Auditing a strip mall in Jacksonville on FPL. The utility bill shows a 6% franchise fee on total charges. I pulled the city of Jacksonville franchise agreement with FPL and it clearly states the franchise fee shall not exceed 4% of gross revenues. The 6% has been applied for at least 3 years based on the billing history. That's a 2% overcharge on every bill — roughly $340/month for this account. Has anyone dealt with a franchise fee that exceeds what the city ordinance allows?
City charging 6% franchise fee — ordinance caps it at 4%
This is more common than you'd think. The franchise fee is negotiated between the city and the utility, and the utility is supposed to apply the rate specified in the franchise agreement. But sometimes the utility applies a default rate across a jurisdiction even if the specific municipality has a lower cap. I found the exact same issue in suburban Cleveland — the city's franchise agreement with FirstEnergy capped the fee at 3% but the utility was billing 5.5%. The utility's explanation was that 5.5% was the county-wide default and they hadn't updated their billing system for municipalities with lower caps. Recovered $28,000 across four commercial accounts going back 3 years.
Franchise fee overcharges are one of the easiest wins in utility bill auditing because the error is black and white — the ordinance says X%, the bill shows Y%, and Y is bigger than X. There's no interpretation needed. The key document is the franchise agreement between the municipality and the utility. These are public records and usually available from the city clerk's office. Once you have the agreement showing the authorized percentage, compare it to what's being billed. If there's a discrepancy, file the claim with the utility and attach a copy of the franchise agreement. Most utilities will correct it quickly because they know they're in the wrong.
I'd also recommend checking whether the franchise fee is being applied to the correct base amount. Some franchise agreements specify the fee applies to gross revenue from energy charges only. Others include demand charges, riders, and everything else. If the agreement says the fee is on energy charges but the utility is applying it to the total bill including demand charges and riders, that's an additional overcharge beyond the percentage issue. I found this on a Duke Energy account in Charlotte where the franchise fee was being calculated on the total bill instead of just the energy component. Added another $180/month in overcharges.
Great point about the base amount. I just checked and the Jacksonville agreement says the fee applies to "gross revenues from the sale of electricity" which should exclude demand charges and customer charges. FPL is applying it to everything. This just got bigger. Filing the claim today with both the percentage error and the base amount error.