Representative Hedrick introduces bill to bar municipal convenience fees for utility payments
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Summary
Representative Troy Hedrick introduced H.265 to the House Energy and Digital Infrastructure Committee on Feb. 28, a bill that would ban convenience and processing fees for online municipal utility payments and require municipalities to absorb those costs.
Representative Troy Hedrick introduced H.265 to the House Energy and Digital Infrastructure Committee on Feb. 28, a bill that would prevent municipal utilities from imposing convenience or processing fees on customers who pay bills using online or electronic methods.
“This is bill H.265 eliminating convenience fees on municipal utility payments,” Hedrick said, and described the measure as born of constituent concern over fees added to online payments.
Under the bill as Hedrick outlined it, municipal utilities would be barred from charging additional processing or convenience fees for online payments. Municipalities would be required to absorb the resulting costs in their operating budgets rather than passing them directly to individual ratepayers. The measure requires municipalities to disclose the costs of online payment systems in annual budgets and to identify any impact those costs may have on future rate adjustments.
Hedrick told the committee the bill includes nonbinding guidance tasks: the bill would ask the state treasurer to provide negotiation guidance for municipalities dealing with third-party payment processors and encourage exploring fee-free payment methods such as automated clearinghouse (ACH) transfers. The bill also directs the Secretary of State, in collaboration with the treasurer and the League of Cities and Towns, to design a grant program to help municipalities adopt modern, lower-cost online payment systems.
Hedrick emphasized what the bill does not do: it would not require a specific payment platform, would not outlaw traditional payment methods such as in-person payments or checks, would not apply to private utilities and would not provide state funds to cover municipal costs. He said the municipal cost must be absorbed in local budgets and noted the equity rationale that small monthly convenience fees disproportionately affect lower-income households.
Committee members asked for more fiscal detail. Representative Sazworth asked whether municipalities would end up socializing those costs back to ratepayers through higher taxes or utility rates; Hedrick acknowledged that municipal budget choices could shift costs and said the bill seeks to limit direct burdens on customers. A questioner identified as Brent Howard described a common 3 percent credit‑card convenience fee his town charges and said that forcing municipalities to absorb card-processing costs could create a real budgetary tradeoff.
Hedrick said he had not requested a Joint Fiscal Office (JFO) analysis and did not have precise data on how many customers pay convenience fees or the overall dollar magnitude for affected municipalities; the bill is a short-form, by-request introduction and the committee commonly seeks fiscal analyses only if it takes the measure up for hearings.
No committee vote was taken on H.265 during the Feb. 28 appearance; Hedrick’s appearance served as an introductory presentation and prompted follow-up questions about ACH feasibility, municipal budgeting and whether banks could offer alternative low-cost settlement options.
