An unidentified Waukee City official said the city is proposing a 2% franchise fee on natural gas and electric bills that would replace the existing 1% sales tax on those utilities, producing a net one percentage-point increase for customers.

The speaker said the sale of the city's gas utility to MidAmerican Energy was completed in October and that change in provider is estimated to lower the average household's bill by 20% to 25%, about $225 per year. "The franchise fee would have an impact of about $16 per year for the average Waukee home," the official said, which the presentation characterized as leaving an estimated net savings of roughly $209 per year for a typical household.

City finance details provided during the presentation explain the rationale for the switch in revenue structure. Under the current 1% sales tax on utilities, the city receives about 19% of the tax revenues generated from those bills. The official said that under a franchise-fee model the city would receive 100% of the revenues from the fee. "So this change to a franchise fee makes a big difference for Waukee because of how much money the city actually receives," the official said.

The speaker also said selling the gas utility "is having a positive impact on natural gas bills for you, but it also means the city has about just shy of $1,000,000 less in revenue." According to the presentation, the revenues once generated by owning the utility supported the gas division and public works and partially supported shared city departments including IT, finance, human resources, administration and communications.

Officials said revenue from a franchise fee would be used to help cover the costs of core city services cited in the presentation, such as hiring staff, resident communications and IT system operations and security. The official noted that most neighboring jurisdictions impose some form of franchise fee or utility fee and said only four metro communities do not have one; others range from about 1% to 5%.

The proposed ordinance was described as expected to appear on the Waukee City Council agenda for the meeting on Monday, December 15, at City Hall or via Zoom; the presentation directed residents to waukee.org for agenda notifications and further information. No formal vote or council action was recorded in the remarks provided.

Next steps: The city expects to include the proposed ordinance on the Dec. 15 council agenda for further consideration; a vote is not recorded in the provided remarks.