About the LCEC Franchise Agreement
The 30-year franchise agreement between LCEC and the City of Cape Coral – a contract that sets terms for the utility’s use of municipal rights-of-way – expired in October 2016. City leaders conducted due diligence to explore all options available to them including the potential for a City purchase of LCEC’s utility system within the City limits and creation of a municipal electric utility (MEU). That “purchase option” no longer exists, and while negotiation for a new franchise agreement began in earnest in early 2017, LCEC and the City reached an impasse at the end of 2017. LCEC strongly believes that a renewed franchise agreement, assuring continued electric service from LCEC, is in the best interest of the City and our customers. In the meantime, LCEC continues to provide electric service without a franchise agreement.
While City leaders have stated publicly that they do not wish to take over the electric system, it was an option that was being thoroughly explored by the City’s staff and consultants. LCEC has shared its concerns about the risks involved in the formation of an MEU. The sale of an electric utility is a complex and very costly endeavor and would require the City to take on nearly half a billion dollars in new debt. This is especially true now that the former franchise agreement and option to purchase have expired. The only avenue left for the City to purchase LCEC assets is via an expensive condemnation process.
As a not-for-profit electric cooperative, LCEC is not motivated by profit but instead by service to customers. Margins are returned to members, who are our customers. For-profit, investor-owned utilities must earn a return for their shareholders; utilities operated by municipalities utilize earnings in general funds to potentially be spent on other projects and programs.