Energy Utility Franchise Agreements

Riverfront at NightThe City of Minneapolis has utility franchise agreements with Xcel Energy for electricity and CenterPoint Energy for natural gas. These agreements were signed in the early 1990s, and both expire at the end of 2014. The City is in the early stages of preparing to negotiate new franchise agreements.

This action comes as the City prepares to enter into energy franchise negotiations with Xcel Energy and CenterPoint Energy. State law currently limits Minneapolis’ authority over utilities in franchise agreements; however, the City is seeking legislative changes to allow negotiations with Xcel and CenterPoint to explore how Minneapolis could make progress toward its goals for sustainable energy, improved air quality, equity and green jobs. The City wishes to explore options to achieve its energy goals outside the existing franchise agreement structure including the potential for municipalization of one or both energy utilities.

What is a franchise agreement?

The right of way along city streets and alleys is public property. To connect homes and properties to gas, electric, telephone and other services, companies must run distribution lines on the public right of way. A community negotiates franchise agreements with utility companies to identify the conditions under which a utility company is allowed to use public property to provide service to local residents and businesses. Utility companies pay a fee to the City — negotiated through a franchise agreement — in exchange for use of the public right of way.

Energy Pathways Study

The Energy Pathways Study received by the City Council HECE Committee on February 28, 2014 explores the various paths the City could take to achieve its goals for an affordable, clean, reliable and local energy system. The study includes an examination of multiple pathways to this future, including potential city-utility partnerships, changes to state law or rules, changes to how the City uses energy utility franchise fees, and the potential for municipalization of one or both energy utilities.

Additional resources and information

Photo: Maury Landsman.

Published Aug 16, 2013