Residents ask ‘why now’ for city-run electric

‘In the Round’ panel answers: City funding may be reason for electric takeover

— Resident Don Farmer, a Naples Daily News and Marco Eagle columnist and former CNN correspondent, led the “In the Round” audience at a forum on electric municipalization to ask the question “why now?” Why undertake a project as potentially expensive as looking into buying the electric cooperative when people face economic hardship?

The city’s electric municipalization committee met earlier Wednesday afternoon and the resounding question toward the end of that meeting was “why buy” Lee County Electric Cooperative, the Island’s electric provider?

About two hours later, the question of “why buy?” became “why now?” at the “In the Round” forum on the topic hosted by Orion Bank.

Farmer’s question spurred the most cheering and comments from the audience, as he geared the question toward City Councilman Jerry Gibson, also the chairman of the city’s electric municipalization committee and John Arceri, a former City Councilman who Farmer described as a person “of influence.”

The audience, many rising to their feet, clapped and echoed: “Why now?”

Gibson’s response was “why not?”

Gibson also said he believed Farmer’s question was “putting the cart before the horse” because so far the city has not spent money to look into the idea. City Council approved $100,000 in the budget for a consultant to look into the viability of the city purchasing or taking over LCEC by eminent domain, but the committee chose to begin preliminary work on its own without hiring a consultant.

He also said it has not been determined whether a city-run electric utility may bring money into the city.

“Why are you people so afraid of facts?” Gibson asked the audience.

The “In the Round” panel included LCEC’s CEO Dennie Hamilton, Barry Moline, executive director of the Florida Municipal Electric Association, Gibson, and Arceri, a former City Councilman who was among the primary negotiators for the city with LCEC regarding plans to put the Island’s electric wires underground.

Moline fielded many questions on the pros and cons of a city-run electric company and came with many examples from the 34 cities which are members of FMEA and operate their own electric companies.

Arceri, who has decades of experience in electric utilities from New York state, offered why he believed it was a viable idea to look into municipalization and to negotiate with LCEC for rates and for underground pricing. He said he believes Marco “subsidizes” the other areas in the electric cooperative.

Hamilton said selling to Marco Island was “not in the best interest” of any of LCEC’s customers, including Marco Island.

Electric as a new tax

“We are convinced the citizens of Marco Island would pay higher rates to the city for the same service they have now through LCEC,” Hamilton said.

He reiterated that LCEC’s customers are also the owners of the coop. He added that he did not believe Arceri’s claim that Marco subsidized other areas was valid.

Hamilton said in years where there were storms on Marco and when there were significant capital improvements to the Island’s system such as in 2003, other areas may have contributed more to the cooperative than Marco. There are four service areas which are more dense and purchase more electric than Marco within the cooperative, Hamilton added.

He also said if Marco is looking to earn money from sources other than property taxes, they may legally charge a 10 percent fee on customers’ electric bills.

“I don’t want to be a tax collector,” Hamilton said, adding that he would do that if the city requested.

He said he saw the issue as a way of “hiding funding for the city through electric rates.”

The audience came back occasionally and repeated “why now?”

Arceri answered that it is a “longterm issue” and it may be a possible solution to the city’s financial troubles as property taxes are not generating the money they used to for the city due to declining property values.

The idea of Marco Island being LCEC’s “cash cow” was the impetus for the research. Arceri said if he had a goal it would be to negotiate a savings for Marco Island, either in rates or undergrounding.

Resident Ron Dick, also a part-time Canadian resident, was among many at the meeting who thanked LCEC for providing relatively low rates with reliable service.

Carl Haeussler Jr., a resident and Island Realtor, said he appreciated LCEC and said anyone from up north likely knows the value LCEC provides with rates lower than in northern states or Canada.

“If it works, don’t fix it,” Haeussler said.

Hamilton addressed several questions from residents looking for more detailed information on how LCEC came to the conclusion that they don’t want to sell and it’s not in Marco residents’ best interest.

He said LCEC was not required and had no motive to hire anyone to discover the value of Marco’s segment of LCEC, such as infrastructure and the depreciation of it.

Hamilton shared that LCEC brings in $370 million in annual revenues and profit margins are allocated back to members in proportion to the energy used. Marco Island accounts for about $35 million of annual revenues, he said. LCEC has 193,000 customers and Marco has about 18,000 customer meters, Hamilton said.

“The city’s committee has not asked LCEC for one piece of information,” he added.

Moline said from his observation the committee is “leaving no stone unturned” as they work to gather impartial facts.

Hamilton also accepted an invite from the electric municipalization committee to give a presentation on LCEC.

Have something to contribute on this topic? Upload your information on links above or send directly to Eagle content editor Kelly Farrell, 213-5335, via e-mail link above or the Eagle office, 579 Elkcam Circle.

© 2009 All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Comments » 13

Fossil writes:

Councilman Gibson asks "why not". When his mother scolded him to not not touch the hot stove, did he ask "why not". It's obvious why not. Facts are required only when there is an absence of knowledge. In the case of LCEC, the consumers already know all the facts they require to make a decision as to the wisdom of purchasing this utility. The consumers are actually owners of this utility and as owners have an interest in it. The consumers by testimony have stated that they are satisfied with the service and the cost for that service. What other facts are worth $100,000 to learn? Sounds to me that the proponents of this inititive want to hire a consultant to farret our facts to give them reason to purchase it. Facts that the consumers are not seeking. What are the real motives of people like John Arceri? That is a valid question and perhaps worth $100,000 to establish the "facts" as to why we should not purchase this utility. Mr. Gibson needs to rethink his logic and become more objective.

waterday writes:

The city logic is to make more money - more profit as stated in this article. The economy is awful, and didn't we have a record tax increase?? Property taxes on Mark-up Island went up- recollection of tax increase this year/ highest in state and possibly country? did they forget this? oh, it was marketed to us as a tax decrease (when the city did not get the actual dollars they seeked) but it was still a high increase in down economic times. How many other cities increased property taxes on their residents? This Electric agenda has already been decided by (Arceri and his followers) and this is just steps that the city will follow, to try to get council to go along with them. Looks like they have Gibson convinced,nothing to go with logic with this councilor. Our City does SHOULD NEVER own the electric or any of our utilites, run the city correctly and stay out of our pockets. The city owned water company has doubled (tripled) prices since take over. LCEC DOES A REMARKABLE JOB, AND KEEPS OUR PRICES AFFORDABLE.

August8 writes:

Real Simple!!!!!!!!!!!!!!!!!!!!!!!!!!!

Don't get the City into the Electric Business at all, especially NOW!!!!

Let those experts run that service!!!!!!!!!

ejburger writes:

Disband the committe and stop this nonsense; we dont need to look any further with regard to aquiring LCEC. It will only end up costing is money.

marcoredeagle writes:

The City wants more control. If they want more control who is losing control? LCEC and the Marco residents.

The City views they can do things better than LCEC. Let electric professionals run the power on Marco. This has never been seen in the past so how can we expect them to be different in the future? The City just hired 3 (or 4) new people in 2009 in a time when belt tighting is needed. So far this year MI is not looking to reduce expenses ... only growing expenses.

The City views that they can solve problems by getting bigger. The normal view of any organization is the bigger the better. (Government wants to get bigger, hospitals want to get bigger, schools want to get bigger).
But this has proven wrong again in today's economy. Smaller is better. Smaller is nibble.

marcoredeagle writes:

Let me take a 5 minute swag at future overhead costs:
- 1 major real estate lot for a building: $6M
- 1 new building and contents: $7M
- 3 real estate lots for logistics/supplies $4M
- 10 new specialty vechiles replaced every three years: $1.2M
- 20 new cars for employees $900K replaced every three years
- 50 employees per year (average fed government worker costs $112K per year) $5.6M
- 1 government liason - policy person $250
- Consultant fees: $250K per year
- Legal/Accounting fees $250K
- MIS/Supplies/Travel Entertainment/Training $500K
- $XM costs to purchase power from LCEC
$26M without power charges to LCEC to get the power

Full Disclosure: I have NO background in the Electric Business and I spent 5 minutes of thought. But I have an accounting/auditing/cost estimate background.

dc5799 writes:

Remember, Gibson was handpicked with Wayne by Arceri.

happy6 writes:

maroredeagle and ej....right on! the real reason arceri wants this is he sees himself as the CEO of marco electric.better than ceo of the poop plant.....and he'll hire gibson and walduck as meter readers, trotter as the CFO and recker as they atty/tooth puller(of the citizens)....and popoff as the greeter of potential new citizens....the other two will be gone.

playballonK writes:

Can anyone tell me why the heck hasn't the state or feds questioned this cities business practices?
Is there a 'connected' person(s) that has kept the inevitable investigation @ bay?

playballonK writes:

major props for Farmer for standing up for what is right in our community..'Why Now', get the bumper stickers printed...

34145 writes:

"Arceri answered that it is a “longterm issue” and it may be a possible solution to the city’s financial troubles"..... enough said! That is why the City is pushing for this purchase! Residents be darned! The City is hungry! Great job, Don!

NobodysFool57 writes:

The Co-Op has served us well for decades, our ten year relationship with the city (Jolley Bridge Tolls, STRP, Fire Assessment, been contentious at best.Who do you trust?

multi_million_heir writes:

why ever?

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