Denver's 20-Year Franchise With Xcel Energy

Denver's charter bars any franchise over a street, alley or public place unless voters approve it, so City Council sent this agreement with Public Service Company of Colorado, which does business as Xcel Energy, to the ballot in Council Bill 26-0970. The franchise starts January 1, 2027, runs 20 years and replaces every earlier franchise between the city and Xcel. It gives Xcel a nonexclusive right to make reasonable use of public ways to deliver utility service. If voters approve, Xcel must sign the franchise and a separate Denver International Airport operating agreement within 60 days, or the mayor may not grant it.

Xcel pays Denver a monthly franchise fee equal to 3% of adjusted gross revenue from utility service to Denver residents and businesses and from use of its poles and other facilities on city property. Utility sales to the city itself are excluded. Denverite reports $34 million a year in franchise fees. Separately, Xcel must allocate 1% of the preceding year's adjusted electric revenue, excluding electric sales to the city, to projects that bury existing overhead distribution lines at the city's request where the work is feasible, without charging end-use customers for the conversion. Xcel keeps unspent undergrounding money when the franchise ends but must finish projects already approved. Xcel must also pay for independent audits of franchise-fee payments and undergrounding charges every three years, beginning at the end of the third year, covering the preceding three calendar years.

The agreement reserves Xcel's right to seek changes in its rates, and both parties acknowledge that state Public Utilities Commission rules and decisions may require Denver customers to bear the costs of complying with some of its provisions. If a court voids the fee, the agreement calls for Xcel to pay the city an equivalent amount, subject to its exception for payments prohibited by law. To the extent the law allows, Xcel would collect that amount through a surcharge on utility service to Denver customers. If industry restructuring cuts fee revenue, Xcel agrees, at the city's request and as the law permits, to help modify the franchise so Denver receives at least the fee Xcel was paying. The agreement grants no rights to third parties.

Xcel has no right to terminate the franchise. Denver may end it for a material breach that Xcel leaves uncured after notice, within a reasonable time of up to 90 days or longer if both agree. If the franchise ends, Xcel keeps serving the city until Denver arranges other service or the PUC orders otherwise, and Xcel may collect from residents, and must pay the city, an amount equal to the fee.

The current franchise expires at the end of the year. Denverite reports that the city has warned a rejection could mean lost funding and delayed projects, and that Xcel and the city could extend it temporarily and keep negotiating.