City staff on Nov. 24 laid out a public engagement strategy for a prospective natural‑gas franchise fee that would appear on Minnesota Energy Resources bills and could fund local sustainability programs.

At a Rochester City Council study session, Tyler Niemeyer described the fee as “an option to create a stable local funding source for our sustainability efforts,” saying the city’s current franchise agreement with Minnesota Energy Resources contains a provision allowing such a fee but that the city has not yet implemented it. He said the utility would collect the fee on customer bills and remit it to the city.

Sustainability coordinator Kayla Betzold said staff’s current concept would split collected revenue roughly 50/50: one half for community-facing programs such as weatherization assistance or cost shares for home efficiency upgrades, and the other half for municipal efforts such as fleet electrification. Betzold said staff contracted WSB to design outreach materials and methods and proposed developing communications in December, conducting engagement from January through March 2026, and returning to council with a final recommendation in April.

Council members pressed staff on details. Council Member Keane asked how much revenue the fee might raise; staff described six preliminary scenarios that range from just under $600,000 to just under $3,000,000 annually depending on structure. Staff also said the utility’s rate‑class data show about 47,500 gas meters overall and just under 45,000 residential meters in the city, with multifamily buildings often served by a single meter.

Opponents on the council warned the fee would be regressive. Council Member Fredericks said the measure “hits the people that make the least amount of money the hardest,” calling a charge on an essential energy source inequitable. Council Member Palmer said he would oppose adding a fee unless it replaced property tax and noted low‑income households feel small increases in basic bills.

City Administrator Zelms told the council that authorizing the public engagement does not approve a fee; instead, Zelms advised that the study session should not be used for a formal vote and that staff return with additional analyses, including housing‑stock data, equity impacts and performance metrics.

Next steps: staff will prepare outreach materials with WSB in December, conduct the engagement period in January–March 2026, summarize feedback with recommended fee structure options, and present a recommendation to the council in April 2026.