Sarasota has little choice but to approve a 30-year deal with FPL
Reprinted from the Sarasota Herald Tribune
Last Modified: Friday, October 29, 2010 at 6:42 p.m.
It is clearly in the best interest of Florida Power & Light to lock down a 30-year franchise agreement with Sarasota. But does such a long contract serve the public interest?
That is the question that city commissioners face, and there is no easy answer.
The city’s franchise agreement with electric giant FPL expired earlier this year. FPL now wants another 30-year contract, sweetening the deal with some binding but modest sustainable-energy commitments. City commissioners are scheduled to vote on the matter today.
In our view, a 30-year contract is too long, depriving citizens of leverage to demand improvements if they grow unhappy, 10 or 20 years down the road, with FPL service.
But realistically, FPL won’t budge on the 30-year term, and the city can’t afford to walk away from the deal.
With or without a franchise agreement, FPL is obligated to provide Sarasota with electric service. But the hard fact is, Sarasota depends on FPL for more than electricity. It also counts on the company for money — the $5 million each year the city receives via franchise fees, paid by FPL customers. That revenue, which helps fund local government services and jobs, would disappear — creating a huge budget hole — if a franchise agreement can’t be reached.
Already hit by severe recession and a crash in property values, the city is negotiating from a point of weakness — and FPL knows it.
Boulder, Colo., is in a similar predicament. Its franchise agreement with for-profit Xcel Energy expires at year’s end, and so will the revenue the city gets from it.
This summer, Boulder — desiring a cleaner energy profile — opted against renewing Xcel’s franchise. To make up the lost dollars, Boulder is asking voters this week for permission to start a new tax that would sunset in five years. In essence, the tax is not an increase; it’s just a continuation of what customers already pay in franchise fees. If approved, the proposal would allow Boulder time to thoroughly explore its power options without triggering a budget crisis.
Sarasota could try the same approach. But again, the city is at a disadvantage. Sarasota’s franchise agreement already has expired, and the city has not engaged the public over the possibility of a replacement tax.
Mayor Kelly Kirschner has been investigating the possibility of appending a new tax on water-and-sewer bills, to cover the gap in electric fees if the FPL franchise is not renewed.
The water-sewer route is unwise. A replacement tax, if considered, should be closely tied to electric usage. Either way, a thorough public dialogue followed by a referendum would be advisable.
The quest for cleaner energy is at the heart of the debate. Solar and biomass generation, which would shrink Sarasota’s carbon footprint, won’t grow fast enough if the city stays shackled to FPL, critics say.
We agree that clean energy must become a much larger share of the energy picture. But it’s important to recognize that cost, not FPL, is the primary hurdle on the road to a solar tomorrow.
Renewables involve higher start-up expenses, and the city has not identified how it would cover them. Sarasota has not created a significant funding source to invest in clean energy or conservation. Citizens might be willing to contribute to these initiatives, but that’s by no means clear amid today’s lingering economic malaise.
To be sure, the energy industry is on the cusp of mega-change. Clean-energy research and development, as well as possible climate legislation, could level costs to a great extent. But it is also possible that alternative energy’s momentum could decline in the face of falling prices for natural gas, which may be a more immediately adoptable way to reduce carbon emissions.
Either scenario lacks certainty, and Sarasota is running out of time.
City Manager Robert Bartolotta, who led negotiations to extract some renewable-energy concessions from FPL, recommends that commissioners approve the franchise agreement.
It is the most pragmatic approach, from a government perspective. On its own, the city is not financially positioned to become a renewable-energy leader, though it has the desire.
Approving the franchise agreement should in no way be the end of the story. Action is needed:
The city should lay the groundwork for its own investments in conservation and renewable energy programs, to make the most of its FPL contract.
The state’s utility regulation structure must change to remove hurdles that now discourage opportunity.
Perhaps the most important step is this: Voters should choose lawmakers — at the state and federal levels — who won’t bow to the clout of big utilities or shrink from the hard task of passing climate legislation.