In March, the Edina City Council approved an increase in the utility franchise fee for Xcel Energy to raise money for the City’s Conservation and Sustainability Fund. The residential customer franchise fee will be 95 cents per meter per month in 2018 [$11.40 per year] and $1.45 in 2019 [$17.40]. That is a 52.6% increase in one year. Fees for non-residential customers will increase by a similar percentage. An increase for CenterPoint Energy customers was approved earlier this year.

Franchise fees are charges that show up on the monthly Xcel Energy and CenterPoint Energy bills with no explanation that the resulting funds are passed on directly to the city treasury. The state legislature enabled the local governments to levy these fees as a means of covering the cost of maintenance of the right of ways granted to energy companies. However, the funding generated was not constrained to that purpose, as can be seen in the way Edina proposes to use the additional money it intends to raise. Clearly, the city does not recognize any constraint in how much it plans to raise through this approach.

By linking the fee to the meter that measures energy consumption rather than the amount of energy consumed, citizens have no means of minimizing this “tax”. For a city as “progressive” as Edina, this type of fee is very regressive. The fee is the same no matter how large or small a house. It even hits organizations that would otherwise not be taxed. If a charity or a place of worship owns or occupies a building serviced by Xcel Energy or CenterPoint Energy, it will be billed for the franchise fees.