Falcon Heights to collect Xcel franchise fees

Though the Falcon Heights City Council was effectively voting on June 13 to increase city resident and business owners’ monthly energy bills, none turned out to voice opposition.

The council voted 5-0 to approve four ordinances that put in place franchise fees for all Xcel Energy gas and electricity customers in the city.

City Administrator Sack Thongvanh explained Falcon Heights’ unique position of having limited revenue sources — 68 percent of the properties in the city are either tax exempt or outside the city’s tax authority.

Home to the Minnesota State Fairgrounds and the University of Minnesota St. Paul Campus, he said the city is looking to the franchise fees as a wider and more diverse revenue option that’s also more reliable when it comes budget time. 

Some 70 cities also collect Xcel franchise fees. The change in Falcon Heights will apply to all properties that buy gas or electricity from the utility.

Thongvanh said the expected annual revenue from the fees is just more than $147,000, not insignificant for a city whose 2018 budget is $2.4 million.

Though Mayor Peter Lindstrom said such fees had been a topic of council discussion for the past two or three years, the city faced a need for more revenue coming into 2018 as its public safety costs jumped.

With the switch from contracting with the St. Anthony Police Department to the Ramsey County Sheriff’s Office, a change spurred by the police killing of Philando Castile in 2016, came a 30 percent increase in the cost of police patrols.

Residential Xcel gas customers should expect to see a monthly franchise fee of $1.75 added to their bills. Residential electric customers will see an additional $2.25 each month.

Commercial customers of both gas and electricity will see larger monthly fees, up to $200.

Though the council held a public hearing on the ordinances, only one resident spoke, wondering if franchise fees could be applied to cable television and phone providers. Lindstrom said cable providers such as Comcast already collect franchise fees.

Per an Xcel Energy letter to the council, following city approval franchise fees also need to be green lit by Xcel and the Minnesota Public Utilities Commission. 

That process takes roughly three months — after that, the fees will show up on customers’ bills.


— Mike Munzenrider

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