In 2001, the City entered into a 20-year franchise agreement with CenterPoint Energy (Reliant Energy) giving it “…the right to import, manufacture, distribute and sell [natural] gas for public and private use within and through the limit of the City as its boundaries now exist or as they may be extended in the future.”  The current franchise agreement documented by Ordinance 606 is attached. In 2016, the City exercised its rights to require a franchise fee of 3% of gross revenues from CenterPoint.

Cities have broad gas and electric franchise rights under state law. In Minnesota, franchises are negotiated and take the form of a contract set forth in an ordinance. This particular agreement is based off of the League of Minnesota Cities Franchise Model Ordinance and has been negotiated between staff of both CenterPoint and the City of Shakopee with input from our respective attorneys.

The purpose of this ordinance is to grant to CenterPoint Energy a twenty-year non-exclusive franchise to operate, repair and maintain a natural gas distribution system within the city limits of the City of Shakopee. The terms and conditions of service and the rates to be charged by CenterPoint Energy for natural gas energy are subject to the exclusive jurisdiction of the Minnesota Public Utilities Commission. The ordinance provides for a method of dispute resolution if either the City or CenterPoint Energy asserts that the other party has defaulted in the term of the gad franchise ordinance. The ordinance provides that all gas facilities shall be located, constructed, and maintained so as not to interfere with the safety and convenience of ordinary travel along and over public ways.

The ordinance also provides that CenterPoint Energy shall indemnify and hold the City of Shakopee harmless from liability on account of injury to persons or damage to property occasioned by the construction, maintenance, repair, inspection, the issuance of permits or the operations of the Gas Facilities located in the City of Shakopee’s public rights of way and public grounds.

The ordinance does not change the current 3% franchise fee.