DATE: October 30, 2025
For Immediate Release
CONTACT: Stephanie Trottier
(763) 295-2711 | Stephanie.Trottier@MonticelloMN.gov
Monticello, MN – On Monday, October 27, 2025, the City Council adopted an ordinance to implement a gas energy franchise fee on CenterPoint Energy Minnesota Gas. This new fee will provide a dedicated funding source for the City’s pavement management program and reduce reliance on large property assessments for street maintenance projects.
Utility franchise agreements allow utility companies to install service lines within public rights-of-way to provide gas and electric services. The right-of-way is public property located adjacent to roadways for utilities, construction access, and snow storage. Under Minnesota law, cities may impose franchise fees on utilities operating in these areas. These fees are established by city ordinance and are mutually agreed upon by the City and the utility company. Generally, franchise fees are structured either as a flat rate per utility account or as a percentage of consumption used by each account.
The implementation of the gas franchise fee will create a more sustainable and predictable funding source for maintaining existing streets. Currently, the City funds its pavement management program through a combination of property tax dollars, municipal state-aid funds, and assessments to benefiting property owners. This franchise fee will eliminate the need for special assessments on most pavement management projects, such as roadway reconstructions and mill and overlay. Under the current assessment policy, benefiting residential properties are assessed approximately 30% of the total project cost for reconstructions and 50% for mill and overlays. Going forward, assessments would continue to apply only to urban to rural conversion projects where curb and gutter are installed for the first time.
This new funding model allows the City to better plan and schedule multi-year roadway projects. It also helps distribute the cost of infrastructure improvements more evenly across those who benefit from these city services and minimize the impact to property owners who receive large lump sum assessments. The franchise fee diversifies the City’s revenue sources and provides a reliable stream of funding that can be allocated to specific improvements. Additionally, the funding may serve as local match for future state and federal grant applications.
Franchise agreements are not new to Monticello. The City currently has an electric franchise agreement with Xcel Energy and Wright Hennepin Electric. The current monthly electric franchise fees are $1.95 for residential accounts, $5.50 for small commercial and industrial accounts, and $190 for large commercial and industrial accounts. The electric franchise fee supports community lighting needs in two ways. First, the fee offsets the ongoing operating cost of streetlights throughout the City. Second, remaining funds are allocated to the Street Lighting Improvement capital projects fund, which is used to update existing lighting and install new lighting infrastructure as needed.
The City currently has a gas franchise agreement with CenterPoint Energy. No fee was established under the current agreement. The City Council reviewed the transition to a gas franchise fee for street maintenance during special meetings on April 28 and August 11, 2025.
Although CenterPoint Energy pays the fee to the City of Monticello, utility companies often pass the cost on to customers. As a result, residents and businesses will begin to see a “city fee” on their CenterPoint Energy bills starting in February 2026. The fees are based on usage categories provided by Center Point Energy. The proposed gas franchise fee structure is as follows:
- Residential: $7 per month
- Firm A: $7 per month
- Firm B: $24 per month
- Firm C: $83 per month
- Small Volume, Dual Fuel A: $83 per month
- Small Volume, Dual Fuel B: $175 per month
- Large Volume, Firm and Dual Fuel: $292 per month
The new gas franchise fee will take effect 90 days after notification to CenterPoint Energy and will be filed with the Public Utilities Commission prior to implementation. The franchise fee is anticipated to go into effect on February 1, 2026.
The City anticipates receiving approximately $735,000 annually from the fee, which will be placed into a new Transportation Improvement capital projects fund and used exclusively for pavement management projects.
The City of Monticello remains committed to maintaining and improving our community’s transportation infrastructure. By incorporating diverse funding sources, the City aims to reduce the financial burden on individual property owners while ensuring essential services that benefit the broader community. Franchise fees will play a significant role in this effort by funding local infrastructure projects and serving as matching funds for future grants, helping the City to maximize every dollar invested in improving our streets and roadways.