Senate committee carries over bill to freeze natural-gas franchise fees after city objections

A Senate committee carried over SB271, a bill sponsored by Senator Allen that would freeze municipal franchise fees charged to natural-gas customers and require voter approval for any future increases.

The measure, described to the committee by Chase Wright, Director of Government Affairs for SPIRE, would “freeze franchise fees for natural gas buyer customers” and allow municipalities to put any future increase to a public vote rather than allow city councils or mayors to raise the rate without voter approval. Wright said the intent is to keep customer bills lower while maintaining the municipalities’ revenue stream.

City of Birmingham attorney Yolanda Lawson told the committee the bill would not fit every municipality the same way. "Our concern is the 1 size does not fit all because the bill talks about that the rates would be set. They would be locked," Lawson said, and she raised concerns that Birmingham’s pricing index and status as a class 1 municipality would not be reflected by a statewide freeze. Lawson noted that Birmingham currently collects no franchise fee from SPIRE customers and that the city’s franchise agreement extends to "02/1938" as recorded in the hearing.

Several senators asked for more input from municipalities and the League of Municipalities on how the proposed freeze would affect local budgets. One senator said the agreement on the bill was reached with the League but urged colleagues to "talk to your own municipalities" because smaller cities may lack the government-relations capacity that Birmingham has.

Faced with those concerns, the committee agreed to carry SB271 over so authors and stakeholders can draft amendments. A committee member moved to carry the bill over and a second was recorded; the motion to carry the bill over passed by voice vote. Committee discussion identified two potential amendment approaches discussed on the record: excluding class 1 municipalities such as Birmingham from the freeze, and adding a sunset timed to the city’s existing franchise expiration (the idea of sunsetting the freeze in 02/1938 was suggested during the hearing).

The bill text in committee materials described an effective date of "December 31" of the current year. Committee members also noted that municipalities set franchise fees independently and that there is no current statewide cap on those franchise rates.

Next steps: the committee carried SB271 over for amendment and asked bill sponsors to consult further with municipal stakeholders and the League of Municipalities before the item returns to committee.