Dunedin seeks legal help for utility plan

Dunedin is bringing in a legal team to advise commissioners who wish to dump Florida Power and launch a city-owned electric utility.

By DEBORAH O'NEIL

© St. Petersburg Times, published March 22, 2000

DUNEDIN -- The city will seek outside legal expertise to help decide whether to break away from Florida Power and start a city electric utility.

As they do so, city officials say, time is working against them.

"We need to move quickly, but cautiously," said City Attorney John Hubbard.

Dunedin's contract with Florida Power expires in January 2002, but city officials don't think they can gather enough information to decide the matter by then.

Tuesday, three city commissioners who attended a two-hour workshop on the topic authorized City Attorney John Hubbard to assemble a legal team for commission approval. They also agreed to send a delegation to meet with Florida Power officials to clarify how the utility came up with the cost estimates it gave the city.

"Those two things must happen posthaste," said Commissioner John Doglione.

The lawyers will help the city with three major issues:

What happens when the current contract expires?

Will Dunedin have to pay Florida Power "going concern," an amount to compensate the company for the moneymaking potential of the utility's poles and wires the city would purchase?

Will Dunedin have to pay Florida Power a "stranded cost," a fee that would compensate the utility for future lost income?

Those fees -- stranded cost and going concern -- could make or break the deal for Dunedin. The city's Pittsburgh consultant, Strategic Energy Ltd., has said it does not think Dunedin should have to pay either. The stranded cost, the consultant estimated, could be as much as $24.7-million.

Florida Power has said it will seek stranded cost, but has not said how much. The utility estimated it would ask Dunedin for $29.4-million in going-concern costs.

Ultimately, federal officials would decide the question of stranded cost, a process that could take several years. Going concern would likely be decided in state courts, officials said.

Hubbard said he hopes to find a Washington, D.C., law firm that can assist the city with all three questions. He estimated the city will have to spend at least $50,000 for an initial legal analysis.

"We need to get very serious very fast about committing serious funds to this," Hubbard said. "The strongest thing we can bring to the table is to define our legal issues and define our legal steps. Then you're going to know very fast: Can you afford to do this or not?"

The city consultant estimated Dunedin could save $3.5-million a year by purchasing Florida Power's poles and lines and starting a city electric utility, similar to its sewer and water utilities. Florida Power, however, has said the city would have to raise electric rates 12 to 15 percent to make it financially viable. Right now, city officials studying the matter have no clear answers because the cost estimates in the two reports differ in some cases by millions of dollars.

For instance, the consultant estimated the city would spend $2.3-million to $3.1-million annually to operate and maintain the system. Florida Power pegged that annual cost at $7.7-million. The city will try to clarify those numbers in its meeting with Florida Power, said Public Works Director Bob Brotherton.

"We got a lot of input about what sort of questions we should ask Florida Power," Brotherton said after Tuesday's workshop with commissioners and members of several city advisory groups. "We want all the ideas and thoughts from as many people as we can."

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