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MEMORANDUM TO: Charlie Yunker, City Manager Deborah Maloney, Finance Director FROM: Stacie Kvilvang, Ehlers DATE: June 9, 2026 SUBJECT: Franchise Fees for Electric and Gas Utilities At the April 28, 2026, work session, the City Council expressed an interest in further exploring a Franchise Fee (the “Fee”) to lessen the tax levy burden to support capital projects and other needs for the city. Since that meeting, we have received the number of accounts in the various categories from Xcel as noted in the table below. If the city wants to pursue a Fee, we will obtain similar information from Centerpointe Energy, which typically has fewer accounts since not all users have natural gas. As noted, the city has more residential accounts than commercial accounts, which is not atypical for any community. Based upon this information, we worked with staff to develop three scenarios of proposed Fees that provide approximately $627,000 to $1 million in potential funding for the city. For Option 1 we sized the Fee by account type based upon the 2026 metro city median Fee. Since commercial accounts receive economic benefit from use of the utilities in the right-of-way, they typically pay a higher Fee than residential users. As noted, with these assumptions, 65% of the total revenue comes from residential, with 35% coming from commercial users: Electrict (Excel Energy)Average Monthly Count Residential 4,258 Small C&I – Non-Demand 209 Small C&I – Demand 145 Large C&I 28 Monthly Flat Fee X 2 Utilities (Electric/Gas)Annual Payment Annual Revenue % of Revenue Residential 4.00$ 8.00$ 96.00$ 408,768.00$ 65% Small C&I – Non-Demand 6.00$ 12.00$ 144.00$ 30,096.00$ Small C&I – Demand 28.00$ 56.00$ 672.00$ 97,440.00$ Large C&I 135.00$ 270.00$ 3,240.00$ 90,720.00$ TOTAL 627,024.00$ 100% User Type 35% Option 1 - Fees at Median of Metro Fees