Century eyes franchise fee increase
July 2, 2020
Although no action was taken, the Century Council Monday night by telecom agreed to consider a power franchise fee increase, not updated since 1994, for both Gulf Power and Rural Electrification Administration (REA), which includes Escambia River Electric Co-operative (EREC).
Councilman Luis Gomez asked how Century's rate compared to that of other municipalities, such as Milton, Gulf Breeze, Jay and Pace. Century Interim City Manager Vernon Prather told council members he would research other nearby municipalities to see what percent they received.
According to Prather, the last ordinance, setting the rate at 5 percent up from 3 percent set in 1980 was in 1994, where it has been since. He said three things to consider are: the increase will keep franchise fees coming in, the franchise duration and the percentage. The current maximum percentage is 6 percent.
“Just a 1 percent increase can mean another $30,000 to $35,000 for the General Fund each year,” said Prather.
Councilwoman Ann Brooks asked if the companies would consider paying the fee monthly instead of quarterly, pointing out that it would help the town with planning its yearly budget if they would.
The contract between the town and company is usually 30 years and Councilman James Smith asked about a the possibility of 10 or 15 years instead of 30.
Gulf Power attorney Patrick Bryan said the infrastructure to set it up can be costly, so the contract is set usually at 30 years in order for the company can get its investment back.
Bryan said that if Gulf Power does go higher than 6 percent, the town can renegotiate for a higher rate. He also said the contract is non-exclusive, which means another franchise can come in and they are allowed to compete.
“The contract only prevents the town from starting it's own source of electric power,” said Bryan. “It can't prohibit even a solar sub-generate franchise. Simply put, if the town has a contract that is 30 years, and at year 29, if even one customer is served in the town of Century, the town will receive a franchise fee.”
Bryan said he would work with Century attorney Matt Dannheiser on the franchise, noting that Gulf Power is willing to pay monthly and would offer the option to adjust the rate up or down, with a minimum of a ½ percent fee.
Council members expressed concern that the town not set a rate and leave it in place, like the last percentage increase in 1994, but revisit maybe annually, to get the most benefit.
The council even discussed having a person who is designated to check annually for fee rates in other municipalities if there is an increase and advocate for Century to revisit a possible increase as well.
If it is discovered that other municipalities have increased their rate to higher than Century's, the town can revisit the contract and request to increase, according to a Gulf Power employee on the line.
“The town can exercise it's annual rate provision annually,” said Prather. “This is not like the 1980 version.”
Prather said he will present to the council the provisions of the fee increase contract, including what the town can change, alter or amend, and a comparison of what percentage other municipalities receive at it's next meeting at 7 p.m., Monday, July 6.
The meeting can be accessed by the public by calling 712-770-5019 and enter access code 227646#.