Utility Franchise Fee Increase
Posted on 12/02/2022
Increases will be made to New Hope's gas and electric franchise fees for the first time since 2016. The New Hope City Council approved the ordinance amendment at its Nov. 28 meeting.
Under Minnesota Statute, cities may charge utility companies a fee if they use the public rights-of-way to deliver service. These franchise agreements allow utility companies to use public property adjacent to roadways. Under the statute, cities may determine the amount of the fees. Utility companies typically pass franchise fees on to their customers, which appear as a line item on billing for a "city fee." The utility companies collect the fee and remit their payment directly to the City.
New Hope’s use of franchise fees enables a diversified revenue stream and provides a stable funding source, which the City can use for any public purpose.
The residential gas and electric franchise fees will increase from $3 to $4 per month, per utility for each customer. New electric franchise fees for commercial and industrial properties will range from $7 per month for "Small Commercial/Industrial (non-demand)" businesses to $135 per month for "Large Commercial/Industrial (>1MW demand)" businesses. New gas franchise fees will range from $5 per month for "Small Commercial A" businesses to $190 per month for "Large Volume Dual Fuel" businesses. Under the updated fee structure, New Hope plans to use $440,000 toward the city’s general fund, with the remaining $700,000 used for the street infrastructure fund, which funds maintenance of the city's streets including seal coats, mill and overlays, full depth reclamations and reconstruction.
The rate increase approved by the Council is consistent with the average rates currently charged by other cities in Hennepin County. At the City Council's October work session, New Hope city staff presented the results of a study of monthly franchise fees for cities in Hennepin County with a population greater than 10,000.
The new franchise fees are scheduled to take effect in March 2023.