Just noticed something odd on a client's FirstEnergy bill here in Ohio. They're showing a "Municipal Franchise Fee" of $47.83 on their commercial account. I thought franchise fees were typically rolled into residential rates, not itemized separately on C&I bills. Anyone else seeing this with FirstEnergy or other Ohio utilities? The tariff reference is Schedule FE-1 but I can't find specifics on how this fee is calculated.
FirstEnergy charging franchise fees on commercial accounts?
Jim, I've seen similar charges with Duke Energy here in Cincinnati. They started itemizing franchise fees separately around 2011-2012. The fee is usually a percentage of the total electric charges, typically 3-5% depending on the municipality. Check your client's service address - some cities negotiated different franchise agreements that require separate line items for transparency.
We've been fighting this with TVA distributors in Tennessee. The key is to verify if the franchise fee is authorized by the local municipality's ordinance. I found three cases where utilities were charging franchise fees in cities that had never passed a franchise ordinance. That's an easy refund right there. Also check if they're double-charging - sometimes it's embedded in the base rate AND shown as a separate line item.
Terry makes a good point about double-charging. Alabama Power got caught doing this in Huntsville back in 2012. They were charging the franchise fee as a separate line item but it was already included in their approved rate structure. The PSC made them refund about $2.3 million to commercial customers. Always cross-reference the tariff sheets with the actual ordinance language.
Here in Philly, PECO has been pretty transparent about franchise fees since deregulation. They list them clearly on Schedule R-FF. But I did find one case where they were applying the wrong percentage - using the city rate instead of the county rate for a suburban location. $180/month difference over 14 months = $2,520 refund. Small potatoes but it adds up.
Update: Contacted FirstEnergy and they confirmed the franchise fee is legitimate. Turns out Youngstown passed an ordinance in late 2012 requiring separate itemization. The 2.75% rate matches the city ordinance. Thanks for the guidance everyone - this forum saves me hours of research time!
Glad you got it sorted Jim. For future reference, most Ohio municipalities post their utility ordinances online now. Cincinnati has theirs at cincinnati-oh.gov/utilities if anyone needs to verify franchise fee rates for Duke Energy customers in the area.