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Committee hears franchise-fee review and Climate Legacy Initiative funding update; staff to return with modeling
Summary
Budget and sustainability staff reported that projected franchise-fee funding for the Climate Legacy Initiative was estimated at $10 million but actual 2024 receipts were about $8.4 million; staff and the city attorney outlined options to change allocations, structural adjustments to fee classes and procedural steps required for ordinance changes.
City budget and sustainability staff presented an update on franchise-fee revenue and the Climate Legacy Initiative (CLI) to the Climate and Infrastructure Committee on Sept. 18.
Budget Director Jane DeCenzo said franchise agreements and fees have been in place for decades. After negotiations in 2023, the CLI allocation from franchise fees had been estimated at $10,000,000 for planning purposes; actual receipts were lower, and DeCenzo said the city recorded about $8,400,000 tied to CLI in 2024. She explained the city will refine accounting so distributions tied to CLI are clearer in future statements. DeCenzo also noted the total franchise-fee receipts across natural gas and electricity were roughly $41,600,000 in 2024, with only a portion directed to CLI; the remainder flows to the general fund and other uses.
Director Megan Hoy and staff outlined possible additional revenue sources for climate work — sales tax, parking revenues, bonding, carbon-credit or biochar receipts, philanthropic funding and federal/state grants — and cautioned that reallocating franchise-fee shares would require trade-offs and that annual franchise-fee revenue is variable. Hoy also reviewed practical barriers to an opt-in customer program on utility bills, including billing-system limitations and distributional concerns about residential customers bearing costs.
Senior Assistant City Attorney Jocelyn Bremer advised that amending the franchise-fee ordinances would require amending ordinance appendices for CenterPoint Energy and Xcel Energy, and that the franchise agreements require at least 60 days' notice to the utilities before adopting a fee ordinance amendment; she also noted a common Public Utilities Commission guideline to avoid multiple changes within a 12-month period.
Committee members requested modeling showing how changing fee percentages or splitting rate classes could increase the CLI allocation to target amounts (for example $13M, $15M, $20M) and asked for follow-up memos that translate percentage changes into dollars or monthly bill impacts for residential and commercial customers. Members also asked for updated reporting on 2025 CLI spending and the midyear change items already filed with the city’s budget documents.
Chair Cashman asked staff to provide follow-up material and to present a fuller CLI update in the October briefing schedule.
