Which Entergy electricity sales counted toward Richwood's franchise fee?

Plain-English summary

Richwood asked how to calculate Entergy's franchise fee under their agreement. The Attorney General read its two-percent fee as applying to retail residential and commercial electricity receipts in town, excluding sales to Richwood or other government and municipal agencies. Sales to nonprofit organizations were included because the agreement did not exclude them; commercial sales were expressly included.

The AG answered on the assumption that the agreement had the approvals stated in the document. His conclusion interpreted the particular agreement described, rather than announcing a rule for every utility franchise.

Currency note

This opinion was issued in 2000. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Did sales to government agencies count toward the fee?
No. The AG said the agreement expressly excluded those sales, including the government entities named in the mayor's request.

Did sales to nonprofits count?
Yes. The agreement excluded government and municipal agencies, not nonprofit organizations, so the AG included nonprofit sales.

Were commercial electricity sales included?
Yes. The opinion said the agreement explicitly included commercial sales within Richwood.

Did the opinion decide every franchise agreement's fee base?
No. It interpreted the Richwood-Entergy agreement described in the request, assuming the approvals stated there.

Background and statutory framework

Entergy's agreement called for a fee equal to two percent of gross receipts from residential and commercial retail electricity sales in Richwood. It excluded government customers and industrial or resale sales. The AG applied these categories to the mayor's questions about named government entities, nonprofits, and commercial sales.

Citations and references

The opinion interpreted the described franchise agreement without citing a statute or case.

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/00-0040

Original opinion text

March 15, 2000
OPINION NUMBER 2000-40

Honorable Ed Harris, Mayor
Town of Richwood
5130 Brown Road
Richwood, LA 71202-7004

Dear Mayor Harris:

We received your request for an opinion regarding a franchise agreement between the Town of Richwood and Entergy. Specifically, you inquire as to the calculation of the franchise fee as outlined in the agreement.

We reviewed the franchise agreement provided to us by your office and we respond to your request on the assumption that the agreement was approved by the Department of Revenue and the Louisiana Public Service Commission as indicated in the agreement.

Pursuant to the franchise agreement, Entergy is to pay Richwood a franchise fee equal to 2% of the gross receipts from the sale of electric service at retail for residential and commercial purposes within Richwood. The agreement further provides that the fee shall not apply to or include any receipts from the sale of electric service to the Town of Richwood or to any other government or municipal agencies.

You specifically question whether the sale of electric service to the Ouachita Parish Correctional Center, the Ouachita Industrialization Center, and the Ouachita Multi-Purpose Community Action Program or any other governmental agency may be included in the calculation of the fee. The franchise agreement expressly excludes the sale of electric service to government or municipal agencies. Thus, the sale of electric service to the government agencies specified in your request may not be included in the computation of franchise fees.

You also question whether or not the sale of electric service to a non-profit organization may be included in the calculation of the fee. The franchise agreement excludes only municipal or government agencies. Since there is no exclusion for sales to non-profit organizations, such sales must be included in the fee calculation.

While the agreement specifically exempts from franchise fees sales of electricity for industrial purposes or for resale within Richwood, there is no such exemption for sales for commercial purposes within Richwood. Instead the agreement explicitly includes such

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Opinion Number 2000-40
Honorable Ed Harris, Mayor
Page -2-

sales within the base for the franchise fee.

In sum, the sale of electric service to government agencies may not be included in the computation of franchise fees. However, the sale of electric service to non-profit organizations and sales for commercial purposes within Richwood must be included in the fee computation.

We trust this adequately responds to your request. If you have further questions or comments, please contact our office.

Yours very truly,

RICHARD P. IEYOUB
ATTORNEY GENERAL

BY: _________
TINA VICARI GRANT
Assistant Attorney General

TVG:jv

OPINION NUMBER 00-40

71 Municipalities

Page 3

The Town of Richwood may not include the sale of
electric service to government agencies in the
calculation of its franchise fee as provided for in the franchise agreement it has with Entergy. The franchise fee must include the sale of electric service for commercial purposes within the town limits.

Honorable Ed Harris, Mayor
Town of Richwood
5130 Brown Road
Richwood, LA 71202-7004

Date Received:
Date Released: March 15, 2000

Tina Vicari Grant
Assistant Attorney General