CR 96-88 Suburban Rate Authority BudgetMay 15, 1996
•
APPROVE 1997 SUBURBAN RATE AUTHORITY BUDGET
DESIGNATE DIRECTOR AND ALTERNATE TO SRA
Council Report 96 -88
Proposed Action.
Staff recommends the following motion: Move that Council approve the proposed
1997 Suburban Rate Authority budaet with membership assessment at the current
rate.
Also
Move that Council adopt Resolution 96 -45. Resolution Desianatina Director and
Alternate Director to the Suburban Rate Authority.
Overview.
This report is to inform Council of SRA's 1995 -96 activities and the
organization's anticipated 1996 -97 activities and budget.
Primary Issues to Consider.
• 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.
• 1996 -97 SRA projects
(See supporting information)
• 1996 -197 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.
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.
Staff also recommends adoption of Resolution 96 -45 that designates a director
and alternate to represent the City on the authority.
Supporting Information.
• SRA Annual Review 1995
• 1996 -97 Projects and Anticipated Projects
• 1997 SRA Proposed Budget
0 • Resolution 96 -45
J Gessele
Engineering Superintendent
SUBURBAN RATE AUTHORITY ANNUAL REVIEW 1995
1
The following is a brief summary intended for the city councils of Suburban Rate Authority ( "SRA ") member
cities. It highlights the major activities and achievements of the SRA during 1995. The SRA is a joint
powers association of 32 Twin Cities suburban municipalities that monitors rates and rate design issues of
electric, gas and telecommunications utilities. 1995 and 1996 have been extremely active and successful years
for the SRA.
Model Telecommunications Permit Ordinance
The SRA drafted a model telecommunications permit ordinance in conjunction with the League of Minnesota
Cities to establish uniform requirements regarding important issues to cities in the new competitive
telecommunications environment: permit procedure and fees, location and relocation requirements, repair
requirements, performance bonds, indemnity and other provisions. The recently- enacted Federal
Telecommunications Act of 1996 includes important and debated language regarding cities' right to manage
and receive compensation for use of the right-of-way. The SRA/League Model Ordinance pre-dates the Act
but establishes many of the vital protection cities need when telecommunications carriers seek to expand
within the City and expressly preserves rights to franchising or leasing.
Minnegasco 1995 Rate Case
The SRA actively intervened on behalf of ratepayers in Minnegasco's 1995 petition for a $24.3 million rate
increase and a 7.7% requested increase for residential customers. The SRA, through its expert witness,
Robert Towers of Chesapeake Regulatory Consultants, has challenged a $1 million annual claimed ratepayer
expense resulting from Minnegasco's purchase of the Midwest Gas system. The. SRA also argues that
Minnegasco exaggerates the revenue deficiency created by the residential customer class rates and has not
shown a justification for an increase in the fixed monthly residential customer charge. The ALJ adopted the
SRA arguments challenging the $1 million Midwest Gas acquisition adjustment that, if accepted by the PUC,
will save SRA residents and businesses approximately $215,000 annually. The PUC will decide on the
petition during the summer of 1996.
Model Gas and Electric Franchise Ordinances
Again in partnership with the League of Minnesota Cities, the SRA updated its uniform gas and electric utility
franchises to assist its member cities in negotiating new franchises. Of particular interest to cities in today's
changing fiscal environment is the right to charge franchise fees. In addition, electric utilities are likely to
be deregulated within the next decade. Terms and conditions of franchises become increasingly important
to those utilities when they perceive that franchise terms may affect competition.
Electric Industry Deregulation
The SRA intervened in a long -term investigation and review by the PUC of the electric utility industry. The
PUC will be making a recommendation regarding if and when electric service should be deregulated for retail
customers. The SRA has opposed utility company suggestions that eminent domain rights be equalized
between cities and investor -owned utilities and that franchise rights be diminished. The SRA will continue
to monitor the proceedings.
Customer Service Task Force
The SRA was invited to participate on a task force for the PUC on customer liability and service issues. The
task force addressed issues on notice to customers, liability of innocent residential customers for past unpaid
debts of prior customers living at the new residence and dispute resolution procedures.
JNS103351
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1996 -97 SRA PROJECTS & ANTICIPATED PROJECTS
To assist in the 1997 SRA Budget review process, the following is information 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. CITY RIGHTS -OF -WAY CONTROL AND TELECOMMUNICATIONS CARRIERS. On
February 23, 1996, US West filed a petition with the PUC requesting an order limiting city rights to control
the rights -of -way. This petition seeks broad PUC authority and limits on cities. The SRA has intervened
and will be working closely with the League of Cities and other interested public bodies to protect city
authority to control and receive compensation for utility use of the public right -of -way. This issue will likely
come before the 1997 legislature for comprehensive review and possible new law. The SRA and all
Minnesota cities should regard this matter as vitally important.
2. MINNEGASCO GAS RATE INCREASES. The SRA has been successful in the
administrative hearing portion of the 1995 Minnegasco rate increase petition advocating no recovery from
ratepayers for Minnegasco's acquisition premium for the Midwest Gas assets. Minnegasco has been very
aggressive in the 1990s in seeking rate increases and the SRA is one of the few non -state agency parties to
vigorously contest several of the more significant recovery requests. The SRA will continue to seek the
lowest possible rates for SRA residents and businesses.
3. CITY WATER TOWER LEASES FOR WIRELESS COMMUNICATIONS. The
Telecommunications Act of 1996 has spawned numerous applications for wireless communication antennae
on city water tower sites. The SRA has been very active in coordinating a League of Cities sponsored work
group to establish a model site lease agreement for use by cities. Each lease will be influenced by the many
market considerations such as lease payments, termination rights, interference issues and other matters. This
getup effort will greatly assist cities in their negotiations with cellular, PCS and other wireless communica-
tions applicants.
4. ELECTRIC INDUSTRY DEREGULATION. The PUC is conducting an ongoing
investigation into the deregulation of the electric utility industry. At issue for retail ratepayers will be the
opportunities and burdens that will result when customers are able to purchase power from providers other
than the franchised- provider in the service area. Cities also will be affected greatly as large customers with
significant purchasing clout and as being forced to deal with potential negative consequences if certain
residential customers are unable to benefit from de- regulation.
.JMS103351
50160 -3
1997 Suburban Rate Authority Proposed Budget
1996
Assets:
Cash and Investments (12/31/95) $28,204
Membership Assessments
Contribution- League of Cities 2,500
Interest Income (estimate as of 12/31/96) 1.000
TOTAL $96,504
Anticipated 1996 Expenses:
1995 -96 Minnegasco Case -legal $17,000
- expert 17,000
US West Right -of -way Petition 5,000
Right -of -way Legislation 4,000
PCS /Cellular Leases 4,000
Misc. Electric and Gas Matters 3,000
General (fees and disbursements) 17.000
TOTAL ($67,000)
Reserve at December 31, 1996: $29,504
Assets:
Carryover from 1996 $29,504
Membership Assessment 64,800
Interest Income (estimate as of 12/31/96) 1,000
TOTAL
1997
Budgeted 1997 Expenses:
Minnegasco (no rate case) $ 1,000
NSP (no rate case) 2,000
Right -of -way Issues 25,000
US West Rate Case 15,000
Electric Deregulation Investigation 5,000
General Matters (fees and disbursements) 17,000
Reserve at December 31, 1997:
JMS68238
50160 -3
April 17, 1996
$95,304
($64,000)
$31,304
1
* First half payment was made after Match 31
SUBURBAN RATE AUTHORITY
STATUS OF ASSESSMENTS RECEIVABLE
As of March 31, 1996
BALANCE
VOTES ASSESSMENT PAID DUE
Bloomington 18 $ 7200.00 $ 3600.00 $ 3600.00
Brooklyn Park 12 4800.00 2400.00 2400.00
Burnsville 11 4400.00 2200.00 2200.00
Circle Pines 1 400.00 400.00 0.00
Columbia Heights 4 1600.00 0.00 1600.00 *
Deephaven 1 400.00 400.00 0.00
Eden Prairie 8 3200.00 0.00 3200.00 *
Edina 10 4000.00 2000.00 2000.00
Fridley 6 2400.00 1200.00 1200.00
Greenwood 1 400.00 400.00 0.00
Hastings 4 1600.00 800.00 800.00
Hopkins 4 1600.00 800.00 800.00
Lauderdale 1 400.00 200.00 200.00
Maple Plain 1 400.00 0.00 400.00 *
Maplewood 7 2800.00 1400.00 1400.00
Ip Minnetonka 10 4000.00 2000.00 2000.00
Minnetrista 1 400.00 200.00 200.00
New Brighton 5 2000.00 0.00 2000.00 *
North St. Paul 3 1200.00 600.00 600.00
Orono 2 800.00 400.00 400.00
Osseo 1 400.00 0.00 400.00 *
Plymouth 11 4400.00 2200.00 2200.00
Robbinsdale 3 1200.00 600.00 600.00
Roseville 7 2800.00 1400.00 1400.00
Savage 2 800.00 400.00 400.00
Shakopee 3 1200.00 0.00 1200.00
Shoreview 5 2000.00 1000.00 1000.00
Spring Park 1 400.00 200.00 200.00
St. Louis Park 9 3600.00 1800.00 1800.00
Wayzata 1 400.00 200.00 200.00
West St. Paul 4 1600.00 800.00 800.00
Woodbury 5 2000.00 0.00 2000.00 *
0.00
162 $ 64800.00 $ 27600.00 $ 37200.00
NOW, THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
HOPKINS, MINNESOTA:
Adopted by the City Council of the City of Hopkins this 21st day
of May, 1996
Attest:
James A.Genellie, City Clerk
rea96 -45
CITY OF HOPKINS
Hennepin County, Minnesota
RESOLUTION 96 -45
RESOLUTION DESIGNATING DIRECTOR AND ALTERNATE DIRECTOR
TO SUBURBAN RATE AUTHORITY
James Gessele, Engineering Superintendent, is hereby
designated as a director of the Suburban Rate Authority
and Charles D. Redepenning, Mayor, is hereby designated
to serve as alternate director of the Suburban Rate
Authority for the year 1996 and until their successors
are appointed.
Charles D.Redepenning, Mayor