MARCO ISLAND — City Council will determine Monday if support of the study to take over the island’s electric company, Lee County Electric Cooperative, should continue as they vote whether to spend about $100,000 on the consultant firm, RW Beck.
The committee studying the feasibility of taking over LCEC began discussions Oct. 29 with constultants from RW Beck, which is the firm the committee ranked as their top choice.
The committee and consultants noted several challenges they will face in reaching their primary goal of lowering electric rates including committee members’ expertise or lack of it, possible conflicts of interest between LCEC and the consultant and whether the city will ultimately have the power to buy the utility without owners’ consent.
The committee chose RW Beck, a Seatle-based firm with 22 offices in the U.S. including Tampa and Orlando, over Virchow, Krause & Co., a Milwaukee-based firm with eight offices in the upper Midwest.
The decision came after committee members blindly ranked the two firms based on proposals and interviews in early October. City Council will vote whether to accept their recommendation Monday.
The committee only had two firms to choose from when six of the initial eight consultants who inquired about the project backed out due to conflicts of interest with LCEC, according to Public Works Director Rony Joel.
Committee member Jose Granda said he didn’t support the choice of RW Beck.
“I felt you (RW Beck consultants) were too tied into LCEC,” Granda said at Wednesday’s meeting.
Resident Bill McMullan, who was initially on the committee and withdrew citing his belief that it was a “sham,” said in an interview that he believes more consultants should have been considered.
“We’re not reinventing the wheel here. Other cities have done this. I don’t think a pilot project is necessary either. We can get estimates,” McMullan said.
McMullan also criticized how the city approached the topic of taking over an electric company and said he was suspicious about the involvement of former City Councilor John Arceri.
“I don’t have allegations against Arceri. I have concerns and I have a right to have concerns,” McMullan said.
McMullan’s concerns stem from a public records request yielding hundreds of e-mails between Arceri, Joel and several City Councilors.
In at least one e-mail, McMullan said he read a request for two city councilors to meet with Arceri.
“Can you prove they actually met and a councilor didn’t say ‘no’ to the request? No you can’t,” McMullan said clarifying why he finds it suspicious but is not making a formal allegation.
During the Oct. 20 City Council meeting Joel and City Manager Steve Thompson said Arceri’s involvement came upon their request for him to get involved in discussions with LCEC because Arceri had an extensive background in electric while no other city officials have such expertise.
“I’ve heard council and the public say I should use the community to complement staff needs. I can’t judge the political implications of that and I don’t need to ... I asked Mr. Arceri for help because I don’t have the expertise in electrical municipalization,” Joel said at the Oct. 20 council meeting.
Councilman Rob Popoff said that after going through “every single e-mail,” of which there were about 600, he noticed that almost every one began with: “Per your request.”
Councilman Chuck Kiester said he still had concerns including e-mails that “originated long before the council showed any interest at all in LCEC.”
Arceri said that his involvement in any electric related issues taken on by city staff began when he was on City Council and evolved into discussions of undergrounding and municipalization.
Arceri said that when serving as the city’s “utility expert,” he got together with LCEC on undergrounding and LCEC’s estimates began at $7 million in 2004 and became $30 million in February 2008.
“That spilled over into the municipalization ideas,” Arceri said.
The allegations of fraud and impropriety are “the purest form of political revenge,” Arceri said.
“Kiester blames me for the sewers. He blames me for the conviction of the violation of the sunshine law. His four candidates lost the election,” Arceri said in a follow-up interview with the Eagle.
“I still can’t believe I wrote 600 e-mails,” he added with a smile
Popoff said he shared Kiester’s concerns about the volume of e-mails, but “the name on the e-mails makes no difference.”
Kiester said he agreed.
McMullan said that he too has nothing personal against Arceri.
“I like (Arceri). I have no animosity toward Arceri or anybody. I just don’t like the thought that people have a back door to city hall,” McMullan said.
Arceri was once signed up for the committee to study the electric company’s takeover but backed out saying there were enough people on the committee with business and utility backgrounds.
Arceri’s 44 years of experience with New York electric utilities likely lent some economic value to the city. He said he has worked on the side of defending electric utilities from being taken over by governments and valued his volunteer consultant services for the city as high as $50,000 in the last year.
He said he has no interest in getting out of retirement and would decline any offer for a paid position with the city if it should municipalize the electric company.
The issue of whether the current committee has the credentials to assist in the LCEC takeover popped up at Wednesday’s committee meeting.
“No disrespect to this committee, but I don’t think the bulk of this committee is qualified,” said RW Beck consultant Jeff Larson.
Committee member Steve Stefanides agreed.
“No court is going to accept my notes ... I’ll go out there and count poles for you, but it has to be all experts out there determining the value (of LCEC’s on-island utility),” Stefanides said.
Discussions between RW Beck consultants and the committee indicated that the committee may be best suited to research other cities’ electric municipalization efforts while RW Beck conducted the other required research and documentation.
RW Beck estimated that with the assistance of the committee they could complete the first phase of the study for less than $100,000.
The first phase of the electric municipalization study, if approved by council, will likely include determining savings to the city in rates and undergrounding, establishing open communications with LCEC and determining if city takeover is technically feasible.
The committee and consultants also recognized some challenges that they will face in the process.
“If the cooperative is cooperative” the city can save money on researching the value of LCEC, said Ted Szymankiewicz, the feasibility consultant with RW Beck.
Joel said he believes LCEC’s cooperation is possible.
“They’ve said no to the sale, but that’s a long ways away from saying no to the study,” Joel said.
LCEC will consider answering questions from the committee on a “case by case basis,” spokeswoman Karen Ryan wrote to the Eagle in an e-mail.
The longer term possibility of acquiring LCEC through eminent domain, which is the power of the government to take over private property without the owners’ consent after offering to buy it, may also be a challenge.
Szymankiewicz said LCEC’s substation, located at SR-951 and U.S. 41 is about five miles off the island, so unless LCEC sells the substation, the city won’t have the power of eminent domain because it is outside of the City of Marco Island’s jurisdiction.
Joel said an intermediate agreement with LCEC may include accepting the current electricity rates if LCEC would agree to share the cost of undergrounding.
City Council will determine if RW Beck should be hired as well as determine the scope and budget of the study Monday.