A franchise agreement renewal between the city of Clinton and Interstate Power and Light Co. lays the foundation for the city to collect a franchise fee from customers if it wanted to implement one.
The franchise agreement will span the next 25 years, allowing the city to employ the fee during that time. If implemented, the franchise fee would be applied to all customers’ bills and paid to the city. IPL, doing business as Alliant Energy, would only be responsible for the administration aspect of collecting the fee.
“Franchise fees are actually pretty common nowadays at least to have the language in their agreement whether or not they actually have a fee associated with it,” Alliant Spokesman Justin Foss said.
City Attorney Jeff Farwell explained the reason for using the franchise fee language in the agreement during the Internal Operations Committee on Tuesday.
“There’s a section in here about franchise fees, which has been put in there not because the city is moving forward with one. It’s just in the next 25 years if the city would at one point want to do that we want to have the franchise agreement reflect it now,” Farwell said.
The franchise fee is allowed by Iowa code to be up to 5 percent of a customer’s bill. According to Foss, there are a number of other cities that also have similar language contained in their agreements, but not acted upon.
“It helps the city go that route if they choose to, but there is nothing binding about having that language in the agreement,” Foss said.
A franchise fee of 3 percent, which would cost a family with a $250 monthly bill around $90 a year, was discussed last year. The estimated $2.4 million that would have been raised through a fee would have funded long-term investment projects.