Clearwater slashes promotion deals subsidized by gas utility customers

After a review by City Manager Jon Jennings, Clearwater Gas System will downsize a program that gives ratepayer money to charities and businesses in exchange for promotions.

Of 27 municipally owned natural gas utilities in Florida, Clearwater Gas is one of seven that have a sponsorship program. Although it is the fourth-largest such utility, the $2.2 million Clearwater Gas spent on sponsorships since 2015 was more than twice what the other six spent combined, a 2021 investigation by the Tampa Bay Times showed.

The sponsorships are used to promote the natural gas brand and offer access to events for city officials and their guests.

In some cases, gas officials had not kept track of guests invited to sponsored events, like the 225 tickets to the Sugar Sand Festival they handed out in 2019 as part of a $25,000 sponsorship.

The City Council this week approved Jennings’ recommendation to cut the utility’s sponsorships by 34%, leaving $117,940 for 17 organizations for fiscal year 2023. About $66,350 for sponsorships of 17 organizations will be moved to the City Council’s general fund budget. And $51,590 for 22 groups will be eliminated.

Most of the sponsorships eliminated were lunches, dinners and other events that did not provide outward exposure of the brand and were “where we were questioning the value” to the gas system, said interim director Brian Langille.

The sponsorships amount to less than 1% of the system’s revenue, Langille said.

Unlike investor-owned utilities, which are overseen by the Florida Public Service Commission, municipal utilities like Clearwater Gas are regulated by the cities that own them. Sponsorships are more common among investor-owned utilities, but the commission requires theirs be paid from shareholder profits.

Clearwater Gas historically paid for sponsorships from an extra charge to customers used for energy conservation. Last year, then-assistant city manager Micah Maxwell directed the system to pay for sponsorships from base rates instead as part of a push to correct problems like the lack of recording ticket recipients.

Jennings said the cutback was part of his evaluation of the system he’s done since he took over the city administration in November 2021.

Council member Kathleen Beckman said she supports local charities but questioned using ratepayer money for sponsorships when the customers have no say in the matter.

“I think the question is philosophically, ‘Do we put our charitable contributions on the backs of gas company ratepayers?’” Beckman said. “We only have one gas company in the area, it’s not competitive, so those people who subscribe to gas have inflated costs so that we can make charitable donations, and I’m just not sure that’s ethically right.”

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Mayor Frank Hibbard said he had no issue with how the program was operated. Clearwater has fewer corporations that donate to charities than other cities and Clearwater Gas has been able to fill that gap, he said.

The utility returns a dividend each year to the city’s general fund of at least 50% of net income, which averaged to $3.3 million a year between 2015 and 2021. So the $58,000 for sponsorships of 13 organizations moved the city’s general fund is “a shell game,” he said.

He lamented the elimination of $59,340 for 25 groups, like $2,750 for the Chi Chi Rodriguez Youth Foundation and $1,500 for Sepia of Pinellas County. The sponsorship of Morton Plant Mease Hospital was cut to $6,000 to eliminate a dinner attended by city officials.

“I think that’s a lost opportunity to build relationships with the people at the hospital,” Hibbard said. “I’ll be going anyway because I’ll just pay for myself, but that’s one of the most important institutions in this city.”

Although Clearwater Gas’ sponsorships are reduced, the organization will still spend more than any other municipally owned utility in Florida.

The largest recipient will continue to be the for-profit Philadelphia Phillies. The city will pay the team $61,000 for the sponsorship in exchange for tickets to the corporate suite, food and beverage and exposure of the natural gas brand.

(Editor’s note: A previous version of this story indicated the City Council approved the revised sponsorship lists at its Monday work session. The lists were approved at the council meeting on Thursday, Nov. 3, with small changes regarding the organizations affected that are reflected in the story.)