VII.3. First Reading of Ordinance Extending Electric Franchise Fees; Bishop
CITY OF HOPKINS
City Council Report 2026-096
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: September 15, 2026
Subject: First Reading of Ordinance Extending Electric Franchise Fees
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RECOMMENDED ACTION
MOTION TO Adopt for First Reading on An Ordinance Setting a Franchise Fee on
Electric Operations within the City of Hopkins – Northern States Power D/B/A Xcel
Energy
OVERVIEW
The City has two ordinances to collect gas and electric franchise fees that took effect
January 1, 2024. The fees are based on a percentage of utility revenue. Residential
customers pay 5% and commercial properties pay 4.25%. The fees are used to
subsidize the general fund and support the parks, capital improvement and
sustainability funds. The City collected approximately $1.5 million under these
ordinances in 2025.
The original intent of the January 1, 2024 ordinances was to adopt franchise fees for a
five year period ending December 31, 2028. However, Xcel’s ordinance could not
extend past the expiration of their operation franchise on March 20, 2027. Adoption of
Ordinance 2026-1236 allows the City to continue to collect franchise fees while a new
operation franchise is negotiated. The City can adjust its franchise fees at anytime.
SUPPORTING INFORMATION
• Ordinance No. 2026-1236
Finance Department
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CITY OF HOPKINS
COUNTY OF HENNEPIN
ORDINANCE NO. 2026-1236
AN ORDINANCE SETTING A FRANCHISE FEE ON ELECTRIC OPERATIONS
WITHIN THE CITY OF HOPKINS – NORTHERN STATES POWER D/B/A XCEL
ENERGY
The City Council of the City of Hopkins ordains:
Subdivision 1. Purpose. The Hopkins City Council has determined that it is in the best interest
of the city to impose a franchise fee as authorized in Minnesota Statutes – section 216B.36 on
those public utility companies that provide natural gas and electric services within the City of
Hopkins.
(a) Pursuant to City Ordinance No. 2007-984, a Franchise Agreement between the City of
Hopkins and Northern States Power Company, a Minnesota corporation, dba Xcel
Energy, its successors and assigns, the city has the right to impose a franchise fee on
Northern States Power Company, a Minnesota corporation, dba Xcel Energy, its
successors and assigns, in an amount and fee design as set forth in Section 9 of the
Northern States Power Company Franchise and in Subdivision 9 of this Ordinance.
Subdivision 2. Franchise Fee Statement. A franchise fee is hereby imposed on Northern
States Power Company, a Minnesota corporation, dba Xcel Energy, its successors and assigns,
under the electric franchise in accordance with Subdivision 9, commencing with the Xcel
Energy’s November 2026 billing month.
Subdivision 3. Payment. The said franchise fee shall be payable to the city in accordance with
the terms set forth in Section 9 of the Franchise and the terms of this Ordinance.
Subdivision 4. Surcharge. The city recognizes that the Minnesota Public Utilities Commission
may allow Company to add a surcharge to customer rates to reimburse Company for the cost of
the fee.
Subdivision 5. Record Support for Payment. Xcel Energy shall make each payment when
due and, if requested by the city, shall provide at the time of each payment, a statement
summarizing how the franchise fee payment was determined, including information showing any
adjustments to the total surcharge billed in the period for which the payment is being made to
account for any uncollectibles, refunds, or error corrections.
Subdivision 6. Enforcement. Any dispute, including enforcement of a default regarding this
ordinance will be resolved in accordance with Section 2.5 of the Franchise Agreement.
Subdivision 7. Effective Date of Franchise Fee and Repeal of City Ordinance 2018-1135
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The effective date of this ordinance shall be after its publication and after the sending of written
notice enclosing a copy of this adopted Ordinance to Xcel Energy by certified mail. Collection
of the fee shall commence as provided above. Upon the effective date of this Ordinance, City
Ordinance 2023-1199 shall be repealed and replaced by this Ordinance 2026-1236.
Subdivision 98. Fee Schedule.
Class Percent (%) of Gross
Revenue Per Account
Residential 5.00%
Sm C & I – Non-Dem 4.25%
Sm C & I – Demand 4.25%
Large C & I 4.25%
The term “gross revenues” shall have the same meaning as in Section 9.2 of the Franchise.
Franchise fees are to be collected by the Utility in the amounts set forth in the above schedule
and submitted to the city on a quarterly basis as follows: January-March collections due by April
30, April-June collections due by July 31, July-September collections due by October 31, and
October-December collections due by January 31.
First Reading: September 15, 2026
Second Reading: October 6, 2026
Date of Publication: October 15, 2026
Date Ordinance Takes Effect: November 1, 2026
Adopted this 15th day of September, 2026 by the Hopkins City Council.
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Patrick Hanlon, Mayor
Attest:
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Amy Domeier, City Clerk