Quick Answer
Taxes, fees, and franchise charges are three different kinds of non-usage line, each set by a different authority. A utility tax is a charge a city or state levies on your utility service, usually a percentage of the billed amount [1]. A fee is a fixed add-on for a specific cost or service, such as a program or administrative charge (those are covered separately as riders and surcharges). A franchise charge compensates the city for the utility’s use of public streets and rights-of-way — the utility either absorbs it or passes it through to customers [5].
Next step: If your line is a percentage of your billed charges, match its label in the table below. If it is a one-time or program add-on instead, it belongs to the riders and surcharges family — and delivery vs. supply charges explains how to tell which part of the bill a line applies to.
What Each One Looks Like on a Bill
Verified examples with published rates — not typical ranges:
| Line on a bill | Often appears as | Who sets it | Verified example |
|---|---|---|---|
| Utility users tax (electric, gas, water) | A line naming your city or state plus “tax,” usually a percentage of your billed charges. Labels vary by utility. | City ordinance — Pasadena, CA | Electricity 7.67%, gas 7.9%, water 7.67% of charges billed at a Pasadena address [1] |
| State cap on city utility taxes | A percentage near or just above 6% on an electricity, gas, or steam line in a cap state. Labels vary. | Statute — Washington | Cities cannot tax electricity, natural gas, steam, or telephone service above 6% unless voters approve a higher rate [2] |
| Voter-approved rate above the cap | A percentage noticeably higher than your state’s typical cap. Labels vary. | Local ballot measures — Cheney, WA | Cheney’s total utility tax on electricity and gas reaches 14.75% after voter-approved additions [3] |
| Municipal public service tax | A percent-of-bill line on utility purchases that is not labeled a utility tax. Labels vary. | Statute — Florida | A municipal tax on electricity, metered or bottled gas, and water purchases cannot exceed 10% of payments received [4] |
| Franchise or right-of-way fee | A line naming the city, streets, franchise, or right-of-way. Labels vary by utility. | Municipal license or franchise agreement — Minnesota | The fee is based on the utility’s gross operating revenues from operations inside the city [5] |
These reach real residential bills: Los Angeles’s Office of Finance requires lifeline-exemption applicants to submit their entire DWP, gas, or phone bill showing the Los Angeles City Tax line [6].
Why a Tax Lands on Your Delivery Charges Too
Most city utility taxes are gross-receipts taxes: the percentage applies to the utility’s revenue from all billed charges, not just the fuel or electricity you consumed [3]. That is why the tax line sits on top of delivery and other service charges.
Gross-receipts math can also make a tax line look bigger than its stated rate, because the base includes the revenue that pays the tax itself [3] — the worked example is in the questions below. Cities avoid the confusion by embedding the tax in rates or showing only a footnote percentage [3].
How to Read Yours
Check each non-usage line in this order:
- Record the exact label and amount, plus what it was applied to (the whole bill, delivery only, or supply only).
- Ask which authority set it. Taxes trace to a city ordinance or state statute; franchise charges trace to the agreement between the utility and the city; program fees trace to a commission-approved tariff or rider.
- Look up the rate or cap. City finance departments publish utility-users-tax rate pages [1]; state legislatures publish statutory caps [2][4].
- Recompute the line with the printed percentage and the base it applies to. If the label says 10% but the math shows a markup, re-check the authority from step 2 first [3] — and if it still does not reconcile, our guide walks how to dispute a utility bill step by step.
A fuel adjustment charge tracks the utility’s fuel costs; riders and surcharges recover specific approved programs. One-time items are a third family: connection fees attach to starting service, reconnection fees to restoring it.
Related Reading
- Riders and surcharges — the other recurring add-on lines and which commission approves each.
- Every charge on a utility bill, explained — a map of the whole bill, line by line.
- Delivery vs. supply charges — where each line sits in the delivery and supply parts of the bill.
- How to dispute a utility bill — the escalation path when a line will not reconcile.
- Your utility deposit, explained — the other one-time line new-service households meet.
