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S.F. No. 2092 - Municipalities and Revenue Raising Fees for Public Utilities (as amended)
 
Author: Senator Rich Draheim
 
Prepared By: Priyanka Premo, Senate Counsel (651/296-3914)
 
Date: March 16, 2017



 

Under current law, a municipality may impose a fee for a “license, permit, right or franchise” that raises revenue or defrays increased municipal costs due to gas or electric utility operations, or both. A municipality means any city, however organized.

S.F. 2092, as amended, provides for public notice, a hearing, and reverse referendum on whether the municipality may impose a fee that raises revenue. An ordinance or agreement may impose a revenue raising fee for up to five years.

The municipality, in its ordinance or agreement with the utility, must identify what will constitute a cost to the city. The municipality must publish a notice explaining: (1) the fee and its intended uses; (2) that the public utility is likely to pass the fee on to customers and how much that may increase customers' utility bills; (3) that alternatives to the revenue-raising portion of the fee are to raise the revenue from another source available to the municipality or forego planned uses of the revenue; and (4) what revenue raised from another source will cost those paying it.

Notice must be provided at least once each week for two consecutive weeks in the official municipal publication and must be posted on the municipal’s Web site during the notice period. Notice must also be mailed to all affected ratepayers.

After publication but before imposing a fee, the municipality must provide an opportunity for public comment. Unless a petition is filed, the municipality may impose the fee at least 90 days after the public hearing. A petition requesting referendum may be filed within 90 days of the public hearing and the question may be placed on the ballot at the next general election.

Effective for license, permit, right, or franchise agreements entered into on or after August 1, 2017. For license, permit, right, or franchise agreements entered into before August 1, 2017 and which will remain in effect after August 1, 2022, the municipality must follow the notice, hearing, and reverse referendum procedures by August 1, 2022.

 
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