Guest Commentary: Electric Municipalization - The answers and the real questions

On Feb. 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 garner 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 as an expert in the area of municipalizing electric utilities. Moline 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, 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 city’s 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. The committee, while hungry for knowledge agrees that for this amount of money, should be able to give the City Council the answers they were looking for.

We found find out that he cannot answer the basic questions that were put before him by the committee, but could give us a much more detailed review for another $18,000-plus. 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 the initial $4,700.

We must now wonder if the real question all along was why LCEC raised its price for putting electric lines underground 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 saw 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 putting these lines underground the real question? If so, why didn’t we just work on that? Did anyone ask LCEC to update their bid after oil prices fell and inflation went away? Did anyone check to see if their increase of $400,000 per 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.

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Comments » 7

NobodysFool57 writes:

As a fellow committee member I believe the city's motivation for this acquisition(by whatever means necessary)was the ability to manipulate rates to raise revenues to spend wherever they please. In my years of service with Duquesne Light Co. of Pittsburgh,PA the name of the game was public service. I feel LCEC still embodies this spirit, but our elected officials don't. Jim Wilson

loscabos writes:

Once again, the arrogance of the council majority shows its' true colors. The Ad Hoc's finding wasn't what the majority wants; therefore, they'll keep at it until another twisted and distorted way can be made up. Its' getting time to dust off those "torches and pitch forks" and get the city back to where it belongs.

deltarome writes:

I was also a committee member and disappointed in the way the meetings were run.
The purpose of the committee was to gather facts and to remain unbiased.
Many members were not unbiased and should have been removed by Gibson. The biases were from both sides-for and against takeover.
We needed to complete the cost evaluation of a takeover and we did not complete that. That remains unfinished work.
The paid consultant let the committee down and the committee let the citizens of Marco down.

Fossil writes:

deltarome, the only unbiased citizens regarding this subject are those who still do not have electricity! Glad to hear you were appointed to represent those unfortunate members of our community. Sounds to me if Gibson had done as you wished; only you, those who have a commercial interest in the takeover and Gibson would have remained. That would still leave you as the only unbiased member. What then?

deltarome writes:

Fossil, you are jumping to conclusions. First of all, it was I who first compared LCEC's rates to those of the Munis. It was I that did the first basic calculation that showed that even if Marco took over and ran it at 10% cheaper than even the lowest cost Muni that it would not cover the added debt service to purchase the utility and buy power at wholesale.
I wanted to finish determining the outcome from a more accurate debt service than my assumed $100 million purchase cost.
Had the hired consultant given us answers to the three questions we asked him, we would have had better numbers. That again was the committee not managing him properly to get that without him coming back and asking for more money to answer questions that we had not asked him to respond to.
At the start of the meetings, we were all asked to remain unbiased until AFTER we had enough facts to work from, not a simple mistrust of the city to run it or some other emotional response.
The world runs on facts, not preconceived notions, inuendos and biases.
While there were obvious biases from the members, and possible commercial conflicts of interest, it was up to the committee chair to rid the committee of them until the facts could be obtained.

Fossil writes:

deltarome: The only point I was trying to make is that every subscriber of LCEC has preconceived notions or attitudes about the service and cost of this utility. Attitudes that favors one way of feeling or acting over any other is bias. Attitudes are the result of personal learned experiences that individuals relate to. The world is not run on "facts" alone. It is run by people. People relate to their learned personal experiences or attitudes to make decisions. Just how would Mr. Gibson erase those attitudes or bias from the member's mind? Cannot be done.

sailingalong writes:

I hope Arceri, Waldack and Gibson will let this dog die! Chasing this windmill has nothing to do with saving us money and everything to do with expanding the city's power and giving Arceri a nice, fat, consulting or management job.

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