.
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