Franchise fee increase proposed for climate and energy action

Information sessions and public hearing offered in November, December

The City and its partners are making progress toward the City’s energy and climate change goals, but to continue moving forward at the accelerated pace needed, reliable, ongoing funding sources are required. Raising the franchise fee by half a percentage point – about 59 cents monthly for the average household – would provide one of those sources.

What is a franchise fee?
The City of Minneapolis collects a utility franchise fee from Xcel Energy and CenterPoint Energy in return for their agreement to operate in the city. These fees are passed on to customers as a line item on their monthly energy bills. Fees are set by ordinance as a percentage of charges: currently 4.5 percent for residential customers, 5 percent for commercial customers, and 3 percent for industrial customers. The amount paid on a monthly bill correlates with energy use, which can vary by season.

Why is the city proposing to raise the fee by half a percentage point?
The money would help residents and businesses participate in and make the best use of the utilities’ energy conservation programs and City programs. It would help the City reach its goal of reducing energy use by 1.5 percent each year, annually resulting in about $8.5 million in new savings that benefit residents and businesses throughout the city. Achieving the City’s climate and energy goals would help more residents afford to own or rent their homes, help more businesses succeed and create significant environmental and economic benefits to the city.

How would the costs affect rate payers?
The average residential customer currently pays a franchise fee of about $5.30 per month (about $64 a year). If the increase passes, it would be another half percentage point, which would cost the average residential customer about 57 cents more a month (about $7 more a year) for a total franchise fee of less than $6 a month (about $71 a year).

The average commercial customer is expected to pay about $86 more per year or about $961 total for the 5.5 percent annual franchise fee. Due to significant differences in energy use between small and large businesses, a broad range of impacts (smaller and larger) than this average can be expected.

Information sessions and public hearing

  • Information and feedback session for residential customers
    6-7 p.m. Thursday, Nov. 16
    Urban League, 2100 Plymouth Ave. N.
  • Information and feedback session for business and nonprofit customers
    10 a.m.-noon Monday, Nov. 27
    City Council Chamber, Room 317, City Hall, 350 S. Fifth St.
  • Presentation to the City Council’s Health, Environment & Community Engagement Committee about the kinds of programs the franchise fee may support (comments will not be taken at this meeting)
    1:30 p.m., Monday, Nov. 27
    City Council Chamber, Room 317, City Hall, 350 S. Fifth St.
  • Public hearing during the City Council’s Ways & Means Committee meeting
    1:30 p.m., Monday, Dec. 4
    City Council Chamber, Room 317, City Hall, 350 S. Fifth St.

Anyone can also send their comments to councilcomment@minneapolismn.gov.

More information about current franchise fees and the proposed increase is available here.

# # #