There are several franchise fee procedures:
In Germany, an amount procedure is used in the electricity division. The franchise fee is included in the price on the bill. Conversely, a percentage procedure is used in the water division. In this case, the franchise fee is also included in the price on the bill.
A percentage procedure is also used in North America but the franchise fee is listed separately on the bill.
A franchise contract establishes the duties that a utility company must pay to a particular political entity. In return, the utility company receives the right to supply energy directly to customers in the municipality and may use public traffic routes for installing and operating lines.
Three different procedures are supported in the system:
- Net procedure:
The prices in the price definition are net prices without a franchise fee contribution. The franchise fee contribution is determined via the franchise contract.
- Gross procedure:
The franchise fee contribution is included in the prices.
- Maximum gross procedure:
The franchise fee contribution is already included in the price. A maximum franchise fee amount is determined in the franchise contract. If a franchise fee is not charged by the municipality, the price is reduced accordingly for the customers. If municipalities receive a franchise fee from the utility company that is higher than the maximum tax contained in the price, the customer is only charged the maximum price.
