By Frank Bumb
(Dec. 20, 2016) — Cape Coral and the Lee County Electric Cooperative want to talk about talking some more.
On Thursday, Cape Coral City Manager John Szerlag and LCEC CEO Dennie Hamilton will sit down to discuss a possible framework to restart the stalled franchise agreement negotiations between Florida’s 10th largest city and its electric utility provider.
This time, however, they’ll be joined by two members of the Council For Progress. The Council For Progress takes members of the business community and works toward economic growth and improvements to the city of Cape Coral through local partnerships. Joe Mazurkiewicz, a former mayor, is the current executive director of the group.
“At our meeting on the 9th, the Council For Progress did vote to offer its services on to both LCEC and the city and assist to negotiate on the franchise agreement and a path forward,” Mazurkiewicz said.
Mazurkiewicz said the plan was to have two representatives from Council For Progress, LCEC and the city conduct negotiations. But that effort would be contingent on successful discussions in Thursday’s meeting.
“Thursday is an initial meeting,” Cape Coral Spokeswoman Connie Barron said. “The city’s always been willing to negotiate.”
Cape Coral, LCEC: New Round of Talks
LCEC Spokeswoman Karen Ryan said LCEC is hopeful that this new round of talks will lead to a franchise agreement, something that more than two years of talks and an outside negotiator for the city were unable to produce.
But Ryan reiterated LCEC’s position on what is likely to be the biggest roadblock to any negotiations: the city’s petition to the Florida Public Service Commission. The petition was filed in March and, among other things, requested the service commission force LCEC to turn over information regarding its cost of service inside Cape Coral.
That petition was put on hold in June at the request of LCEC and agreed to by the city’s negotiator, Stuart Diamond to allow negotiations to continue. But five months of negotiations between Diamond and LCEC failed to produce any significant progress in the city’s eyes. The city then reactivated its petition to the PSC in November and LCEC broke off negotiations.
Is the petition necessary?
LCEC has repeatedly said it will not negotiate with the city while having to litigate and respond to the petition at the PSC. The city, however, insists its petition is necessary to get cost of service and other information that LCEC has said it can’t or won’t provide.
If the city and LCEC manage to agree to a framework to restart talks, the latest round would look to reach an agreement that the city and LCEC itself failed to accomplish. Diamond wrote a bestseller on negotiations and has served as a negotiating adviser to governments, multinational corporations and to the military.
Diamond said he could count on one hand the number of times in his hundreds of negotiations where he had failed to produce an agreement. In one instance, Diamond managed to convince Bolivian farmers growing cocaine to switch to bananas but in five months could not break the deadlock between the city and Cape Coral on a franchise agreement.
Ryan said she and LCEC had enormous respect for Diamond and that LCEC’s leadership felt they were making progress before the reactivation of the PSC petition. But she added Diamond’s relationship to the city may have provided bias or the appearance of bias from Diamond.
“He still had a client, he was still looking out for the best interests of the city,” Ryan said. “Even if he wasn’t, there was a perception.”
Ryan said that the Council for Progress’ “nonpartisan” nature may allow them to see things in a new light.
“Both sides are so close to these negotiations, they might be able say this is fair or not or propose things that we maybe haven’t thought of,” Ryan said. “It’s getting someone else in the room that could help.”
What is being negotiated?
The current franchise agreement between the city of Cape Coral and LCEC is expired on Sept. 30. A franchise agreement allows a utility provider access to a municipality, county or other government’s right-of-way. In return, some franchise agreements include a franchise fee. The franchise fee for the city of Cape Coral brings in about $6 million annually.
The city feels it potentially subsidizes the rest of LCEC’s more rural service area and should get more benefits for it and its customers pay. The city also wants changes to LCEC’s policies on equity retention and when it pays back equity to its members and transparency from LCEC during any new franchise agreement.
The city also wants some sort of mechanism to prevent large rate increases from LCEC. LCEC countered that it keeps its rates low, has lowered rates numerous times in the recent past.
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