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Report: City-run electric ‘financially feasible’

By Staff | Jan 22, 2015

A Cape Coral Municipal Electric Utility could improve service and aesthetics to the city, but a high initial cost and the possibility that its current electric provider LCEC could make things difficult for them in future negotiations are potential roadblocks.

That’s what the city council heard during a workshop meeting on the subject Wednesday at the Nicholas Annex as it begins to examine if providing electric service is feasible.

In the end, council considered going in a parallel path – to negotiate with the current provider, LCEC, while further investigating whether an MEU is right for the Cape.

Mike Ilczyszyn, interim assistant city manager, said the city can own its own utility, as it currently runs sewer and water, which was purchased years ago from Gulf American, but it would be up to council to determine if the risk (a potential start-up investment of a half-billion dollars) is worth the potential reward.

The council, with Mayor Marni Sawicki in Washington D.C. for a mayor’s conference and Councilmember Jim Burch also absent, heard three speakers discuss the pros and cons of such a move, including Jerry Warren, who heads the MEU in Winter Park.

Warren said Winter Park wrangled with Progress Energy for years in court to become an MEU, which it finally did in 2005.

The result has been fewer interruptions of service, better overall service and the undergrounding of lines, which was an alternative to its former provider’s practice of pruning the city’s signature oak trees.

They also made some missteps. Those included not borrowing money, not focusing on the separation and reintegration, and issuing auction rate bonds instead of fixed rate.

Warren said the fight was worth it.

“Our reliability went from more than 200 interruption minutes to less than 70 per year. During Faye in 2008, we lost power on Thursday night, by Friday night most power was restored,” Warren said. “We did it just like they did. But better.”

Barry Moline, executive director of the Florida Municipal Electric Association, said 34 municipalities statewide have public power, ranging from cities as large as Jacksonville to as small as Moore Haven. Big or small, it’s a big issue.

“It’s a big decision. I encourage you to dig deep into the issues. They can become emotional,” Moline said. “Learn to play hardball, expect political shenanigans and guarantee to treat the franchise employees the same and compensate them, or they’ll stab you in the back.”

Consultant Doug Spencer went through more of the technical aspects, saying only Burnt Store Marina would be without the new MEU’s services, with the nearest substation eight miles away.

If Cape Coral were to establish an MEU, it would become one of the 75 largest in the nation and among the largest in Florida.

When it came time for public comment, Denny Hamilton, LCEC’s CEO, said the studies provided were filled with omissions and assumptions.

“This is an important issue with financial implications. There are huge risks you must consider. We have worked with Cape Coral for six decades and want to work here for years to come,” Hamilton said. “We believe it’s in the best interest of the city to renew the franchise agreement. We’re ready to negotiate with you.”

Councilmember Rana Erbrick responded with a raised finger toward Hamilton during council comment.

“You don’t want me on the other side of the table. What drives me nuts is the bickering over moving things,” Erbrick said. “I’m not sure about raising $500 million, but if you don’t come to the table with something good”

Richard Leon said he wanted to make a decision more quickly, with local primaries and elections on the horizon. He also suggested going down dual paths – examining the MEU and the renewal of the city’s franchise agreement with LCEC.

“Let’s say we try this and in November we have a whole new council and suddenly they change their mind,” Leon said.

Erbrick said the creation of a MEU must be considered, despite any potential controversy, because it could be a once-in-a-lifetime opportunity that could be off the table if the city decides to just renew the franchise.

“This is a decision to be made at the ballot box and it will be intense, like financial diversification. It will be a long fight, but a good fight,” Erbrick said.