Hermiston council cuts electric franchise fee to 4% and repeals data‑center rebate, citing net revenue gain

Mister Morgan, a city staff presenter, told the Hermiston City Council on Dec. 8 that the council was being asked to take two linked actions: adopt Ordinance 23-77 to grant a 20-year nonexclusive franchise to Umatilla Electric Cooperative (UEC) and adopt Resolution 23-98 to repeal the city's bulk power incentive program for very large electricity users.

Morgan said the ordinance keeps most existing franchise terms in place but reduces the combined franchise/occupancy fee from 7% to 4% of a utility's gross revenues. "The only change of substance is we're recommending reducing the franchise fee from 7% to 4%," Morgan said. He framed the paired resolution as the financial counterpart: repealing the 2022 rebate that refunded franchise fees above a $750,000 floor (indexed to about $800,000 for 2025) to large customers.

Staff walked the council through the financial rationale. Morgan said UEC paid roughly $400,000 in fees to the city in calendar year 2024; with the growth in large power use tied to new data center operations, staff project UEC franchise receipts could be about $1.6 million for calendar year 2025. Morgan said that, when combined, eliminating the rebate and setting a 4% citywide fee would still increase city revenues "between $1,000,000 and $2,000,000 per year" through 2030 under current projections. He gave a household example: a typical residential customer with a $150 monthly bill would save roughly $4.50 per month (about $54 a year) from the lower rate.

Councilors asked clarifying questions about who qualified for the rebate, whether any businesses had claimed refunds, and how the additional revenue would be used. Councilor Litton asked for a plain‑language explanation of how rising electricity demand from data centers translated into higher fee receipts. Morgan replied that the rebate was available to any business whose annual franchise fee payments exceeded the program threshold, that no entity had yet requested reimbursement under the program, and that the projected net revenue would flow into the city's general fund rather than be restricted to utilities.

Several council members praised the package as a way to lower costs for residents while preserving or increasing city revenue. "This is a win‑win‑win scenario," one councilor said, noting it protected trade‑secret information for data centers while reducing rates for other customers and improving city revenues.

On a roll call vote the council approved Ordinance 23-77 and then adopted Resolution 23-98, each by unanimous vote. Morgan told the council the ordinance would become effective 30 days after adoption at a single‑meeting passage; because the votes were unanimous, a second reading was not required.

What the actions do and what they do not do

- Ordinance 23-77: renews the city's franchise with Umatilla Electric Cooperative for 20 years on mostly existing terms but reduces the franchise/occupancy fee from 7% to 4% across customers in the city. The ordinance was adopted at a single meeting and will become effective 30 days after adoption.

- Resolution 23-98: repeals the city's bulk power incentive/rebate program (originally adopted in 2022) that refunded franchise fees above a $750,000 floor to qualifying large power users; no reimbursements under that program had been claimed to date, staff said.

Councilors and staff emphasized open questions that remain for future budget or policy work, including how higher projected revenues would be allocated in future budget cycles. Morgan recommended the pair of changes as the most straightforward way to retain competitiveness for local data center operations while delivering modest savings to other customers and increasing net general‑fund revenues.

Pending items and next steps

The council voted on the measures at the Dec. 8 meeting; the ordinance takes effect 30 days after adoption as provided in the motion. Staff will present budgetary implications in future budget discussions and will continue coordination with regional partners on franchise strategies.