Edina switches utility fees from flat rate to percentage-based model
The Edina City Council approved a new utility franchise fee structure that will change how residential customers pay for gas and electricity starting January 1st. The shift aims to make fees more equitable while generating $1 million annually for street repairs and community improvements.
Edina residents will soon see a significant change in how they're charged for utilities. Instead of paying a flat $355 per month fee, customers will pay 4% of their monthly utility bill starting next year. The City Council previously directed staff to implement this change as a way to fund street reconstruction and other community projects.
The new percentage-based fee structure is designed to be fairer to residents. Under the old flat-rate system, customers paid the same amount regardless of how much energy they used. The new approach means customers who use less energy will pay less in franchise fees, while those who use more will pay proportionally more. "The shift to a percentage-based fee means customers will pay in proportion to how much energy they use, which is a more equitable approach," according to meeting materials.
Council members were particularly drawn to another benefit of the change: it gives residents control over their fees. "That gives the residents those opportunities to reduce the fees. And that's what council really liked about this change from a flat rate to a percentage-based fee," a council member noted during the meeting. Residents can lower their franchise fees by conserving energy through efficiency improvements or behavioral changes.
The additional $1 million in annual revenue will support several community priorities beyond street reconstruction, including sustainability initiatives, pedestrian and cyclist safety improvements, and street lighting upgrades. The City Council chose this franchise fee approach over raising taxes to fund these improvements. The new fee structure takes effect January 1st, 2026.
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Votes (1)
Implementation of New Utility Franchise Fee Structure
The city of Edina is changing its utility franchise fee structure for residential customers from a flat rate of $355 per month to 4% of the monthly utility bill, effective January 1st. This shift is motivated by a desire for greater equity, allowing customers to influence their fees through energy conservation, and to secure additional funding for community projects like sustainability, safer streets, and road reconstruction. The City Council previously directed this change as a preferred funding mechanism over taxes for street reconstruction.
Notable Quotes (2)
The shift to a percentage-based fee means customers will pay in proportion to how much energy they use, which is a more equitable approach.
That gives the residents those opportunities to reduce the fees. And that's what council really liked about this change from a flat rate to a percentage-based fee.
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