The City chose the “flat rate” fee, rather than one based on consumption - which would vary each month.
What Does This Mean for Residents?
Utility companies have the right to pass franchise fees on to their customers.Utility customers have likely seen a line item on their gas and electric bills for a “City fee.” The utility companies collect this fee and remits it to the City.
Residential Franchise Fee
The current franchise fee is $1 per month, per account on residential gas and electric bills. That means, utility customers see a $1 fee on BOTH their gas and electric bill.
Commercial Franchise Fee
Commercial rates vary based on the utility company’s account classification based on usage volume. The commercial fees range from $3-$10 for small to medium accounts and $45 per month for high volume accounts.
Why Franchise Fees?
Utility franchise fees help cities cover increasing costs of providing important services – such as maintaining aging facilities and infrastructure – without raising property taxes. Many cities in Minnesota have them in place.
These fees are also more equally distributed than property taxes, and would be paid by ALL utility customers - even those who do not currently pay property tax.
What Other Cities Collect Utility Franchise Fees?
In 2016, within the Xcel Energy service area, 66 cities collect electric franchise fees and 51 cities collect gas franchise fees. Below is a list of the City of Burnsville’s market cities as it relates to the collection of utility franchise fees.
Residential Electric Franchise Fee
Commercial Electric Franchise Fee
Residential Gas Franchise Fee
Commercial Gas Franchise Fee
St. Louis Park