Under Minnesota Statute (216B.36), cities can impose a fee on utility companies that use the public property to deliver service. The City can determine the amount, structure and use of franchise fees. Fees are typically passed directly through to all commercial and industrial businesses, tax exempt properties and residents. Over the next three months, residents will see a $2 franchise fee on their monthly gas and electric bills; fees for businesses and other properties vary.
Residential Franchise Fee
The current franchise fee is $2 per month, per account on residential gas and electric bills. That means, utility customers see a $2 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. Commercial fees range from $15-20 for small to medium accounts and $50 per month for high volume accounts.
Why Franchise Fees?
Utility franchise fees help cities cover increasing costs of providing important services – such as maintaining infrastructure and preserving natural resources – without raising tax dollars. These fees are also more equally distributed than property taxes, because fees are paid by all utility customers - even those who do not pay property tax.