CR 95-121 Approve 1996 SRA Budget
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. July 7, 1995 Council Report 95-121
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Approve 1996 SRA Budget
Proposed Action.
staff recommends adoption of the following motion: Move that
Council approve the proposed 1996 Suburban Rate Authoritv budaet
with its membership assessment at the current rate.
OVerview.
This report is to inform Council of SRA's 1994-95 activities and
the organization's anticipated 1995-96 activities and budget.
Primary Issues to Consider.
0 SRA - What is it and what has it done?
This is an association of 32 suburban municipalities whose
activity centers around monitoring public utility rates and
rate design. Its activities and accomplishments are detailed
in the supporting information.
0 1995-96 SRA projects
(See supporting information)
0 1995-96 budget
. The current membership assessment is set at $400.00 per
member city vote. Hopkins is allocated four votes and pays
$1,600.00 annually in dues. See attached supporting
information for more budget information.
0 Recommendation
Staff can attest to the effectiveness of this organization.
It is one of very few organizations that represents the
general rate paying public before the Public utilities
Commission. staff urges Council to approve the budget and
continue the City's membership in this organization.
Supportina Information.
0 BRA Annual Review 1994
0 1995-96 Projects and Anticipated Projects
0 1996 SRA Proposed Budget
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J es Gessele
Engineering Superintendent
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. SUBURBAN RATE AUTHORITY ANNUAL REVIEW 1994
The following is a brief summary intended for the city councils of Suburban Rate Authority C'SRA") member
cities. It highlights the major activities and achievements of the SRA during 1994. The SRA is a joint
powers association of 32 Twin Cities suburban municipalities that monitors rates and rate design issues of
electric, gas, telephone utilities and Metropolitan Council Wastewater Services. The SRA was very active
and successful in several far-reaching issues affecting member city ratepayers and Minnesota cities generally.
Telecommunications Legislation
In the fall of 1994, the SRA Board authorized counsel to participate in legislative issues affecting cities
relating to the alternative telephone regulation bill (local service de-regulation) then expected to be offered
in the 1995 legislative session. The SRA assisted the lobbying efforts of the League of Minnesota Cities in
two important issues relating to that legislation: clarifying and broadening the police power of cities in the
new competitive environment for a local telephone service and addressing cities rights to compensation for
telecommunications utility use of public property. As of the date of this report. those SRA supported issues
have been incorporated into the bill which passed out of both the Senate and House Committees and is being
debated in the legislature at the time of this Review. The Department of Public Service will be authorized
by this bill to issue a comprehensive report by February 15, 1996 recommending a uniform state policy on
franchise fees for use of public property by utilities. Currently no telecommunications companies to pay
franchise fees to Minnesota cities and the law is unclear regarding the rights of cities to require fees over and
above regulatory cost. The SRA advocated a clarification on this issue and actively assisted in the inclusion
. of this study. in lieu of the right to require franchise fees in the current bill. The SRA will be actively
involved in the DPS study if this bill passes.
Model Telecommunications Permit Ordinance
The SRA also drafted a model telecommunications permit ordinance to establish uniform requirements
regarding important issues to cities in the new competitive telecommunications environment: permit fees,
location and relocation requirements, repair requirements, performance bonds. Gopher State One information
and other provisions. The telephone deregulation bill language broadening city police power would further
ensure the enforceability of these telecommunications permit ordinances. The Mirmesota League of Cities
has requested that the model permit ordinance be used as a basis for the League's model ordinance for
distribution to its members.
Minnegasco 1994 Rate Case
The SRA won a significant victory for residential ratepayers served by Minnegasco in limiting
increases in the fixed customer service charge Minnegasco sought. In 1993 Mirmegasco won a 67% increase
(from $3 to $5) in a fixed non-usage based customer charge for its residential customers, This increase was
augmented by the elimination of a credit for gas usage. In the 1994 filing. Mirmegasco sought again to
increase its $5 charge to $6, stating that it intended to continue these increases in subsequent rate filings.
The SRA was the sole party to criticize this increase as contrary to conservation goals established by the
legislature and otherwise unsupported by evidence in the record. The DPS supported the increase. The PUC
agreed with the SRA and denied MilU1egasco's increase, citing conservation concerns and lack of customer
. acceptance. This PUC decision has ramifications for both gas and electric utilities and places a greater burden
on the utilities in future rate filings to justify an increase in non-usage based charges.
c1MS8 7296
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- 1995-96 SRA Projects & Anticipated Projects
To assist in the 1996 SRA Budget review process, the following is infonnation describing the types of issues
the SRA is currently addressing and those in which we believe the SRA will be involved to protect residential
business. and city government ratepayers of SRA members. Given the quantity of important issues. it is
possible that the SRA will be required to focus only on two of three of these issues to stay within its budget
constraints. These matters are in addition to the General budget item that usually carries the largest
component of any SRA annual budget. The General category includes quarterly meetings. member and non-
member communications and on-going identification of new issues that may arise.
1. UTILITY FRANCHISE FEE LEGISLATIVE STUDY. Assuming passage of the telephone
deregulation bill as it currently reads, the SRA will play an active and important role in the DPS study of
franchise fees in gas. electric. telephone and cable services in Minnesota. This issue is clearly of great
importance to SRA members and to all Minnesota cities. It will provide a forum for cities to make their case
for the discretionary right to charge franchise fees for use of public property by telecommunication utilities.
2. GAS - ELECfRIC RATE INCREASES. It is anticipated that Minnegasco will file for a
general rate increase later in 1995. The SRA will intervene and monitor issues that may affect SRA cities,
specifically including the residential customer service charge which the SRA succeeded in limiting in the
1994 Minnegasco case. It is not known at this time whether NSP will seek a general rate increase in 1995.
Historically, NSP has sought general rate increases every two years and has not filed since 1993.
e 3. LOCAL TELEPHONE CALLING AREA INVESTIGATION. The 1994 legislature
authorized a PUC investigation of local telephone calling area policy in Minnesota. The PUC commenced
this investigation in 1994 and hearings will be held in the fall of 1995. The SRA's dual interest in these
proceedings is to maintain the existing unifonn calling rate across the metro area and to ensure the scope of
toll free metro calling, which is the largest in the United States. There is no proposal thus far presented that
would jeopardize either of those SRA concerns. The primary focus of this proceeding is to establish the size
of out-state toll-free calling area and policies.
4. GAS-ELECTRIC MODEL FRANCHISE. Several SRA cities are negotiating with NSP for
new franchise agreements. The increasingly deregulated gas and electric service environment creates a need
for review of the previously approved SRA model franchises. The SRA will review the need for revisions
to its model ordinance to better assist SRA members in negotiating new franchise agreements.
5. LONG-TERM ELECfRIC SERVICE CONTRAcrS. Cities collectively comprise a
significant electric load for municipal services such as street lighting and municipal pumping. The
increasingly deregulated environment raises new issues regarding the source of energy and city ability to
negotiate discounted long-tenn rates in exchange for comminnent to electric energy. The SRA is exploring
this issue as it may benefit SRA cities.
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April 19, 1995
1996 Suburban Rate Authority Proposed Bud~et
- 1995
Assets:
Cash and Investments (12/31194) $25,076
Receivables (1995 assessments) 64,800
Interest Income (estimate as of 12/31/95) 2,000
TOTAL $91,876
Anticipated 1995 Expenses:
1994 and 1995 Minnegasco Cases
legal $4,000
expert 1,000
1995 NSP Electric and Gas Matters
legal 6,000
expert 3,000
Legislative Matters 10,000
Local Calling Area Investigation 4,000
Electric and Gas Franchise Matters 5,000
Legislative Study of Franchises 14,000
General (fees and disbursements) 18.000
. TOTAL ($65,000)
Reserve at December 31. 1995: $26,876
1996
Assets:
Carryover from 1995 $26,876
Membership Assessment ($400 per vote) 64.800
Interest Income (estimate as of 12/31/95) 2,000
TOTAL $93,676
Anticipated 1996 Expenses:
Minnegasco legal $ 7,000
expert 3,000
NSP legal 10,000
expert 4,000
Telephone- legal 8,000
expert 1,000
Legislative Matters 9,000
General Matters (fees and disbursements) 18,000
" ($60,000)
Reserve at December 31, 1996: $33,67fi
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