Mounds View continues to collect Xcel franchise fees

The Mounds View City Council approved a continuation of a franchise fee on Xcel Energy electric and natural gas services in the city at its Monday, Aug. 12 meeting.

The city first adopted a franchise free agreement on electric and natural gas services in 1993.

Mounds View’s Finance Director Mark Beer said the city would continue to assess a four percent fee on Xcel services for another year. 

The council will consider whether or not to impose the fees on an annual basis.

“The city elects to do that because it keeps it fresh in their minds,” Beer said.

A public hearing was scheduled, however, none was required for the city to move forward with readopting ordinance 881, which continues the assessment of Xcel franchise fees through Dec. 31, 2014.

No residents chose to speak during the public comment period preceding the council’s actions.

Beer said the average household would pay around $62 per year in Xcel franchise fees next year. That figure is based on a $130 monthly Xcel Energy bill.

There are currently 72 other municipalities in Minnesota that collect franchise fees on gas and electric utilities, including neighboring New Brighton and nearby Shoreview. The city of Arden Hills has held discussions recently about the possibility of assessing franchise fees there as well.

Beer said collecting the fees helps keep property taxes down. He said without the fees, Mounds View would have to levy an additional $240,000 annually for the city’s general fund.

“It would probably mean $100 more a year per household on average in property taxes,” he said.

The city has several tax-exempt non-profit businesses and four tax increment finance districts that take away from the city’s tax levy base, according to Beer.

The franchise fees are more equitable, because they apply to anyone who uses gas and electricity, he said.

Half of the franchise fees collected go toward fixing city streets and the other half go toward the city’s general fund.

Joshua Nielsen can be reached at or 651-748-7824.

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