At its June 12 meeting, the Pensacola City Council will approve how Pensacola Energy will pay out the $15.9 million settlement of the Eric L. Frank vs. City of Pensacola lawsuit. Read Memorandum
After nearly a decade of legal battles, Pensacola Energy customers are finally set to receive significant refunds following the settlement of a class-action lawsuit that challenged the city’s collection of franchise fees.
- Bottom Line: Current Pensacola Energy customers don’t need to do anything – refund checks totaling $8.946 million will be automatically mailed out. However, former customers who want their share of the $3.654 million allocated for past customers must file a claim during the designated period.
What This Case Was Really About
The lawsuit, filed in 2015 by Pensacola chiropractor Eric Frank, centered on a fundamental question: Did the city have the legal authority to charge franchise fees to customers of its own municipal utility?
- Since 1970, Pensacola Energy customers living within city limits have been paying a 6% franchise fee, plus an additional 10% public service tax on those fees. This meant customers were paying 6.6% more than they should have been, according to Circuit Court Judge Jan Shackelford’s ruling last summer.
The problem? Private utility companies typically pay franchise fees to use public rights-of-way to deliver services. But Pensacola Energy is owned by the city itself, making collecting these fees legally questionable. Judge Shackelford ultimately ruled that the city didn’t have the proper legal authority for decades.
How the Money Will Be Distributed
The $15.9 million settlement breaks down as follows:
- $8.946 million for current active customers (automatic distribution)
- $3.654 million for former customers who can be located (claim required)
- $3.3 million for legal fees and settlement costs
There’s also a built-in recovery mechanism: if former customers don’t claim all available funds, 35% of unclaimed money (up to $4.41 million) returns to the city. The city will redistribute the next $1 million among previous recipients proportionally; any remaining funds will revert to the city.
Moving Forward
The city plans to issue bonds of up to $40 million by October 2025 to replace the cash used for the settlement. Additionally, Pensacola Energy is conducting a comprehensive rate study to determine what rates should be going forward to fund all operations.
Key Takeaways for Customers
If you’re a current Pensacola Energy customer: Watch your mailbox – your refund check is coming automatically. You don’t need to file any paperwork or take any action.
If you’re a former customer: You’ll need to actively file a claim during the designated period to receive your portion of the settlement. Keep an eye out for official notifications about the claims process.