EAGLE i: Electric committee member shares what he learned from takeover study

— On Thursday, February 26, the Ad Hoc Electric Municipalization Committee voted to disband after a majority of the members could not find it in their hearts to pursue spending more city money on an effort that kept leading in one direction and one direction only.

After interviewing two consultants last fall to help garnish information as to whether this makes financial sense to the city, it became apparent that one of the key points and driving forces for the possibility of a City owned Electric Utility just did not make sense as each and every company and individual that spoke to the group told us that if they were looking at lowering rates for the customers, they need not look any further. Rate savings rarely happened and if anything, rates would probably increase. As LCEC is not interested in selling the utility to Marco Island, we would have to use condemnation proceedings through Eminent Domain and the legal battles would be extremely costly.

The committee then brought in Barry Moline (Executive Director of the Florida Municipal Electric Association) as an expert in the area of municipalizing electric utilities who not only started the presentation by telling us the same thing (rate savings were probably not going to be had and again, our rate payers may end up paying more). Only one city in Florida has decided to move forward with taking over their utility in the last 15 years and that was in Winter Park, Florida and their reason had to do with some very poor service from their local power utility. Again, we on Marco Island certainly cannot say that LCEC has not been responsive and service oriented (just look how fast their response was after Wilma).

Finally we bring in Mr. Bill Herrington, a consultant that has worked with cities that considered municipalizing, and who for $4,700 would be able to pull together some “top” level data that would actually show us if this really makes any sense to pursue any further or not. The committee, while hungry for knowledge agrees that for this amount of money, should be able to give the city council the answer they were looking for. Of course the committee was not privy to whatever meetings Mr. Herrington had with staff and/or Mr. Jerry Gibson (our City Council liaison), and find out that he cannot answer the basic questions that were put together for him by the committee, but had to give us a much more detailed review for another $18,000 or more. The amount of money is not the issue. In the grand scheme of things it is actually fairly minor, but the point is, we didn’t get an answer to the question we asked for (when we paid) the initial $4,700.

We must now wonder if the REAL question all along was why LCEC raised its price for undergrounding from approximately $100,000 per mile to approximately $400,000 per mile. LCEC as a non-profit corporation has no reason to overcharge us for doing this, but if everyone remembers what happened over the last couple of years, we would see that oil prices went from $30 per barrel to $144 per barrel and raw materials such as copper, steel, and just about everything else sky rocketed. Is undergrounding the city the real question? If so, why didn’t we just work on that question? Did anyone ask LCEC to update their bid on undergrounding after oil prices fell and inflation went away? Did anyone check to see if their increase of $400,000 mile was in the ball park back when that number was updated? Cocoa Beach just happened to underground during that time and isn’t it surprising to find out that their cost ended up at approximately $435,000 per mile.

There is another good reason to own a utility. With dwindling tax revenues, rates can be adjusted to add revenues to the city to help pay for the many projects municipal leaders have in the queue.

Does Marco need to own another utility? Only you, our residents and taxpayers can answer that question.

Bob Brown

Electric Ad Hoc Committee Member

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Comments » 2

MarcoJimbo writes:

As a fellow committee member there is no doubt in my mind that the city's motivation for this acquisition by whatever means necessary, was the ability to manipulate rates to raise revenues they could spend wherever they please. In my years with Duquesne Light Co. of Pittsburgh,PA public service was the name of the game. I feel LCEC still embodies that spirit, but our elected officials don't. Jim Wilson

Working_Stiff writes:

By even raising the question of using imminent domain and essentially stealing from a company that has done no wrong in my eyes, only further erodes my mistrust of our elected officials. Government entities can never run any operation as efficiently as private companies can and that is a fact.

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