Franchise Fees

New! Franchise Fee Rebate Program

The City Council approved an amendment to the Franchise Fee Ordinance for Wright-Hennepin Cooperative Electric Association (W/H). In conjunction with this amendment, the City is offering a Rebate Program for eligible property owners who have been billed by W/H for multiple franchise fees for accounts on the same property.

 To reimburse property owners for the multiple fees, the City is offering a one-time, $108.00 rebate to eligible property owners, which represents twenty-seven (27) months of the residential franchise fee rate. This billing issue has been resolved between the City and W/H and the billings corrected beyond January 2025.

The rebate program is authorized through December 31, 2025 and the forms
are due by then.

Learn more and access the Rebate Request Form.


About Franchise Fees

Franchise Fees are another way in which a local government can pay for specific programs or projects within its jurisdiction. Under Minnesota Statute § 216B.36, cities have the authority to establish franchise agreements with utility companies that serve their community, which can include charging franchise fees. Once franchise fees are established, utility companies are required to collect the franchise fee by adding it onto their customer's utility bills, which will eventually be transferred to the City. The City of Otsego implemented such fees in 2022 and all electricity and natural gas utility companies within the City.

What Franchise Fees Can Be Used for

The City Council has designated the franchise fees to help fund the Pavement Management Program, which accounts for most all street maintenance within the City, including seal coating, fog coating, microsurface overlays, mill and overlays, full depth reclamations, and full reconstruction projects. 

Pavement Management Fund

All revenues from franchise fees are deposited into the Pavement Management Fund. Other funding sources of the Pavement Management Program include property taxes, state aid, and special assessments. Since implementation in 2022, the City Council has already been able to reduce the property tax levy by 27% ($300,000). The chart below shows the revenue sources and project costs for the ten-year period covered in the City’s Capital Improvement Plan Budget.

When the Franchise Fees Will Be Implemented

The franchise fees will begin in the October 2022 billing period. The City of Otsego will the receive the franchise revenues on a quarterly basis


pavement mgmt capital budget

Learn About the Why

The dollar amount needed to be collected through taxes and assessments was expected to increase significantly over the coming years as infrastructure constructed in the last 25 years aged. Increasing the property tax levy and special assessments to cover the increased needs of street repairs was considered but not found to be the most viable option. Property taxes also exempted non-profits, schools, and other entities that utilize the street infrastructure. The property tax option would have changed yearly based on annual changes in the values of homes and business properties. Having a dedicated fee ensures local control of predictable revenue and that repairs stay on schedule in accordance with the Pavement Management Program. 

Monthly Fees

  1. Electricity Utility Companies: Northern States Power Company (Xcel Energy), Elk River Municipal Utilities, and Wright-Hennepin.
    • Residential: $4
    • Small Commercial and Industrial - Non Demand: $5
    • Small Commercial and Industrial - Demand $40
    • Large Commercial and Industrial: $95
  2. Natural Gas Utility Companies: CenterPoint Energy.
    • Residential: $4
    • Firm A: $5
    • Firm B: $20
    • Firm C: $60
    • Small Volume, Dual Fuel A (SVDF A): $80
    • Small Volume, Duel Fuel B (SVDF B): $80
    • Large Volume, Duel Fuel (LVDF): $100