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City Council to discuss possibility of municipalizing electric power utility

By Staff | Jan 20, 2015

Cape Coral City Council members will hear from staff and outside sources about the possibility of municipalizing the local electric power utility during a special meeting Wednesday at the Nicholas Annex.

City Manager John Szerlag and his staff have been exploring for several months a number of options available to the city before its 30-year lease agreement with LCEC expires at the end of September 2016. Szerlag will report the results of a feasibility study undertaken by an interdepartmental task force he formed to evaluate those options.

The meeting is scheduled to start at 4:30 p.m. in Room A200. Council set aside 45 minutes for public input with a limit of three minutes per person.

The director of a successful municipalization of the Winter Park power utility and the executive director of the Florida Municipal Electric Association will share their views and experiences. Representatives from outside consultant services will speak on the financial feasibility of forming a Cape Coral MEU (Municipal Electric Utility.)

The subject of MEUs was first discussed at a City Council meeting last May.

The first option for the city is to form a MEU to take over distribution of power, purchased at wholesale rates, from entities that generate the power and transmission of that power to the MEU grid.

The second option is to drop LCEC in favor of a different provider, and the third is to simply renew its lease agreement with LCEC.

Doug Spencer of Spencer Consulting was paid a $10,000 fee by the city to assist the six-member task force with their preliminary analysis. In his presentation to council in May, Spencer noted reasonable rates charged to consumers and MEUs typically are able to provide better service reliability measured in average annual outage time in minutes.

He said the value of an MEU includes better customer service and treatment of developers because the city is only concerned with its residents as opposed to an LCEC entity serving several communities. He pointed out sales tax incentives, tax exempt financing, higher customer density per mile of distribution line than larger electric utilities, reduced overhead and access to FEMA funds for storm restoration.

Spencer said drawbacks associated with an MEU include governance issues (long-term planning and different administrative services), retaining business focus and the complexity of purchasing wholesale power.