Just wrapped up a big win with CPS Energy here in San Antonio. Large industrial client was getting charged franchise fees on their transmission-level service, but the city ordinance specifically exempts transmission customers. Utility was applying the 4.2% fee to everything including transmission charges. Took 8 months of fighting but we got $23,000 in refunds plus interest. Always read the fine print on these municipal franchise agreements!
CPS Energy franchise fee calculation error - $23K recovery!
Jorge, that's a great catch! We see similar issues here in Tennessee where municipal utilities sometimes misapply franchise fees. The transmission exemption is pretty common but utilities often overlook it or hope customers don't notice. What was CPS's initial response when you challenged it? Did they fight hard or acknowledge the error?
Jeff, they definitely fought it at first. Claimed the transmission exemption only applied to "pure" transmission customers, whatever that means. Had to get the city attorney involved to confirm that any customer taking service at transmission voltage levels was exempt regardless of how they used the power. Once we got that clarification, CPS folded pretty quickly.
Excellent work Jorge! That "pure transmission" argument is complete BS and utilities know it. We had NorthWestern Energy try similar nonsense here in Montana. The voltage level determines the exemption, not the end use. Sounds like getting the city attorney on record was the key move.
Brian, exactly right. The city attorney's letter was what broke the case open. I'd recommend anyone dealing with franchise fee disputes to go straight to the municipal legal department rather than trying to argue with utility customer service. They usually understand their own ordinances better than the utility does.
Great strategy Jorge. Question - how far back were you able to get refunds? Some states have statute of limitations issues on utility overcharges. Texas pretty liberal on that front or did you run into time limits?
Frank, we got refunds going back 3 years which is the standard limitation period in Texas for utility billing disputes. Could have probably gone back further since it was an ongoing systematic error, but client was happy with the $23K and didn't want to drag it out longer. Sometimes you take the win and move on.
Jorge, outstanding work on this case! This is exactly the kind of systematic error we see with franchise fees. Utilities set up their billing systems to apply these fees broadly and don't build in the exemptions properly. Your approach of involving the city attorney directly is spot on - they wrote the ordinance so they know the intent better than anyone. This case would make a great presentation topic for our next conference.
Thanks Randy! I'd be happy to present this at the conference. The key lesson is that franchise fee exemptions are often buried in municipal code rather than utility tariffs, so you have to dig into both sources. Also helps to have a good relationship with city legal departments - they're usually pretty responsive once they understand the issue.