Why Pensacola must pay up to $20 million to natural gas customers

PENSACOLA, Fla. ( WKRG ) — Escambia County Circuit Court Judge Jan Shackelford has ordered the City of Pensacola to refund millions of dollars to Pensacola Energy customers.

According to court documents, Shackelford’s order mandates that the city return so-called “franchise fees” to natural gas customers charged these amounts since Aug. 6, 2011.

The amounts ordered to return are estimated to be between $18 million and $20 million.

Shackelford also ordered the city to stop charging franchise fees immediately.

“The mandate applies to all customers of Pensacola Energy who are located inside the City limits,” a news release from attorney Matt Dannheisser’s office said.

The order comes after Pensacola resident Dr. Eric L. Frank filed suit against the city in 2015 regarding charges to him and other residents called mandatory franchise frees for city-owned property to deliver natural gas services.

Dannheisser and Artie Shimek have represented Dr. Frank in this case.

“The City charges its own gas department, Pensacola Energy, a ‘franchise fee’ to use land owned by the city to deliver the natural gas to homes and businesses within the city,” Shimek said. “Pensacola Energy then passed that charge on to its customers. In other words, the City purports to charge itself a fee to use its own property.”

Dr. Frank’s lawsuit said the city had no right to charge what he believed amounted to an illegal tax.

“It was completely illogical for the city to charge itself a fee, but it became spurious when the city mandated its own citizens pay those illogical charges,” Dannheisser said.

According to Dr. Frank’s attorneys, Pensacola has charged customers within its city limits a 6% franchise fee on top of natural gas charges.

“In addition to that, the city has also charged a 10% public services tax on those improper franchise fee charges. Judge Shackelford ordered those taxes also be refunded to the customers,” Shimek said. “In essence, the Judge has ordered the City to return 6.6% of the amounts paid by in-city natural gas customers.”

However, Dannheisser and Shimek could only recover affected charges since 2011 because of Florida’s four-year statute of limitations, as the suit was filed in 2015. They said the city could still keep perhaps more than $50 million as it has collected the fees since 1970.

Dr. Frank’s attorneys said the next step is establishing a court-supervised claims process for customers to get refunds. This process will take a few months to develop.

Dannheisser said there could be between 20,000 and 30,000 current and former customers who will be refunded.

“Through a court-approved and supervised claims process, customers will be notified of their right to a refund,” Dannheisser said. “A website will be established to better facilitate payments to every customer.”

Dannheisser said he is concerned about the difficulty of contacting former customers who have left the area.

“I hope the city council will return some of those amounts to the customers who shouldn’t have had to pay them to begin with,” Dr. Frank said.

This a developing story. News 5 will provide updates as more information becomes available.

READ THE FULL LAWSUIT HERE:

For the latest news, weather, sports, and streaming video, head to WKRG News 5.