The City of St. Petersburg’s franchise agreement with Duke Energy expired July 31; now what?
GOLIATH J. DAVIS, III, Ph.D. | Contributor
ST. PETERSBURG – Yesterday, I was repeatedly questioned by residents about the status of the City of St. Pete’s relationship with Duke Energy – and, more specifically, whether we are going to experience blackouts. The questions revolve around the fact that the city’s franchise agreement with Duke Energy expired July 31, and according to news reports, there are no ongoing negotiations regarding Duke Energy’s responsibility to provide city residents with electrical service, including electricity and electrical repair and maintenance.
For some time now, the city council and Mayor Welch have debated the feasibility of dropping Duke Energy as a provider and evaluating other alternatives. Some believe it may be possible to improve services and reduce rates by contracting with a different entity or by allowing the city to create its own power company and manage it as a city utility. Currently, city utilities consist of water, sanitation, and sewage. The process for such an acquisition involves state agencies, etc., and is not as simple as it sounds. The City of St. Pete is currently spending $590,000 on a feasibility study to decide if it should sever the relationship with Duke Energy.
The City of Clearwater utilized the same consulting firm, Newgen Strategies, and, after careful review, decided to retain its partnership with Duke Energy. Perhaps our city can benefit from Clearwater’s experience. In any case, city administrators should resume talks with Duke and take us out of a state of limbo. Currently, it appears Duke is operating on goodwill as they continue to provide what’s needed to keep the lights on absent a legal agreement. Our current status has serious implications for homeowners, renters, businesses, schools, law enforcement, emergency services, etc.
With the franchise agreement, Duke Energy collects franchise fees and utility taxes from homeowners, businesses and other electrical users. The franchise fees are passed on to the city. It is estimated that the fees provide city government with approximately $2 million in revenue each month for an annual total of approximately $23 million. The obvious question is: Can Duke Energy legally collect and disperse the funds absent a franchise agreement with the City of St. Petersburg? Additionally, operating without a franchise agreement potentially opens the city to a host of liability issues surrounding injuries, property damage and other claims.
There are some serious questions here for the residents and taxpayers of St. Petersburg, related to Leadership, Responsible Governance, and Accountability. One individual asked: Who is in charge? I explained we have a strong mayor form of government and district representation by city council members. It appears Duke Energy is not the bad guy in this situation. So far, they have indicated a willingness to continue to provide electrical services but would very much like to negotiate a new franchise agreement.
Like many readers, I would love lower utility rates and understand why some in city government may wish to pursue that option, but I cannot understand the manner of the pursuit. I have known Florida Power first and now Duke Energy all my life. Our current provider, Duke, has been a good neighbor and community partner. I do not recommend the city make any attempt to operate the utility. The city administrator estimated it would cost $2 billion to acquire Duke and add approximately $80 per month to each utility bill. I do not know whether the $2 billion figure includes personnel salaries and benefits, training and other necessary amenities.
It is time for someone to take the point and lead the way.
Author’s Note: Research for the column included the following: The Catalyst and Tampa Bay Business and Wealth.
