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Credibility at stake if core findings fail

March 11, 2016
Cape Coral Daily Breeze

The first public presentation of the city's desired franchise terms will be made to the Cape Coral City Council Monday.

Scheduled for discussion is the city's proposed franchise counter made this week to a "boiler plate" document submitted to the city by LCEC a year ago as well as the recommendation of Tallahassee-based attorney Brian P. Armstrong that the city initiate a Florida Public Service Commission review of LCEC "rate structure issues."

The counter, which the city is referring to as a draft franchise agreement, was presented Wednesday to LCEC Executive Vice President and CEO Dennie Hamilton in a meeting that included City Manager John Szerlag and attorneys for each side.

Judging from the related discussion scheduled to take place Monday, and LCEC's reaction to the recommendation that the city file a complaint and petition with the PSC, Wednesday's meeting did little to prod forward the languishing negotiations to reach a new franchise agreement with the electric co-op.

That's unfortunate but, perhaps, expected given the city's stated position that it can provide, essentially, more for less should it opt to become a municipal electric utility rather than renew the franchise with LCEC when the 30-year-old agreement expires at the end of the year.

For Monday's presentation, the city's position pivots around a couple of points in addition to proposed franchise terms. Among them are its "discovery" that Cape Coral ratepayers are "subsidizing" ratepayers outside the city limits where LCEC's service areas are less densely populated; LCEC contributions in aid of construction charges, a rate tariff; and the recently submitted LCEC street LED lighting program, which calls for the implementation of some of the LED lighting initiatives that the city wants, but does not reduce rates.

The city also questions the co-op's equity capital balances. The city maintains the co-op could reduce rates by "minimizing the profits collected by LCEC each year through customer bills" by using some of the equity capital. LCEC says those funds are needed "to partially finance long-term capital projects, and a minimum level is required by lenders in order to extend loans to LCEC. A higher level of equity capital can reduce the cost (interest rate) of borrowed money."

City staff believes a Public Service Commission administrative investigation of LCEC's rate structure to obtain cost of service information it has otherwise been denied will get these questions answered, and says LCEC - which points out that its rate structure is PSC approved - suggested this route.

Well and good.

However, given that Cape Coral taxpayers/ratepayers are paying twice as they are funding the legal and staff expenses for both the city and LCEC, we certainly hope, should city council opt to pursue the PSC complaint and petition route, that the results received justify the expense.

Otherwise, the next city "discovery" may be that its filing is perceived more as posturing to justify a down-the-road municipalization or assets-purchase vote than fact-finding.

And that would be unfortunate, indeed.

For not only would the cost of the exercise be misspent, but, from a public buy-in perspective, council's credibility on the LCEC issue will take a hard hit.

As well it should if the city's core positions behind the filing, which have been more than a year in the making, prove unsubstantiated.

- Breeze editorial



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