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Belleair learns price for utility

A mediation panel says the city must pay Progress Energy $8.5-million to take over the electric system and run it on its own.

BELLEAIR - It could cost the town of Belleair $8.5-million to buy out Progress Energy to run its own power system.

It's a price tag the city's mayor appears willing to pay.

Progress Energy serves 32 counties in Florida and has about 1.5-million customers statewide.

But Mayor George Mariani said his town is willing to buck the massive utility to make a considerable profit and provide reliable service to the people of Belleair.

"My only motivation is what's best for Belleair," Mariani said.

And Progress Energy, which earns about $8-billion in annual revenues, thinks the pint-size Belleair is a worthwhile investment, too, "or they wouldn't be fighting so hard to keep it," Mariani said.

On Tuesday, a court-ordered arbitration panel ruled that the city's cost of buying Progress Energy's poles and wires with which to operate its own utility would be $8.5-million. The decision followed a three-year battle between the town and Progress Energy, a North Carolina-based utility whose Florida operations are run out of St. Petersburg.

Mariani also said buying the system would give the city a chance to beautify itself by burying unsightly power lines.

But the utility isn't going without a fight.

Over the past several months, Progress Energy representatives have met with residents to warn them about the drawbacks of running their own system, said Michael Lewis, regional vice president for Progress Energy.

Municipal-owned utilities generally have higher rates, poor reliability and less response during storms, he said.

Barry Moline, who runs the Florida Municipal Electric Association, a group that supports city-owned power businesses in the state, said higher rates in several cities that run their own power system are the result of traditionally low property tax rates, not expensive systems.

Moline also said it takes Progress Energy twice as long as most utilities to restore power to customers after outages.

Belleair took the utility to court in August 2000 to enforce terms of a contract both sides signed in 1971. Belleair officials argued that the contract gave the town an option to buy the electrical plant and facilities located in the town when the contract expired in December 2001.

Belleair won. Progress Energy appealed and in September 2002 an appeals court upheld the December decision.

Belleair, a town of about 4,100, is one of a few Florida cities that had the moxie to stand up to Progress Energy.

Mariani said his town's unique qualities make it a formidable contender.

The city, which spans 2 square miles, is small enough to handle its own utility system, he said. The town is made up of a lot of retired and working professionals who are savvy enough not to be scared by Progress Energy's tactics, he said.

"They understand enterprises such as this and are not intimated by (Progress Enery)," Mariani said.

Other Florida cities have recently tried to tackle the utility giant, but few have been successful.

There are 32 municipal utilities in Florida, but no city in Florida has formed a public owned utility since Key West did so in 1943, Aaron Perlut, spokesman for Progress Energy said.

Winter Park, Casselberry, Longwood and Dunedin also explored ways to buy out the utility within city boundaries and provide their own electricity to residents.

Casselberry and Longwood recently decided to renew 30-year contracts with the company. And two years ago, Dunedin signed a contract for 10 years.

Winter Park is still fighting Progress Energy. Residents will vote on a referendum Tuesday on whether the city should purchase the electric distribution system from Progress Energy.

The next step for Belleair will be to come up with a business plan to determine the risks and benefits of the venture, Mariani said.

"If it seems to be a viable plan, we will then present it to the town," he said.

Mariani said the city hasn't ironed out the details, but there will either be public hearings or a referendum.