City should not ‘municipalize’ electric utility services
To the editor:
The Jan. 23 Breeze editorial concerning what will no doubt become a hostile takeover of LCEC by the city raises many questions; the foremost is “should we.” Paradoxically, this is the question that is most easily answered. The answer is NO!
Nowhere in the 2014 Spencer Consulting report is there an identified objective that provides the motivation or justification for going forward with “municipalization” of LCEC. Does the Cape Coral electricity provider, LCEC, suffer from poor availability, poor service, or high cost relative to the market? No it does not. No good reason has been offered other than the city can – a conclusion which I believe is ill-considered. Remember the Swim Center, the Academic Village, North Del Prado extension, the pelletization plant the North RO Plant? Remember when we were told the old Police HQ was in a sick building with leaks and mold that could not be fixed and should be sold or torn down? As soon as the new police HQ was built the old building was refurbished and new city staff moved in. These are some of the more egregious projects brought forth and or undertaken. In fact, after listening to the Mayor at the Jan. 26 Council meeting, can you be sure that Council is even given all the information the city has necessary for them to make an informed decision? Are you confident that Council will undertake the necessary independent fact finding and investigation that is called for? It was Council’s independent investigation that exposed the Swim Center scam, not city staff.
LCEC has not raised its rates in seven years, and in fact, has reduced its rates two years running and is in the bottom third among average billing comparisons statewide. Can the city match that record? Has any rate, fee or tax that you pay to the city not increased for seven years much less have been reduced in the last two? Have your water and sewer rates been reduced the last two years? How about garbage collection? Remember when the money earned from recycling went to reduce the collection fee that you pay? The Council has now decided not to pass the savings on to you, but to put it in the General Fund. In fact, the city just subjected you to two new taxes – the fire assessment and the public service tax.
Are you happy with expensive assessments or the condition of city roads? Remember the city has no experience running an electric utility, but LCEC has and has done a good job doing so. LCEC is not broken and if it were, are you confident the city has demonstrated the ability to fix it? City staff has said that they would run the electric utility like they run the water/sewer utility. Do you want your electric power supply operated that way?
A 2010 feasibility study also done by Spencer Consulting, states that 75-80 percent of the total operating cost of an electric utility is the cost of bulk power. It is realistic to assume Cape Coral, with the city’s smaller usage, hence less bargaining leverage, could negotiate bulk power purchases at lower rate than LCEC? Barry Moline, executive director of the Florida Electric Association stated he did not see a great opportunity for reduced rates. Also there is no economy of scale in infrastructure, maintenance, technical expertise and service management. Is the estimated purchase price realistic? Do the start-up costs adequately address the purchase of line trucks, construction of an office with a Systems Operation matrix, an IT center, and a maintenance department with adequate supply of transformers, transmission poles, cable and other spare parts? The benefits to the residents from a city takeover of LCEC are totally unclear.
Are you willing to take on new debt most likely in excess of $500 million to be added to the billion you already owe in outstanding bonds, loans, pensions and other unfunded post employment benefits? Are you happy with your new fire assessment? Fort Myers is considering a fire assessment, a flat fee of $45.82 per home. That is 35 percent less than Cape Coral has already billed you for just the land portion of your assessment. Keep in mind the city assesses many more dollars for your house. Why does it appear as if things seem to be more expensive in Cape Coral? Do you want this for your electric bill, too? Remember LCEC is a co-operative and you are eligible, every year for a “return on equity” check. Ever get one of those from the city?
No doubt, the city will offer as a reason for the takeover, is that it will be able to provide a more efficient service at a reduced rate. DON’T YOU BELIEVE IT! If the city were really concerned about reducing your electric cost, it would eliminate the 10 percent tax it adds every month to your electric bill. The real reason the city wants to control the electric supply is so it can create a new revenue stream with a guaranteed profit (from you) to add to the city budget to spend as it wants. That is the only reason for the city to takeover LCEC.
Furthermore don’t look for an opportunity to vote on this. Council has made it clear that they do not want a referendum on this matter, i.e. any stating of choice by the tax and fee paying public. They do not mind governing against the will of the people. Additionally if this issue goes to litigation/arbitration, as is likely, you will pay both sides of the legal fees; once as a taxpayer and once again as a member of the co-op.
You need to be heard now and if not listened to be heard at the ballot box in November.
William P. Deile
Cape Cora