Lafayette ballot issues focus on Xcel pact
The Lafayette City Council has passed an ordinance to place the question of whether to renew the franchise on the November ballot. The agreement grants Xcel rights of way on city streets, public utility easements and other public property to build and maintain its distribution system. In exchange, Xcel pays the city a franchise fee equal to 3 percent of gross revenue collected from Lafayette customers, an amount that currently is about $720,000 per year.
The group Lafayette’s Energy Future turned in a petition Aug. 6 for an alternate ballot measure that would replace the revenue from the franchise agreement with an occupation tax on Xcel for use of the rights of way. The tax would show up as a line item on Lafayette customers’ bills and essentially would be equal to the franchise fee the city receives from Xcel. Rather than putting that money toward the general fund, the money collected would be earmarked toward city programs that would support the use of renewable energy.
The occupation tax would go into effect only if the franchise renewal failed. If both passed, it’s written into the proposed occupation tax measure that the franchise renewal would prevail.
“Twenty years seems like a mighty long time for anything these days, but especially for energy, which is changing so rapidly,” Lafayette’s Energy Future steering committee member Larry Miloshevich said. “It just seems prudent to keep our options open.”
The city’s franchise agreement with Xcel expires in November. City law requires that residents vote whether to renew the franchise. If the franchise agreement is not renewed, Xcel would still serve the city but Lafayette would lose the franchise fee.
The city has been holding public meetings to explain the pros and cons of renewing with Xcel. A meeting for businesses will be held at 7:30 a.m. Tuesday, Aug. 20, at the Lafayette Chamber of Commerce, 1290 S. Public Road.
“If the franchise is terminated, Xcel is still here doing business,” Lafayette public information officer Debbie Wilmot said. “There’s no benefits to our residents or the city to get rid of that franchise agreement.”
Wilmot contends that the city would not be locked into service with Xcel if the franchise agreement were renewed and could still explore other energy options, although creating a municipal utility as Boulder is trying to do would come with significant costs with or without the franchise agreement.
The city staff is worried, though, that if the franchise agreement isn’t renewed, city services could be cut because of the loss of the franchise fee. The Lafayette City Council has approved a temporary licensing arrangement with Xcel that would keep the franchise fee in place for a year if the vote to renew is shot down, thus giving city officials some time to plan for what to do next without the revenue from Xcel.
The argument about city services being affected doesn’t fly with Lafayette’s Energy Future. While the occupation tax money collected wouldn’t be directed straight to the general fund, it still could be used for costs that would normally come out of the general fund as long as energy efficiency is taken into account.
The $720,000 franchise-fee figure accounts for only about 1.6 percent of the city’s $45 million general fund. Given that some of the occupation tax money could still go toward general-fund expenses and the energy savings that potentially could be realized by the city, Miloshevich said that $720,000 isn’t the hit it looks like on the surface.
“One thing we’re quite confident of is this is not going to cause harm to city services or personnel,” Miloshevich said.
One downside of the occupation tax over the franchise renewal, Miloshevich admits, is that, in addition to the franchise fee, part of the arrangement with Xcel requires the company to invest an additional $180,000 per year into a fund to cover the cost of burying power lines. The city’s fund currently is worth about $1.2 million, money that would go away if the franchise isn’t renewed.
Miloshevich said that is a small price to pay compared with the economic and environmental benefits residents could see down the road with a better mix of renewable energy and practices. The goal in rejecting the franchise renewal, he said, is to send a message to Xcel shareholders that they are tired of seeing the company continue to invest in coal.
Miloshevich acknowledged that municipalization might not be in the best interests of a city Lafayette’s size, but said sending such a message could help influence Xcel to clean up its energy mix faster.
“I think that would be a bigger win in the big picture than just Lafayette’s energy mix alone (with municipalization),” Miloshevich said.
Despite the push for an increased focus on renewable-energy programs, the city contends that it is achieving many renewable-energy strides by working with Xcel, such as recently breaking ground on a 1-megawatt solar garden.
“We can do some of these projects better with Xcel subsidizing some of these solar projects,” Wilmot said.
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