The administration of Duluth Mayor Emily Larson is proposing to amend the Minnesota Power franchise fee increase approved by city councilors on Sep. 22. The fee was increased from 1 percent to 3 percent so the city could balance its budget without cutting staff.
The amendment proposes to establish a cap of $420,000, the maximum franchise fee any electrical customer would pay. The cap would benefit large industrial electricity users such as Verso Paper in West Duluth. Due to the increase, Verso would have been forced to pay an added $600,000 annually.
City officials originally said that tripling the fee was justified because it had not been increased in 20 years.
In a Tuesday news release, Larson said “Good policy making is a give and take. With this thoughtful and specific modification, we can all move forward with clarity and confidence for the future long term health of our community.”
The cap provision would apply to Minnesota Power’s large scale industrial customers in Duluth.
“The proposal provides the revenue increase needed to meet the city’s budget requirements and caps what a large industrial user like the Verso mill would pay at $420,000 annually,” said Verso Duluth Mill Manager John Bastian. “This amendment, which mirrors electrical franchise fee language that exists in many other Minnesota municipalities, is not only a fair and practical solution for the city and the mill, but importantly, keeps Duluth an attractive destination for new businesses.
"The Verso Duluth Mill appreciates the open and honest discussions and engagement by Mayor Larson and the city staff and urges the city council to pass this measure,” he said in a prepared statement distributed by the city.
His remarks came after Verso officials voiced their concerns at a recent city council meeting. The increase, said Verso's customer service manager Dawn Polaski, "feels very selective and not well thought out."
City administrators said they met with several commercial and industrial economic partners and other constituents and decided to revise the original proposal in a "fair and reasonable manner."
The amendment will be introduced on Oct. 24.