Just noticed on our Knoxville Utilities Board commercial accounts they're now charging a 'City Franchise Fee' at 3.04% of the base electric charges. This wasn't on bills from last year. Called KUB and they claim it's always been there, just 'formatted differently'. Anyone else in Tennessee seeing similar franchise fees appearing out of nowhere? Need to know if this is legit or if we should challenge it.
KUB hitting us with 'City Franchise Fee' - Anyone else see this?
Terry - Duke Energy here in Charlotte has had franchise fees on commercial accounts for years, usually around 2-4% depending on the municipality. The key is whether your city actually has a franchise agreement with KUB that authorizes this fee. You'll want to request a copy of the franchise ordinance from Knoxville city clerk's office. If the fee percentage exceeds what's allowed in the ordinance, you've got grounds for a refund claim.
Had this exact issue with FirstEnergy in Youngstown two years ago. They started billing franchise fees retroactively for 6 months without notice. Turns out the city had amended their franchise ordinance but the utility was applying it incorrectly to accounts that should have been exempt. Recovered $18,000 for one manufacturing client. Always check the municipal ordinance language - utilities often misinterpret the scope.
ComEd franchise fees in Chicago are a nightmare. Different rates for different suburbs, some exempt certain account classes, others don't. The worst part is when they change the fee structure mid-billing cycle without proper notice. Documentation is key - save every bill that shows the fee appearing for the first time.
Update: Got the Knoxville franchise ordinance. Fee is legitimate but they've been calculating it wrong on accounts over 1000 kW demand - should be applied only to distribution charges, not transmission. That's about $2,400 per month overcharge for our biggest client. Filing dispute tomorrow.
CPS Energy in San Antonio just added a 'Public Purpose Charge' last month that looks suspiciously like a franchise fee by another name. They're calling it environmental compliance but it's going straight to the city general fund. Rate is 1.8% of total electric charges. Anyone know if there's a difference legally between franchise fees and public purpose charges?
Angela - 'Public Purpose Charge' is often just creative naming for franchise fees. Key difference is the legal authority. Franchise fees require a specific franchise agreement between city and utility. Public purpose charges might fall under different statutory authority. Either way, they need proper notice and the rate should be clearly stated in tariffs. Worth challenging if the notice was inadequate.