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Thanks - and no thanks

September 28, 2018
Cape Coral Daily Breeze

After more than 2-1/2 years of on-again, off-again negotiations, the city of Cape Coral and its electric services provider, LCEC, have reached a new franchise agreement that will take the city through the next 20-30 years.

We thank the Cape Coral City Council for taking control and tapping one of its own to lead another round of talks, bringing this issue to resolution.

We thank Mayor Joe Coviello for agreeing to take up the task.

We thank Council for Progress Chair Brian Rist and Executive Director Joe Mazurkiewicz for bringing an agreement to the cusp.

And we thank LCEC's Executive Vice President and CEO Dennie Hamilton and board of directors for their patience through the process.

The absence of the city's administration from the "thank you" list is not an oversight.

We say this for a number of reasons - more than a million of them, in fact. That is the stunning amount of money that has been expended on legal expenses alone, paid by both sides for what is typically a routine process between governments and their various utilities providers.

Since the city administration bungled and bullied its way through this multi-year debacle without a basic acceptance of what a franchise is, let us reiterate one more time what a franchise agreement does: It grants a utility the right to use public rights-of-way for infrastructure such as lines, wires, poles and conduits.

In exchange, the utility collects a tax - excuse us, a "franchise" fee - from the utility's ratepayers and remits that tax to the government that dictates its rate.

A franchise agreement is not a service agreement that approves rates or defines service areas. That authority belongs to the state.

A franchise agreement is not a quasi joint-operating arrangement that allows a government to dictate aspects of the utility's operations - nor should it be.

Imagine the disarray to rates and infrastructure investment if it were up to innumerable cities, towns, districts and counties to negotiate separate rates and special upgrades. It boggles the mind but not, perhaps, as much as the city administration's compassless path that ultimately led to a more-or-less standard contract with a handful of new provisions related to city-desired auditing and new technologies as well as the ability to double or more the existing 3 percent franchise fee/tax a decade in.

Steps along the administration's meander centered primarily around a core finding: That LCEC customers within the city are overcharged because they "subsidize" ratepayers in less populated areas of the co-op's service area and that the city could provide or obtain services cheaper. Lots cheaper, which is why the city demanded LCEC set up a special rate structure within the Cape.

The city failed to establish the former and failed to accomplish the latter.

This despite:

- An allegations-fraught "exploration" of a municipal purchase of LCEC assets within the city, an option provided in the franchise agreement that expired in 2016.

- A city-submitted complaint filed, put on hold, and then withdrawn with the state Public Services Commission.

- A behind-the-scenes buy/flip sale attempt to FPL if the city were to purchase LCEC's assets in the Cape. FPL, which bulk-sells electricity to the co-op, wasn't interested.

City Manager John Szerlag and his team do not deserve thanks.

Not for this one.

Cape Coral's taxpayers and ratepayers, though, deserve a full accounting of a debacle that resulted in approximately $1.18 million in legal fees - $577,634 incurred by the city and another $600,000-plus incurred by LCEC.

Rate and taxpayers are the ones who have funded this fiasco, the collective cost of which is actually higher - much higher - than those legal expenses show. Neither side tracked hours upon hours of staff time although the city administration tracks, to the penny, how much it costs to provide public safety services for a public event or how much it costs to provide city services to the Cape's municipal charter school system.

Let us be clear: City taxpayers and ratepayers - most of whom are both - not only deserve an accounting, they are owed - yes, owed - one.

In the private sector, such a waste of time and money would result in a full investigation and, in all likelihood, terminations or a resignation at the top.

The board of directors would demand it.

We ask our public sector equivalent to follow a similar course.

We urge Council to demand a detailed explanation, not to find a scapegoat, not necessarily to find "blame."

But to give those who footed the bill at least an accounting for their money so as to provide an assurance that such a run-amuck process will not be allowed in the future.

- Breeze editorial



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