On August 7, 2001, the City entered into a 20-year franchise agreement with Northern States Power Company d/b/a Xcel Energy (Ordinance No. 607 attached). On April 6, 2021 the City Council granted an extension to the franchise agreement to December 31, 2021 for additional time to negotiate with Xcel on a new agreement (Ordinance No. O2021-007 attached).

The August 7, 2001 agreement gave Xcel the “…the right to transmit and furnish electric energy for light, heat and power for public and private use within and through the limits of the City as its boundaries now exist or as they may be extended in the future.” In 2016, the City exercised its rights to require a franchise fee of 3% of gross revenues from Xcel.

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 Xcel Energy and the City of Shakopee with input from our respective attorneys.

The purpose of Ordinance Number O2021-020  is to grant to Xcel Energy a twenty-year non-exclusive franchise to operate, repair and maintain an electrical energy distribution system within the city limits of the City of Shakopee. The terms and conditions of service and the rates to be charged by Xcel Energy for electric 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 Xcel Energy asserts that the other party has defaulted in the term of the electric franchise ordinance. In addition, the ordinance provides that all electric 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 Xcel 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 electrical facilities located in the City of Shakopee’s public rights of way and public grounds.

The purpose of Ordinance Number O2021-021 is to continue the franchise fee that was put in place in 2016. The ordinance does not change the current 3% franchise fee.