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Small town's buyout bid heats up utility's fuses
© St. Petersburg Times When we last visited Belleair, playing the role of David, the town was girding its loins to fight Florida Power Corp., cast in the role of Goliath. The results of the early rounds are in. David is winning so far. Belleair, a pleasant enclave of 4,000 on the coast of Pinellas County, has the notion that it might buy out Florida Power and run its own electric utility. Florida Power does not like this idea very much. Would it be a smart business move for Belleair? Could a little town really do a better job than the big electric company? That's a judgment Belleair has yet to make. So far, the court fight has been about whether Belleair even has the power to consider it. Like lots of cities, Belleair had a 30-year "franchise agreement," or contract with Florida Power. Typically, the company agrees to collect a "franchise fee" from customers and remit it to the city. Belleair's agreement expired this past Dec. 1. Here's the nub: The contract gave Belleair the right to buy out Florida Power once the 30 years ran out. If the two sides could not agree on a price, they would submit to arbitration. More than a year in advance of the deadline, Belleair told Florida Power it wanted to talk about buying. Florida Power said no dice. Belleair sued. So did another city in the same boat, Casselberry in Seminole County. Florida Power's argument was, more or less: Look, the state law that required such a "buy-out" clause was repealed a long time ago. Besides, isn't this really the business of the Public Service Commission, or the feds? The cities answered, more or less: Look, a deal is a deal. You signed a contract 30 years ago. In ink. It says we can buy you out. As it turns out, a deal IS a deal, just as Belleair's attorney, Lee Atkinson, had argued. The trial judge in the Casselberry case ruled against Florida Power. So did an appeals court. Here in Pinellas, a trial judge ruled in favor of Belleair in early December. Florida Power and Belleair now are scheduled to begin arbitration in February, with a deadline of mid March for setting a price. But Florida Power has filed a notice of appeal, and is trying to delay things. The company's motion will be heard on Jan. 25. "Of course, we will comply with any court order," Gail Simpson, the company's manager of public policy, told me on Friday. But the company is not sure it even has legal authority to keep collecting a franchise fee, as Belleair wants, without an agreement in place. Despite having lost in two trial courts and a district appeals court, Florida Power still hopes to prevail on the original point. The only reason the company put a sale clause in the contract was that state law required it then -- and no longer requires it now. In fairness, it should be admitted that dumping Florida Power might prove to be a really lousy idea. No Florida city has tried it since 1943, according to the company. The nearby city of Dunedin, after toying with the same idea, just signed a new long-term contract with Florida Power. The company warns that Belleair could get stuck not only for the costs of the poles and wires and substations, but for a lot more. There could be a "stranded cost," which means, making Belleair pay its share for all those power plants and other big stuff that Florida Power built in expectation of having a certain number of customers. Or Belleair might get stuck with a bill for Florida Power's "going concern," which kind of means, paying the company for the future business it will be losing. Belleair's position is, hey, it doesn't hurt to work up a price tag, does it? We can't make an intelligent decision without one. That makes sense. If the deal is as bad as Florida Power says it is, then what's the harm of looking? The company probably doesn't want things to get that far mostly because of the risk of stirring up more cities. "The system isn't for sale," Simpson said flatly. "We've never put it up for sale." The trouble is that a bunch of dusty, 30-year-old contracts say that maybe they did. -- You can reach Howard Troxler at (727) 893-8505 or at troxler@sptimes.com.
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