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Clearwater reverses decision to sell its natural gas utility

City Manager Jon Jennings said he will change how the system spends ratepayer money.
Clearwater Gas System’s headquarters, on Wednesday, Oct. 13, 2021, at 777 Maple Street in downtown Clearwater.
Clearwater Gas System’s headquarters, on Wednesday, Oct. 13, 2021, at 777 Maple Street in downtown Clearwater. [ DOUGLAS R. CLIFFORD | Times ]
Published Jun. 3

CLEARWATER — Less than three weeks after agreeing to put its natural gas utility up for sale, the City Council on Thursday decided to abandon the effort and keep Clearwater Gas System under its control.

Mayor Frank Hibbard said he would support a sale only if the city could get a reasonable price and if the council could invest the proceeds into an annuity fund that would spinoff close to the average $3 million dividend the gas system pays the city annually.

A preliminary valuation completed by Raymond James in March projected the city could get about $115 million for the utility that serves 30,000 customers in Pinellas, Pasco and Hillsborough counties.

But City Attorney David Margolis confirmed state law restricts local governments from investing surplus funds in perpetuity.

“Regardless of suitors that we have, I won’t support it because I don’t think we can sequester that money and be responsible for it over a long period of time,” Hibbard said.

Council members also pointed to the anxiety this exercise caused for the roughly 90 Clearwater Gas System employees, who would have likely been displaced by a sale. Council member David Allbritton added that, as a municipally-owned utility, the city has better control over customers’ rates than the private utility that would have been the most probable buyer.

Although the idea to sell the utility is dead, significant changes are still in store.

City Manager Jon Jennings said he wants to change the way Clearwater Gas System has used ratepayer money to pay for sponsorships of nonprofits and businesses. In an analysis published in October, the Tampa Bay Times found Clearwater Gas is the fourth-largest of the 27 municipally owned gas utilities in Florida but spends the most by far on sponsorships.

RELATED: Clearwater Gas paid millions for sponsorships, far outspending its peers

Since 2015, Clearwater Gas has contributed more than $2.3 million of ratepayer money to nonprofits and businesses, with those organizations providing tickets to events, meals and exposure of the gas brand in exchange. City officials also shared those tickets with handpicked guests, but the utility historically did not keep track of all guests who attended, the Times analysis found.

While some sponsorships will continue to be paid for by Clearwater Gas, Jennings said he will be eliminating much of the spending and transferring some expenditures to the city’s general fund in the upcoming 2023 budget.

“There’s been this feeling of ‘let gas pay for it,’ and honestly that’s not fair,” Jennings said in an interview.

Council member Kathleen Beckman supported the shift in the sponsorship program and raised a conflict she sees with the council receiving perks while overseeing the utility.

“This is not only a matter of public trust, but the money associated with these gifts should instead be returned to employees, ratepayers and residents,” Beckman said.

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Hibbard took issue with her describing the use of the sponsorship program as “gifts” because tickets or dinners for nonprofit events are part of packages Clearwater Gas System pays for.

“I think that is a far different thing from perks and gifts and I want to make that publicly known,” Hibbard said.

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