Commission approves first reading of 30-year gas franchise with auditing rights

The West Palm Beach City Commission approved on first reading Ordinance 51-48-25 on March 30, granting Florida Public Utilities (FPU) a nonexclusive 30-year franchise to sell, distribute and transmit natural, manufactured or mixed gas in the city, with one optional 10-year renewal.

Melissa Anderson, senior assistant city attorney, outlined key changes from the prior franchise ordinance: the franchise fee is defined as 6% of FPU's gross revenue in the city "without offset for the payment of any other City of West Palm Beach fees or taxes," and the ordinance adds explicit city auditing rights and an annual backup-documentation requirement. Anderson said the prior ordinance had allowed deduction of ad valorem taxes from the payable franchise fee and that change addressed prior concerns. "We inserted two sections into the ordinance ... they give the city extensive auditing rights, including the ability to go onto the premises of FPU to examine records," she said.

Commissioners asked about the term length (30 years is consistent with similar franchise agreements) and about whether the 6% rate is standard across peer cities. Anderson said she reviewed Miami, Fort Lauderdale and other Palm Beach County cities and found 6% is common for gas franchises. She also told the commission there is another fee in the city's code that results in an additional 10% being paid under separate code provisions, meaning the combined payments to the city exceed 6%.

Administrator Fauna and staff noted that franchise fees are generally a passthrough paid by customers rather than a direct tax on company profits. The commission approved the ordinance on first reading and scheduled the second reading for April 13, 2026.

What’s next: the ordinance will return for second reading and final passage on 2026-04-13; the record shows negotiation with FPU has concluded for the principal terms but minor adjustments between readings are possible.