The Lago Vista City Council opened a review of a proposed franchise agreement with Pedernales Electric Cooperative (PEC) and flagged a potential reduction in the franchise fee from the current 4 percent to a proposed 2 percent rate contained in the draft.

City staff told councilmembers that the city currently receives roughly $158,421 per quarter in franchise-fee payments under the existing 4 percent formula (about $630,000 per year). At a 2 percent fee, staff estimated the city’s annual franchise revenue would fall by roughly half (to about $300,000 a year), and finance staff noted this reduction had not been planned for in the current fiscal-year budget (the budget had used 4 percent as the assumption). Staff said the draft agreement does not require final approval until mid-2026 but that the council discussion was intended to identify topics for negotiation.

PEC’s local representative, Jared Fields, confirmed the current local franchise arrangement is at 4 percent and said PEC collects and remits whatever franchise fee the city authorizes. Fields also said the company views the fee as a passthrough to ratepayers: “We collect what city council sets us that fee and pass it through.” Council members asked staff to place the draft franchise agreement on the discussion board for additional review, and attendees raised questions about construction standards and cost-sharing when PEC facilities are relocated by public works projects.

What the council asked: Council asked staff to circulate a marked draft (it was circulated by e-mail) and to compare the draft’s fee and term against nearby jurisdictions; several councilmembers suggested negotiating reauthorization language so the council would review a franchise at the end of the initial term rather than allow an automatic multi‑year renewal.

No vote was taken. Staff and council agreed to continue the discussion, allow councilmembers to provide written edits on the discussion board and return with a recommended draft.