City Utility May Offer Lower Electric Rates, Commissioners Told
Area Cities With Own Utilities Pay Save Significantly
Last updated 9/11/2022 at 5:06pm
A significant lowering of electric rates for Lake Wales could result if city commissioners decide to create their own municipal utility, according to a local attorney,
Rudy Engholm presented a comparative study of local rates at this week’s meeting, explaining that Duke Energy rates paid by Lake Wales residents “are about 10% higher than Bartow rates, and about 25% higher than St. Cloud rates.”
Wauchula is also among the more than 30 cities that operate their own electric utilities. In each case the cities purchase the power at wholesale rates and sell them on to customers, billing much as they do for water services
Engholm, who has a background in computer engineering, presented the concept of initiating a local utility, suggesting that it could lower rates locally. The change could save Lake Wales residents thousands of dollars in electricity costs, amounting to millions of dollars over time.
The commission is set to consider a new 30-year franchise agreement with Duke Energy, allowing them unlimited use of city rights-of-way.
“This arrangement is quite valuable to Duke,” Engholm pointed out, urging the commissioners to consider a one-year extension of the current contract so that consideration may be given to the idea.
“We live in a very different world than we did in 1992,” Engholm said, referring to the last time the contract was renewed. That agreement expires on November 17, 2022.
Commissioners seemed to agree with his assessment. Commissioner Howell urged that the issue be given serious consideration.
Deputy Mayor Robin Gibson admitted that he knows nothing about the franchise agreement but would be “looking very closely” at any proposed contract and hoping to see “as much flexibility as possible” for the city. “I don’t want to see us locked into anything we’re going to be sorry for,” he added.
Civil engineer Ben Wiles of Lake Wales called the issue “a huge public policy decision that affects everyone,” adding that the city “should consider the full range of options.”
An online search revealed that, in addition to creating more local jobs, a municipal utility in Lake Wales would be able to produce its own power using solar panels, a solution which other cities have employed. Lakeland, which also has its own generating capacity, pays the lowest rates in the region.
An electric utility could both lower rates and create a greater profit for the city “instead of for bondholders,” Wiles told LakeWalesNews.net.
City Manager James Slaton told the commission that he has been in negotiation with Duke over the extension through the city’s utilities attorney, Tom Cloud of the Gray Robinson firm, but have not finalized the matter.
Slaton assured the commission that if no agreement is reached by the November expiration date, Duke Energy would remain responsible for paying the franchise fee of $1.6 million to the city, “since they’d still be using our rights-of-way.”
Engholm warned the commissioner that if the franchise agreement is simply extended for 30 years it would tie the city’s hands. “If a developer wanted to construct a neighborhood with its own small microgrid to supply solar power (as some neighborhoods have done in other cities), the Franchise Agreement could give Duke…a veto power over such projects,” he said,
Engholm has served as vice-president of a successful software company, has extensive experience with multi-customer residential solar projects and has been admitted to practice law in several states.