Twenty-year Xcel Energy franchise contract

Denver Referred Question 2K would approve a new twenty-year franchise agreement with Public Service Company of Colorado, which does business as Xcel Energy. The agreement would start January 1, 2027. It would continue Xcel's program for undergrounding overhead electric lines, maintaining infrastructure safety, and coordinating with the city on emergency management. Xcel would keep paying the city for use of public rights-of-way and other city property. A YES vote approves the agreement. A NO vote means the agreement is not approved.

The current franchise agreement expires at the end of 2026. Voter approval would authorize a new twenty-year agreement. The city projects franchise fee revenue of $32 million a year, and the existing fee of three percent would not increase. The agreement would also provide about $10 million a year in undergrounding benefits, which Xcel holds and uses at the city's direction. The city received $32.3 million in franchise fee revenue in 2025 and estimates $34.3 million in 2027, plus a one-time $2.5 million payment.

FINANCIAL IMPACT STATEMENT

The City and County of Denver’s current franchise agreement with Public Service Company of Colorado, doing business as Xcel Energy, expires at the end of 2026. Voter approval would authorize a new 20-year franchise agreement and would ensure the City’s receipt of franchise fee revenues, which are projected to be $32 million annually, in addition to $150 million annually in utility relocation benefits. Without a franchise agreement, the City would have to pay Xcel to relocate utility lines for city capital projects.

The proposed agreement would continue the existing franchise fee equal to three percent of Xcel Energy’s applicable revenues from providing electric and natural gas service in Denver. The franchise fee is paid to the City in connection with Xcel Energy’s use of City streets, rights-of-way, and other public property to provide utility service. The proposed agreement does not increase the existing three percent franchise fee.

The agreement would also provide an estimated $10 million annually in undergrounding benefits. The benefit is equivalent to 1% of electric service revenues. Xcel does not pay these funds to the City, but holds them and deploys them to underground distribution lines at the City’s direction.

Franchise fee revenue received by the City has historically grown over time and may fluctuate due to utility rates, energy consumption, customer growth, commodity prices, and other economic and regulatory factors.

In 2025, the City and County of Denver received $32.3 million in franchise fee revenue. Current projections estimate franchise fee revenue of $32.9 million for 2026.

The City estimates approximately $34.3 million in franchise fee revenue in 2027. Of that amount, $2M would be transferred annually to the Energy Efficiency Assistance Fund as required by City Code. This funding supports low-income energy assistance and low-income energy efficiency programs for individuals and non- profit agencies.

The remaining franchise fee would be deposited in the General Fund and available to support core city services like police, fire, parks, recreation, and libraries.

In addition to recurring franchise fee revenue, the proposed agreements with Xcel Energy includes a one- time payment of $2.5 million in 2027 for utility assistance. Including this one-time payment, the City estimates total 2027 revenue associated with the proposed agreements of approximately $36.9 million.

The tables below identify the projected revenue(s) the City and County of Denver would receive using compound annual growth rates (CAGR) of 1.5%, 2.0%, and 2.5%. These projections are estimates only. Actual franchise fee revenue will depend on future utility rates, energy consumption, customer growth, and other economic and regulatory factors and may differ from these estimates.

Total Franchise Fee Revenue

Note: 2027 projections are fixed and are not projected with variable growth rates.

CAGR 2027* 2037 2047 Total over 20 Years*

1.5% $36.9M $39.9M $46.3M $808.5

2% $36.9M $41.9M $51M $853.6M

(2015-2025 CAGR)

2.5% $36.9M $44M $56.3M $901.7M

*Includes one-time payment of $2.5 million in 2027, but that amount is excluded from future years’

estimated annual revenue.

General Fund Franchise Fee Revenue

CAGR 2027* 2037 2047 Total over 20 Years

1.5% $34.3M $37.9M $44.3M $766M

2% $34.3M $39.9M $49M $811.1M

(2015-2025 CAGR)

2.5% $34.3M $42M $54.3M $859.1M