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Small town franchise rebellions confront Florida Power

Central Florida's well known for its hot weather, hot beaches and even hot theme parks. Now add hotbed of unrest in the electricity business.

The rebels include a half dozen or so small cities and towns from Orlando west to the Tampa Bay area. These cities' 30-year contracts have expired with area utility giant Florida Power Corp., the provider of electricity to their citizens.

Now each city is debating whether to drop Florida Power in favor of running its own municipal power service. You've probably heard of most of these places, even if you're not quite sure where they are. Casselberry. Longwood, Winter Park. Apopka. Edgewood. They are all near Orlando. Last but not least: tiny, upscale Belleair, just south of Clearwater, whose multiyear battle with Florida Power may be decided by the state's Supreme Court.

It's David vs. Goliath on several fronts. Florida Power, whose service territory stretches across Central Florida north to Tallahassee, is one of more than 200 private power companies that supply 75 percent of the nation's electricity needs. In contrast, public power systems, such as the Orlando Utilities Commission or Jacksonville Electric Authority, handle 15 percent of U.S. electricity demands. The remaining 10 percent is handled by mostly rural electric cooperatives.

Why must these few Florida cities go against tradition? Why make a fuss when renewing a 30-year deal sounds so easy?

Some towns blame lousy service and high electric rates. For others, a lack of reliability. Many don't like Florida Power's decision to offer a contract renewal that lacks the traditional option for a city to buy out the utility's service in its area, power poles and all. In effect, that makes a buyout a now-or-never proposition.

Others don't appreciate what they say are Florida Power's scare tactics and, in the recent Nov. 5 election, aggressive financial backing of local candidates who saw things the utility's way.

For all these cities, the idea of keeping more local control of their power systems is gaining ground. Madalyn Cafruny, spokeswoman for the American Public Power Association in Washington, a national trade group for municipal power providers, credits California's power blackouts of 2000, the industry's manipulation of electricity prices and the shenanigans at Enron for opening the eyes of local governments.

All that publicity helped educate folks about the arcane world of electricity and how it is delivered, she says. Now cities realize they have options other than signing on Florida Power's dotted line.

"Hundreds of communities have contacted us to explore the idea of establishing their own power systems," Cafruny says. "That tells you what people are interested in right now."

At Florida Power, which has 104 current franchise agreements with area cities, saber rattling by a handful of small municipalities is just that: much ado about little.

The St. Petersburg-based power company, now a subsidiary of North Carolina's Progress Energy Corp., has signed or renewed 45 franchise agreements with such places as Clearwater, Treasure Island and Safety Harbor over the past six years.

Even rebellious Dunedin in north Pinellas County, which a few years ago teamed up with Belleair to explore creating a municipal electric utility, tossed in the towel. It signed a new contract with Florida Power at the end of 2001.

Of the 32 municipal electricity systems in the Sunshine State, Florida Power's residential rates currently are lower than 26 of them.

Can a town go it alone as an electricity provider? "It's a very risky proposition by a city on behalf of its citizens," Florida Power spokesman Aaron Perlut warns.

He's right. A city's decision to leave the power womb of a big utility is no picnic. A small municipal power system that serves relatively few customers may find it difficult to offer competitive rates.

Nor should it come as a surprise that more cities are making threats to leave Florida Power. It's all part of local politics and the tough bargaining process.

Perlut can be forgiven if Florida Power is not too worried about a mass municipal defection. After all, the last Florida city to dump a major electric utility and start a municipal system of its own was Key West in the 1940s.

Since then, it's been all talk and no action.

In Casselberry, the town of 25,000 never would have opposed Florida Power if the utility had kept a buyout option for the city in its renewal agreement. Now the dispute has left major legal bills for the city and the utility and pointed criticisms of each other in the local news media.

So far, Casselberry has prevailed in court. Last month, court-appointed arbitrators ruled that Casselberry would have to pay $22.3-million to buy out Florida Power's operations in the city. The city had pegged a buyout price of only $13.5-million, but Florida Power argued its operations were worth far more: $45-million.

In a recent column published in the Orlando Sentinel, Florida Power CEO Bill Habermeyer defended his utility's campaign to renew the Casselberry franchise and warned a city takeover could lead to unstable rates, less reliability and maybe even slower response by the utility to storm damage. In turn, Casselberry Mayor Bruce Pronovost said Habermeyer and "his spin meisters" were waging a campaign of misinformation.

In the Nov. 5 elections, supporters of public power won four of five contested local government races in Casselberry and nearby Longwood. Florida Power lobbied aggressively ("Using every underhanded trick in the book," the Orlando Sentinel editorialized) against a takeover of its system with letters to the town residents and heavy campaign contributions.

In Winter Park, with its dense canopy of trees, Florida Power acknowledges its electric system suffers from reliability problems.

Then there is Belleair. After the town balked at renewing a franchise agreement, Florida Power quit collecting from customers the franchise fees that are normally handed over to the cities. That meant the loss to Belleair of tens of thousands of dollars. After multiple court battles, an arbitration panel will meet in June to come up with a compromise price Belleair would pay to buy out Florida Power's local electric system.

Belleair Mayor George Mariani Jr. says Florida Power has pitched itself as "kinder and gentler" since it was acquired by Progress Energy. But after years of butting heads, Mariani is skeptical at best about restarting negotiations.

Still, there are modest signs of compromise.

Rather than push only 30-year franchise contracts, Florida Power is starting to offer 10-year deals with cities. And in what Florida Power considers a major accommodation, it recently revived a buyout clause in a new 30-year franchise contract with the small town of Oviedo, northeast of Orlando.

If all this squabbling seems messy, well, it is. But it's a good thing to see cities pushing back at Florida Power's aging role as King of the Power Mountain. And it's encouraging to see Florida Power try and bend a little.

"It's hard to negotiate with someone who is trying to conduct a hostile takeover of your business," utility spokesman Perlut says.

Hard, yes. Impossible, no. And it could just result in better power deals for many Floridians.

_ Robert Trigaux can be reached at trigauxsptimes.com or (727) 893-8405.

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