County begins weighing franchise fees, acknowledges potential impacts on utilities and ratepayers

WENATCHEE — Chelan County commissioners began their first public discussion Tuesday on whether to adopt a new franchise-compensation structure that could require utilities and other right-of-way users to pay significant annual fees to the County. While no decision was made, the conversation revealed a clear split in tone on the board, with two commissioners emphasizing caution and community impact and one urging that utilities should have anticipated the possibility.

The issue centers on a proposed amendment to Chelan County Code 8.25.070, which governs franchise requirements. The County already requires any entity using county right-of-way to enter a franchise agreement, and updated language added earlier this year makes that mandatory. The amendment now under review goes further: it outlines a system in which certain franchise holders — those using one mile or more of county right-of-way — would pay annual franchise compensation calculated in part on land value, area occupied, density of customers served, and a reasonable rate of return to the County.

The amendment also includes a provision that was accidentally left un-underlined in the draft packet but is part of the proposed change. It states that any person or company using county property or right-of-way without a franchise agreement will be required to obtain one and to pay franchise compensation once the County demands it, with the fee amount determined after completing the full valuation process.

PUD says costs will fall on customers

Representatives of the Chelan County PUD attended in person, among them Chief Strategy & Stakeholder Officer Justin Erickson and PUD Commissioners Kelly Allen and Carnan Bergren. A spreadsheet prepared by the County estimated that the PUD’s annual fee could approach $3 million under the valuation model described in the amendment.

Erickson said those costs would inevitably reach ratepayers. Allen added that the PUD’s existing franchise agreements include numerous services and community investments that go far beyond the minimum required of a public utility. She urged commissioners to recognize that the PUD’s “in-kind” contributions, such as parks, trails, fiber expansion, and reliability projects, have historically been part of the overall value the utility returns to the county.

Bergren, known for lengthy testimony, offered only a short statement that drew light-hearted comments from Commissioner Shon Smith and briefly softened the tenor of a weighty meeting.

Small districts say they cannot absorb unplanned fees

The potential impacts extend well beyond the PUD. Malaga’s Three Lakes Water District Commissioner Tammy Donaghue addressed the board via Zoom, noting that her district had not budgeted for any franchise fee costs at all, and that even a modest fee would affect customers directly.

“We just don’t have anything like that in our budget,” she said, echoing concerns raised across multiple utilities.

Commission split: Smith and Overbay urge caution; Hawkins says utilities should have expected this

Commissioners Smith and Kevin Overbay both thanked the utilities for attending and spoke openly about their concerns that franchise compensation would be passed directly to the same residents the County serves. They also noted the PUD’s broader value to the community, describing the need to weigh any new revenue tool against the potential for unintended consequences.

Both signaled that they were not prepared to move forward with franchise fees until the County has a firmer grasp on real-world impacts.

Commissioner Brad Hawkins, however, took a different tone throughout the meeting. Several times he emphasized that the PUD “should not have been surprised” by the possibility of fees, suggesting that prior franchise language might have anticipated compensation. It remained unclear during the discussion whether that provision existed in the PUD’s actual franchise agreement, or whether it was added in later revisions of county code, but Hawkins repeatedly returned to the point.

Though he did eventually acknowledge the PUD’s contributions to the community, Hawkins appeared more ready than his colleagues to consider advancing the fee discussion.

No action taken

With concerns ranging from ratepayer impacts to interagency relationships to clarity in the code itself, the board treated the meeting as a starting point. Commissioners said the County will need more public feedback, more discussion with utilities, and more clarity on franchise agreement history before taking any formal action.

For now, the board will continue gathering information as it weighs whether — and how — to move forward with the newly outlined franchise-compensation system.

Andrew Simpson: 509-433-7626 or andrew@ward.media