St. Petersburg is facing uncertainty after its franchise agreement with Duke Energy expired on July 31, leaving roughly $2 million in monthly city revenue and other legal protections in question. The company has urged the city to begin negotiating a new franchise agreement as soon as possible.

Financial Implications

The immediate financial issue stems from a 6% franchise fee Duke collects from customers in exchange for using public rights-of-way. This arrangement is now uncertain, and Duke has questioned what happens to this fee without a franchise agreement.

Councilmember Copley Gerdes stressed that the decision to explore municipalization originated with the council, and the city needs to be prudent in its approach. The city is spending up to $590,000 to determine whether it should ultimately sever its relationship with Duke and create a publicly owned utility.

Municipalization

NewGen Strategies and Solutions is examining whether St. Petersburg could acquire Duke’s local infrastructure and operate a publicly owned utility. However, Gerdes has consistently questioned comparisons to Winter Park, which established a municipal electric utility in 2005, citing significant differences in geography and population.

Duke highlighted that the expired agreement contains no purchase option, acquisition mechanism, or contractual method for determining the value of its assets. The company also noted that municipalization would likely entail years of regulatory proceedings, litigation, and asset valuation.

Negotiations

Gerdes hopes that future negotiations can capture some benefits sought by municipalization advocates without requiring St. Petersburg to assume the financial and operational risks of running an electric utility. He also sees an opportunity to address affordability through negotiations, such as creating an account for lower-income people who are behind in their power bills.

Duke’s letter indicates that the company is willing to discuss more than a franchise agreement, stating that negotiations could include a memorandum of understanding containing additional initiatives, partnerships, or other commitments benefiting customers and the community.

Original reporting: St. Pete Catalyst — read the source article.