Columbia Heights businesses and residents will see a slight rise in their utility bills by early next year due to a pair of ordinances recently passed by their City Council.
The new laws establish the addition of “franchise fees” to be collected by CenterPoint Energy and Xcel Energy from consumers and transferred to the city. The fees would be in addition to the current monthly billing.
Both Xcel and CenterPoint are “franchises,” meaning that they have exclusive contracts with the city to provide electricity and natural gas with negotiated monthly rates. In exchange, the utilities are obligated to provide services to all users in Columbia Heights.
Franchise fees, which are additional charges on a utility user’s bill, are allowed through an agreement between the city and its utility providers. They are generally levied equally to all customers of a given rate class, such as residents, businesses (rated by size) and other qualifications. Cities frequently establish franchise fees as a method of raising money for other ongoing expenses, not necessarily related to the utilities themselves.
The City of Columbia Heights bills quarterly for water, sewer, storm sewer, garbage, recycling and yard waste. Water and sewer charges are a combination of fixed quarterly fees, plus a variable charge for water passing through the meter. A single-family residential unit might expect to pay around $50 every three months for those services, which do not include electricity or natural gas. The proposed franchise fees, which are approximately $4 per utility or $8 total for a residence (and higher for businesses depending on size), would become part of a user’s monthly bill. Fees collected by utility providers would be remitted to the city every three months.
According to City Manager Aaron Chirpich, the plan could raise over $1 million annually to be used on capital improvements such as street repairs, infrastructure and climate initiatives.
The ordinances go into effect on November 27, 30 days after the City Council approved their passage.