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Cape Coral eyes its own electric utility

‘Municipal Electric Utility’ one of three options

May 29, 2014
By JIM LINETTE ( , Cape Coral Daily Breeze

The city of Cape Coral is exploring options to part ways with LCEC as the city's electrical power utility.

The discussion was brought before a special City Council meeting Wednesday night because the city's 30-year lease agreement with LCEC expires at the end of September 2016. The city, until then, has time to explore three options put forth by City Manager John Szerlag and a small interdepartmental task force formed to evaluate those options.

The first option is to form a Municipal Electric Utility - an MEU - to take over distribution of power, purchased at wholesale rates, from entities that generate the power and transmission of that power to the MEU grid.

The second option is to drop LCEC in favor of a different provider, and the third is to renew the lease agreement with LCEC.

Doug Spencer of Spencer Consulting is being paid a $10,000 fee by the city to assist the six-member task force with its preliminary analysis. In his presentation to council, Spencer noted reasonable rates charged to consumers and MEUs typically are able to provide better service reliability measured in average annual outage time in minutes.

He said the value of a MEU includes better customer service and treatment of developers because the city is only concerned with its residents as opposed to a utility serving several communities. He pointed out sales tax incentives, tax exempt financing, higher customer density per mile of distribution line than larger electric utilities, reduced overhead and access to FEMA funds for storm restoration.

Spencer said drawbacks of a MEU include governance issues (long-term planning and different administrative services), retaining business focus and the complexity of purchasing of wholesale power.

"You can customize your services to the consumers," said Spencer. "Companies serving several communities can not do that, and the Public Service Commission has limited authority over a MEU."

Councilmember Jim Burch immediately made the motion to continue the analysis of the MEU with Derrick Donnell seconding.

"We have a responsibility to get all the facts," said Burch.

"This will be an interesting and educational journey, and I am looking forward to the discussion," said Donnell.

Mayor Marni Sawicki asked Szerlag and Business Manager Michael Ilczyszyn to add two residents to the task force for their input and they agreed.

"This is not the first time the city has delved into municipalization," said Ilczyszyn. "The city did it with the water and sewer utility back in the 1970s."

After council voted 7-1 to continue the process, Ilczyszyn informed council that the next presentation on the task force findings would come in October.

In other business, Szerlag brought a revision of the non-union employee compensation ordinance before council for discussion.

Council in April had directed Szerlag to make revisions he asked for regarding hiring new employees and internal promotions within the set pay ranges without petitioning council every time he saw fit to offer a candidate more than the mid-range of the scale.

Several council members balked at even going forward with the revisions to be introduced at council on June 2 followed by a public hearing on June 16.

"This was just given to me tonight," complained Councilmember Lenny Nesta. "I can't discuss this because I don't know what it says. There are a lot of strike-throughs on here."

Nesta also made a motion to strike the ordinance revision item from the June 2 agenda.

That came before Szerlag and City Attorney Delores Menendez tried to clarify to council that it was only a discussion, but that the language of the revisions could be changed to reflect just the hiring within the salary range, dropping the mid-range restriction, if that was council's pleasure.

Szerlag apologized and assumed responsibility for providing the document to council late. He further noted that just addressing salary range does nothing to rectify his not being allowed to also use the range when promoting from within staff, as was the case with Fire Chief Don Cochran in April.

The original ordinance only allowed Szerlag to offer Cochran an increase in pay up to 10 percent. That meant external candidates could be hired at a higher rate than an employee being promoted.

The discussion by council members were lon on both sides.

Nesta declined to withdraw his motion to remove the item from next Monday's meeting agenda and the motion passed 5-3.



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