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Electric franchise agreements: What are they?

(July 7, 2016) — We wrote recently in this LCEC blog about electric franchise agreements and what they are designed to accomplish.

There is often confusion between a franchise agreement and what are known as service territory agreements. Misperceptions sometimes surface when franchise agreements are up for review.

A common misperception in any electric franchise discussion is that electric franchise agreements grant a utility company the authority to serve a specific community or area. On the flip side, this may lead to the idea that a community can switch to another utility when the agreement expires. That is not the case. Service territories are predetermined and utilities have an obligation to serve the area they are assigned.

gavel and sounder electric franchise agreementsAs confirmed in a recent Florida Supreme Court decision, only the Florida Public Service Commission has authority to approve and assign territorial agreements, which require utility companies such as LCEC to provide service to customers within a specific geographic region.

The Court decision involves the Vero Beach municipal utility and Indian River County, which sought to sever ties with the Vero Beach utility once its electric franchise agreement expires in 2017.

The Court ruled that only the FPSC has jurisdiction to approve service territories, and that the City had a right and obligation to serve customers in their assigned territory even after the franchise agreement expires.

The City of Cape Coral is reviewing two options: a renewed electric franchise agreement with LCEC that grants LCEC a right to use public rights of way for utility equipment and infrastructure, or the creation of a new municipal electric utility. Only LCEC or a newly formed municipal utility would have the authority under Florida law to serve Cape Coral customers.

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