Weather | Sports | Forums | Comics | Classifieds | Calendar | Movies
Seminole wanted less than the standard 30 years so it could have options in a changing market.
By MAUREEN BYRNE
© St. Petersburg Times, published January 14, 2001
SEMINOLE -- City officials and Florida Power have approved a 10-year franchise for Seminole, marking the first time the power company has agreed to a contract for less than 30 years.
Six of the City Council members approved the contract Tuesday. Bob Matthews, an employee of Florida Power, abstained from the vote.
"It's a real change in policy," Nancy Loehr, Florida Power regional manager, said of the shortened agreement.
The new franchise does not provide for an "option to purchase." That means during the next 10 years Seminole will not be allowed to buy Florida Power's poles and wires or operate its own electric system. But the city does have the option to break away in 10 years, said City Manager Frank Edmunds.
"I think it's fair to the city," Edmunds said. "It also recognizes the needs of the company, but more importantly, it's fair to the city."
Seminole is one of eight Pinellas cities whose franchises with Florida Power expire this year. The seven other municipalities are Belleair, Belleair Bluffs, Redington Beach, Treasure Island, St. Pete Beach, South Pasadena and Gulfport.
Agreeing to shorter contracts represents a new direction for the power company, which merged with Raleigh-based Carolina Power and Light. In November, CP&L closed its $5.3-billion acquisition of Florida Progress Corp., the parent company of Florida Power.
During negotiations, Edmunds told Loehr that the city wanted a shorter agreement so it could have options in a changing electric utility market. If the industry is deregulated, for example, the city wants the option to buy power elsewhere.
A 10-year franchise for Florida Power might be the right deal for Seminole, but it doesn't sound like a good plan for Dunedin, said Bob Brotherton, the city's director of public works and utilities. The city is exploring the idea of starting its own electric utility. Its franchise with Florida Power expires next Jan. 1.
"We're looking at what makes the most economic sense," Brotherton said. "Certainly, 10 years is better than 30. However, I'm still not sure a 10-year agreement is in the best interest for the city of Dunedin."
Brotherton cited the elimination of the right-to-buy option and the potential loss of savings for residents during the 10-year period as reasons to discount such a contract for Dunedin.
Dunedin can buy Florida Power's poles and wires under its current contract, Brotherton said. The city would save $4-million a year by forming its own electric utility, he said a study conducted by Strategic Energy Ltd. shows.
"We still have a lot of analysis to do," said Dunedin City Manager John Lawrence. "It's all in the numbers."
In November, a court ruling from the Orlando suburb of Casselberry found that the city has an absolute right to buy all of Florida Power's lines and equipment in the city. Florida Power officials said the ruling wouldn't affect a legal challenge from Belleair, which has sued for the right to buy the company's system.
Florida Power has said that the company's system is not for sale and that the buyout options were invalidated by the state Legislature in the 1970s.
"We are still talking to (Belleair) and we're hoping to resolve our issues there," Loehr said.
Edmunds said the removal of the buyout option does not prevent the city from purchasing Florida Power's poles and lines when the contract expires in 2011. Without such a clause, though, "it makes it a bit more difficult," he said.
Yet Edmunds said he's not sure buying Florida Power's system and operating and maintaining a city-run utility would be in Seminole's best interests.
"I felt there were other terms in the contract that were more important to us and those are the ones we focused on," he said.
- Staff writer Maureen Byrne can be reached at (727) 445-4163 or at byrne@sptimes.com.