Franchise Fee Audits
Core Objectives of a TriStem Franchise Fee Audit
A Franchise Fee Audit can be a valuable asset to any municipality that collects franchise fees from utility companies. TriStem strives to accomplish the following objectives for each of its clients during a franchise fee audit:
- Save your organization’s valuable time by conducting a comprehensive audit on your behalf.
- Add your organization’s bottom line by securing funds owed by utility providers for prior franchise fee tax periods.
- Enhance future revenue – correction of utility’s prior errors results in increased franchise fee tax payments to you in the future.
- Educate your organization on utility practices and regulations applicable to your specific region, providing your staff with knowledge to prevent future utility errors after our audit has been completed.
TriStem values the importance of customer service, and will tailor our franchise fee audit to address specific concerns or needs of each client.
TriStem will conduct a thorough investigation of utility franchise agreements/ordinances, with a focus on:
- Reviewing service locations to ensure the utilities are correctly accounting for all franchise fee tax addresses.
- Recovering underpayments for prior periods, up to the maximum period allowed by State law.
- Ensuring franchisees correct algorithms for future franchise fee tax disbursements.
TriStem’s franchise audit specialist is a CGFO with a complete understanding of the needs of elected officials and City staff, having served in the government sector for over 20 years including positions as Finance Director and Mayor.
Franchise Tax Audit Process
1. The local ordinance and state laws will be reviewed to ensure we understand the algorithms for each type of franchise fee.
2. While reviewing these documents, the City will be asked to provide:
- Name and related information of City’s contact person for each franchisee
- Signed LOA
- List of all IN City addresses (obtained from City’s utility dept or County appraisal district)
3. Send out LOA & Requests for Data to Franchisees:
- Will request a detailed calculation on how each franchise provider calculates the tax.
- Will request a detailed list of customers used in tthe calculation of tax (by the service address) for the years in question.
4. Upon Receipt of Requested Data:
- Recalculate payments based on the state law and city ordinances to ensure that each franchisee’s algorithm has been correctly applied.
- Cross reference all addresses within the service zip code to ensure that “non City” accounts are coded correctly.
5. After identifying list of addresses in question, we will coordinate with the franchisee on the calculation of accounts that were erroneously omitted. This will happen concurrently with correction any calculation errors.
6. Coordinate with City and franchisee on the amount due.
7. City is paid for back franchise fees based on data corrections or formula areas, for the full period allowed by law.
What Will a Franchise Fee Audit Cost the City?
TriStem’s franchise fee audits are RISK FREE – if you don’t receive actual funds from your franchised utility providers as a result of our service, you owe us nothing.
TriStem’s only fee is a percentage of actual funds secured for prior errors. Any savings that occur in the future as a result of our service are 100% your to keep after the first 12 months.
Why should the City choose TriStem for a Franchise Fee Audit?
- TriStem has been working as an advocate for commercial utility consumers across the U.S. for nearly 40 years – no other company can match our experience or expertise.
- TriStem has completed successful franchise tax audits for other municipal consumers, including:
|Organization||Description of Services||Dates Performed||Result|
|City of St. Louis, MO||Utility Rate Audit - Included Audit of Electrical Billings & Franchise, and Natural Gas Billings||2005-2012||$1,151,621 recovery due to Electric Franchise omission, plus $726,410 recovered due to electric & gas billing errors|
|City of Nacogdoches, TX||Franchise Audit, and Electric Street Light, Natural Gas, Telecommunications, & Gasoline Billing Audit||2009-2014||$86,161 recovery due to Electric & Telecom Franchise underpayments, plus $153,334 recovered due to other utility billing errors|
|City of Harker Heights, TX||Franchise Audit, and Electric, Street Light, & Telecommunications Billing Audit||2011-2013||$1,543 recover due to Electric Franchise underpayments, plus $224,755 recovered due to other utility billing errors|
|City of Glenn Heights, TX||Franchise Audit, and Electric, Street Light, & Telecommunications Billing Audit||2014-present||$42,552 recovery due to Electric Franchise underpayments, plus $2,179 recovered due to phone account errors (audit ongoing)|