Fort Collins City Council is weighing an increase to the natural gas franchise fee Xcel Energy pays the city — from 1.07%, where it has held since 2018, to as high as 3% — to shore up three programs in the 2027-2028 budget: the municipal court, the grocery sales tax rebate, and human services grants.1
Staff presented the option at the council's Oct. 13 budget work session as one way to cover $250,000 a year needed to fully fund the grocery rebate under its current design and restore human services grant funding. Raising the fee to 2% would generate about $500,000 a year. The full 3%, the prevailing rate among surrounding Colorado communities, would raise about $1.1 million. Because Xcel would very likely pass the fee through to customers, a typical residential gas bill would rise by about $6.50 a year at 2% or a little under $14 a year at 3%.1
The fee could also cover a newly identified need of about $250,000 a year at the municipal court — a new position, added security, and contracted jail services — that surfaced after the recommended budget was published. To offset that need, the city manager recommended ending contracted landscaping at the Gardens on Spring Creek, repurposing a proposed recreation position intended for the Southeast Community Center, and raising the city's attrition target from 10 to 11 positions. Council members signaled support for folding that package into the budget ordinance.1
No decision was made on the fee itself. Several council members said they were uncomfortable raising it without guardrails on where the money would go, given that the combined bill for a typical customer on all four city utilities is already proposed to rise 9.3% — about $18.90 a month. One member backed moving to the full 3%. Another said they could support 3% if part of the revenue were dedicated to a specific use such as affordable housing fee relief. Staff noted that Xcel offers a natural-gas bill assistance program for lower-income customers and will report back with details.1
Council members asked staff to return with more information in time for the Oct. 27 work session rather than routing the question through the council finance committee first. If the council pursues the fee, a resolution could come alongside the budget's first reading on Nov. 3 and take effect 60 days after written notice — capturing a full year of added revenue. In the meantime, staff said one-time reserve funding is available to keep the grocery rebate and human services grants whole through next year if the fee stalls. The rebate currently pays $81 per person per year to households earning up to 60% of area median income — $62,600 for a family of two — with automatic enrollment through the city's GetFOCO program.1
The council's second public hearing on the recommended budget is scheduled for Oct. 20.1