Fort Collins may revisit natural-gas franchise fee increase during budget talks

Fort Collins budget staff said Tuesday that raising the city’s natural-gas franchise fee to 3% could generate about $1.2 million a year, giving City Council an early look at a possible revenue option for this fall’s budget deliberations.

Staff said Fort Collins currently charges just over 1% for the fee, which is paid by Xcel for use of city right-of-way infrastructure and passed through to natural-gas customers as a line item on their bills. Most home-rule jurisdictions charge 3%, staff told council. Based on a 2022 analysis, increasing the fee to 3% would raise a typical residential customer’s monthly bill by about $1.12, with staff noting the figure would likely be somewhat higher now.

Caleb Weitz told council the city manager’s recommended budget is not expected to rely on the franchise fee increase to close the budget gap. Instead, he said, staff could bring forward options in September for how the revenue might be used if council wants to consider it as a budget modification.

Mayor Emily Francis said the Council Finance Committee had already discussed whether to revisit the franchise fee and had agreed it was worth talking about without signaling support for adopting it. Councilmember Melanie Potyondy said she would support bringing the issue back, adding that she especially wants updated information on ratepayer impacts.

The recommended budget is scheduled to be published by Sept. 3, and staff said the franchise fee could return then as an option for council deliberation rather than as part of the main budget proposal.