The city Public Works Committee recommended approval Tuesday of a new franchise agreement with Public Service Company of New Mexico that will translate to slightly higher bills for electric ratepayers in Santa Fe.

Under the new agreement, the franchise fee the city collects from PNM will increase from 2 percent to 3 percent.

The increase, which is included in the budget for the fiscal year that begins July 1, is expected to generate an additional $736,000 for the city’s general fund the first year. The cost will likely be passed along to PNM’s customers in Santa Fe, increasing from $1 on a monthly $50 electric bill to $1.50.

Taxpayers also will be affected. The new franchise fee will increase the city’s annual electric bill by up to $60,000.