St. Paul hikes franchise fees on utility bills to fund climate coordinator

How out-of-touch are elected officials in St. Paul? First, they successfully lobbied state legislators to scrap a long-standing law shielding Xcel Energy customers in the city from paying higher utility franchise fees during winter months from November to April. As the Pioneer Press pointed out, the consumer protection law had been on the books for decades.

Utility companies pay the city for the right to access the public right-of-way with their wires, pipes and cables, but until recently, the city of St. Paul was barred by state statute from collecting franchise fee revenue for electricity and gas during high-usage winter months.

That law, in place since 1979, blocked the city from collecting the fees from November through April, effectively preventing St. Paul from accessing half the residential fee revenue available to other cities, but it was recently lifted by state lawmakers with the help of state Rep. Athena Hollins and state Sen. Foung Hawj, two DFLers who represent St. Paul.

St. Paul Mayor Melvin Carter immediately proposed adding the franchise fee to the residents’ November and April utility bills at a cost of roughly $35 per customer. City officials were giddy at the prospect of having up to $4.5 million in additional revenue to spend on — wait for it — a new climate action coordinator!

“I think it’s in the council’s best interest and the community’s best interest not to leave any money on the table. We don’t know exactly how much money we can anticipate,” said council member Saura Jost, during a Nov. 13 council meeting. “It’s based on data, and it’s based on the type of winters that we’ll have, and we know that has fluctuated significantly over time.”

The fact that the money on the table comes from the pockets of constituents got lost in the frenzy over the many options for spending it.

She [Jost] noted the funds could offset general fund spending, help to lower the city’s property tax levy or fund new initiatives. Jost said impacts to low-income residents could be offset in part by the Low Usage Affordability Credit, Xcel Energy’s new program to reduce bills for low-income residents who use limited energy, as well as by the state Energy Assistance Program.

At the last minute, a city councilor turned the discussion to the source of the windfall her council colleagues were already well on the way to spending. Namely, her hard-pressed constituents.

Alarmed at the prospect of increasing residential utility bills, council member Nelsie Yang submitted an amendment earlier this month to reduce the proposed fee structure by eliminating the charges during the month of November, cutting potential revenues roughly in half by limiting them to April alone. She noted the upwardly-revised collection totals would still fully fund the green initiatives in the mayor’s budget, with a surplus.

“I constantly hear from constituents in my ward that they’re feeling really deeply the financial constraints of the cost of living increasing, taxes being imposed,” said Yang, addressing the council last week. “With just April alone, we still have so much money left over to figure out what it could be used for.”

In their beneficence, city councilors reached an agreement to charge the newly available franchise fee they orchestrated to their constituents’ utility bills for just one additional month — April. But they still congratulated themselves on allocating the most funding yet for climate change in the city.