PRESS RELEASE: For Immediate Release
November 2, 2022
BROOKINGS COUNCIL CONSIDERS GRADUATED
INCREASE IN ELECTRIC UTILITY FRANCHISE FEE
NO NET INCREASE IN 2023
The Brookings City Council will discuss the renewal of a franchise agreement…essentially a rental agreement…with the Coos Curry Electric Cooperative (CCEC) at its November 7 workshop and November 14 City Council meeting.
“We are proposing a change in the manner and amount by which CCEC pays a fee for the use of City streets and rights of way to conduct of their business,” said City Manager Pro Tem Gary Milliman.
“In 2017 when we were reviewing the amount of franchise fee paid by other users of City rights of way…such as Ziply Fiber… the Council discussed applying the same rate of 7.0 per cent to all users and began to implement that rate,” Milliman said. “CCEC declined to reopen its 20-year franchise agreement at that time and requested that the matter be deferred until now, when their current agreement expires.”
Currently, the franchise fee is paid in the form of barter, with CCEC paying the cost of street lighting in the City in lieu of any cash payment. “According to CCEC, the cost of providing street lights is equal to a 1.0 per cent franchise fee, as compared to 5.0 or 7.0 per cent paid by other users,” Milliman said.
“CCEC management told us that increasing the fee from the equivalent of 1.0 per cent to 7.0 per cent in one year would be quite a challenge for their budget, so we agreed to propose a graduated increase in the rate over five years,” Milliman said. The amount of the franchise fee would be 1.0 per cent in 2023. The fee would increase to 3.5 per cent in 2024, 5.0 per cent in 2025, 6.0 per cent in 2026 and 7.0 per cent in 2027.
Under the terms of the proposed new agreement, the City would pay for street lighting costs…about $93,000 per year…from the proceeds of the franchise fee. “The franchise fee would replace the barter agreement,” Milliman said.
Milliman noted that the City does not impose a franchise fee on the CCEC members, but on the business. “How CCEC pays for the fee…which is a cost of doing business just like renting a storefront…is entirely up to the CCEC Board,” Milliman said. “According to their recent press release, CCEC has, apparently, chosen to pass the entire amount of the fee on to their Brookings customers, including the 1.0 per cent they are now paying in the form of providing street lights.”
Milliman said that, in a survey of other cities, electric utility operators are paying 3.5-10.0 per cent of gross revenue as a city franchise fee. Coos Bay, Klamath Falls and Canyonville are among those at 7.0 per cent, Roseburg is at 9.0 per cent, and Tillamook is at 5.0 per cent. Waldport was the lowest rate at 3.5 per cent, while Gresham was the highest at 10.0 per cent. “All of these cities have been receiving higher electric utility franchise fee revenues for decades,” Milliman noted. “The prevailing rate seems to be 7.0 per cent.” CCEC also did a survey and found that the average franchise fee paid by electric cooperatives…but not all electric utilities… was 4.5 per cent.
The proposed agreement also provides that the City can use a portion of the franchise fee revenue to pay for services such as overhead utility undergrounding and pole relocation in connection with street improvement projects.