Quick question for the group. I've got a small business client in Wichita getting charged a "City Franchise Fee" by Kansas Gas Service at 5% of total gas charges. The client insists this is new as of June 2017, but I'm having trouble verifying when it started. KGS customer service says it's been there "for years" but can't provide specifics. Anyone familiar with Kansas Gas Service franchise fee practices? Just want to make sure this is legitimate before I tell the client it's normal.
Kansas Gas Service franchise fee question
Rachel, 5% sounds high for a franchise fee, especially for natural gas. Most I've seen are in the 2-3% range. In Nashville, Nashville Gas charges about 2.5% through an itemized franchise fee. I'd check the city of Wichita ordinances to see what percentage they're actually authorized to collect. The utility might be over-collecting.
Thanks Ed. I checked the Wichita city website and found the ordinance - franchise fee is capped at 5% but utilities can charge less. Looks like KGS is charging the maximum allowed. Still trying to figure out if this is a recent change or if the client just never noticed before. The amounts are pretty small (under $20/month) so it's possible it was always there.