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LCEC rate challenge: Cape puts complaint on hold

By Staff | Jun 24, 2016

The city of Cape Coral has asked the Public Service Commission to put its complaint against LCEC on hold.

Brian Armstrong, the attorney representing the city, filed notice with the state agency on Tuesday asking that Cape Coral’s complaint and petition requesting an investigation into the rate structure of the electric cooperative be held in abeyance through July 31.

“The parties have agreed to engage in discussions in an attempt to resolve existing areas of disagreement and, should such agreement be reached prior to July 31, the parties believe that no further Commission action in this proceeding would be necessary,” Armstrong’s letter states, in part.

The request was approved by counsel for both LCEC and the city, Armstrong said.

The letter came on the heels of a same-day notice from the PSC to LCEC asking the co-op whether it could provide the rate structure information sought by the city, which had maintained Cape Coral residents subsidize ratepayers in other parts of LCEC’s service area.

The PSC had asked:

1.Does LCEC have location-specific asset information? If yes, please describe how detailed the information is, for example, account-specific investment by city/municipality and by street. If not, please describe in detail the process it would take to develop such information and provide an approximate cost, and include the basis for the cost.

2.Please describe with specificity the steps (and associated costs) LCEC would need to take to conduct a cost of service based on density, such as what the City of Cape Coral wants. How long would this type of study take and what is LCEC’s estimate of the cost?

3.What is the date of LCEC’s most recent cost of service study? Please provide a copy of the study.

4. Does LCEC currently have a cost of service study in process? If yes, does the study address the use of density in determining customer classes and rates? If yes, when will the study be finished?

The PSC gave the utility a deadline of Tuesday, July 12.

The city’s filing this week is the latest in a series of often contentious exchanges that began last year at the start of a process that has taken two directions: The negotiation of a new franchise agreement between the city and LCEC to replace a 30-year old contract that will expire this year and the exploration, on the city’s part, of possible purchase the co-op’s infrastructure within the city and the creation of a municipal electric utility or some city-controlled hybrid.

The current franchise agreement opens the door to purchase but each side has taken a different view as to what such a transaction would require.

The city then initiated a series of filings with the PSC to get information the municipal officials said was needed for the process.

LCEC countered that it provided all available records and others requested either did not exist or were proprietary.

In May, City Council voted to hire Stuart Diamond to represent the city in negotiations with LCEC on a new franchise agreement at a cost to the city of $49,500.

As of that meeting, the city had paid $177,400 in legal fees.

Councilmember Richard Leon was among the council majority that supported hiring someone to see if a resolution could be reached via negotiation.

“It’s good to have a new face, get a fresh perspective and a new set of eyes looking at it,” Leon said then.

Diamond recommended the rate challenge be held in abeyance after talking with LCEC CEO Dennie Hamilton.