Working on a large manufacturing client in Youngstown and seeing franchise fees on their FirstEnergy bills that don't seem right. They're being charged 3.2% on the entire bill including transmission charges. I thought franchise fees were only supposed to apply to distribution charges in Ohio. Anyone else seeing this with FirstEnergy territory accounts? The client is on Rate Schedule GS-3 and we're talking about $8,400 in questionable charges over 18 months.
FirstEnergy franchise fees on industrial accounts?
Jim, I've seen the same thing with several Cleveland Electric Illuminating accounts. FirstEnergy seems to be applying franchise fees to the total bill amount rather than just distribution. In Cleveland the franchise fee should be capped at 5% of distribution charges only per city ordinance. I challenged three accounts last year and recovered about $23,000 total. File a dispute with FirstEnergy customer service first, but be prepared to escalate to PUCO if they push back.
Same issue in Pittsburgh with Duquesne Light. They were charging franchise fees on generation and transmission components through 2012. The city ordinance clearly states it should only apply to distribution services. Recovered $15,600 for one client by going back 24 months. Always check the municipal code for each jurisdiction - the utility companies don't always get it right.
Thanks Frank and Walt. I pulled the Youngstown city ordinance and you're absolutely right - franchise fee is limited to 3% of distribution charges only. FirstEnergy is definitely overcharging. Did you guys have to provide the ordinance language as part of your dispute or did the utility research it themselves?
I always include a copy of the relevant ordinance sections with my dispute letters. Makes it harder for them to deny. Also reference the specific line items on the bill where they're applying the fee incorrectly. The more documentation you provide upfront, the faster the resolution usually.
Watch out for this in Pennsylvania too. PECO was doing something similar in Philadelphia until about two years ago. The city franchise agreement here is 1.5% on distribution revenues only, but PECO was applying it to the entire bill for several years. If you have Philly area clients, definitely worth checking bills going back to 2010.
Update: Filed the dispute with FirstEnergy on April 12th with copies of the Youngstown ordinance. They acknowledged the error within a week and issued a credit for $8,847 covering 20 months of overcharges. Thanks for the guidance everyone - this forum saves me time and money constantly.
Glad it worked out Jim. Always satisfying when utilities actually admit they made a mistake and fix it quickly. That's becoming more rare these days unfortunately.