Potential Utility Bill Changes Resulting from Franchise Fees

The City of Johns Creek has adopted a schedule of franchise fees for utility companies currently using the City’s right-of-way to provide services. In adopting these fees, Johns Creek has ensured that each company has been treated consistently. These utility companies are not required to pass these fees on to their customers, but in most cases they choose to do so.

• Sawnee EMC customers will soon receive notification letters of a 4 percent monthly increase (based on usage) beginning with their March bills. A franchise fee was not built into the billing structure previously.
• Atlanta Gas Light customers will see a slight increase to their bills, estimated at 36 cents per year. Since the cost of franchise fees is spread over all its customers through the billing structure, customers within Johns Creek have, in effect, already been helping to cover the cost of franchise fees for other municipalities. Now a share of the fees will be returned to the City of Johns Creek.
• Customers of AT&T/Bell South will see an increase to their bills based on 3 percent of usage (recurring local service costs) since franchise fees were not previously part of the billing.
• Comcast customers are not expected to see any changes in their monthly bill because a franchise fee was being paid previously to Fulton County. The fee will now be paid to the City.
• No change is anticipated in Georgia Power bills because the cost of such franchise fees was already embedded in the billing structure. Imposition of the franchise fees allows the City of Johns Creek to now receive the fees that are paid by its residents

Prior to incorporation, these utility companies (except Comcast) weren’t paying any franchise fees to deliver service in unincorporated Fulton County. But in some cases (Georgia Power for example) our residents were paying to help cover the costs of the franchise fees charged by municipalities across the State.

These fees - an estimated $2.0 million in 2007 and $2.7 million in 2008 – will go into the City’s General Fund. The fees will help provide necessary services to the community, as well as compensating for the use of the public rights-of-way by the utility providers.

The new City of Johns Creek’s financial health is partly dependant on these franchise fees and we are pleased to see these fees now remain in, and benefit, our local community.

To review the service agreements between the City of Johns Creek and Georgia Power, ATT (Bell South), Sawnee EMC, Comcast and Atlanta Gas Light click here.

Frequently asked questions about franchise fees:

1. What are franchise fees?
Franchise fees are charges to utility companies for the privilege to operate within municipal boundaries. They are a routine and common practice for municipalities across the state and the country. Examples are electricity, telephone, cable television, waste management and natural gas.

Franchise fees are implemented as part of a service agreement executed between a government and a utility company. These Service agreements outline the terms under which utility companies provide service to customers within a specific territory and local governments require them in order to ensure service to all customers in a geographic area.

2. Why are they charged?
These fees are intended to reimburse local governments for use of the public right-of-way and other public services. A franchise fee typically is calculated on a percentage of the revenues derived from sales to customers in that territory. A franchise fee generally is imposed in lieu of licenses or permits that would otherwise be required.

3. Is this the first time they’ve been charged in Johns Creek?
It is the first time the City of Johns Creek has charged them. Fulton County has charged Comcast for a number of years and that fee has been passed on to Comcast customers. Georgia Power has paid them to other municipalities in the state and has passed on that cost across the board to their customers state-wide, as has Atlanta Gas Light.

4. How does this benefit Johns Creek?
These franchise fees provide revenue for the City – an estimated $2 million in 2007 and an estimated $2.7 million in 2008 - and also allow the City to influence how the utility company can use the right-of-way, i.e., tree cutting, movement of sidewalks and damage repair.

5. Is the City charging a franchise fee to the waste management companies servicing Johns Creek customers?
Not at this time. The City has only instituted franchise fees on those utility companies that utilize city maintained right-of-way to provide service to their customers within the city.