City of Saint Paul Announces New Franchise Agreement with Xcel Energy

SAINT PAUL, Minn. - The City of Saint Paul announced today it has entered a Memorandum of Understanding, along with new franchise agreements, with Xcel Energy. These agreements govern Xcel's ability to use the City right-of-way to deliver both natural gas and electricity to Saint Paul residents. The Memorandum of Understanding goes further to outline commitments from Xcel to improve energy efficiency and reduce greenhouse gas emissions.

This new agreement ensures Saint Paul residents are protected from fee increases, commercial and industrial customers pay their fair share, and we can invest in critical climate work for Saint Paul's future.

For decades, Saint Paul has had a complicated franchise fee structure, resulting in residential households paying a higher percentage of franchise fees than other ratepayers. The new agreement prioritizes a fairer distribution of fees between commercial, industrial and residential ratepayers.

"Putting working families first is how we revitalize Saint Paul. With stability for families and fairer contributions from large users, we can modernize infrastructure, clean our air, and grow good jobs in every neighborhood," said Mayor Kaohly Her. "I credit the dedicated work of our Climate Action Coordinator, City Attorney's Office, Treasurer, and City Council partners to achieve this outcome. Thanks to their grit and creativity, we are well positioned to make progress on the goals held within the Climate Action and Resiliency Plan."

Under this new agreement, residents would see little to no increase in their gas and electric franchise fees for 2027. Commercial and industrial franchise fees will increase to balance out the costs previously being shouldered by residents.

In addition to these rate adjustments, households qualifying for the Low Income Heat Energy Assistance Program any time in a 12-month period would automatically receive a 50% rebate on their previous month's franchise fee. This unique progressive fee structure eases the burden of gas and electric bills for those in Saint Paul who need it most.

The structure of the agreement also incentivizes electrification, helping to move the city away from reliance on natural gas.

Funds collected from Xcel gas and electric franchise fees go into the city's general fund. Mayor Her's 2027 proposed budget dedicates funds to climate work such as expansion of Evie carshare and EV spot charging, expansion of Power of Home/Healthy Homes and continued decarbonization of our city's operations.

The agreement will be introduced in front of City Council on Wednesday, September 9. After passage by the City Council in September, Xcel Energy will submit the agreement to the Minnesota Public Utilities Commission. It is proposed to be in effect January 1, 2027.

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