About the LCEC Franchise Agreement
The 30-year franchise agreement between LCEC and the City of Cape Coral expires in October 2016. Understandably, City leaders are conducting their due diligence to explore all options available to them. This includes the potential for a City purchase of LCEC’s utility system within the City limits and creation of a municipal electric utility (MEU) that the City’s consultants have estimated would cost approximately $425 million. 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.
While City leaders have stated publicly that they do not wish to take over the electric system, it is an option that is 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.
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.