Are LCEC’s rate increases restricted in any way?

Q. Are there limitations on LCEC’s ability to raise prices under the franchise agreement that recently expired? If not, are rate increases restricted in any way? Ms. L. – Cape Coral

A. The simple answer is no, under the expired agreement there are no limitations related to rates. A franchise agreement is simply an agreement between a utility and a governmental body to allow the utility to place facilities in the rights-of-way. Typically, in exchange for this “rental” of space the utility collects a fee from those receiving service from the facilities and remits it to the governmental body (LCEC remits approximately $7 million a year to the City of Cape Coral).

The franchise agreement does not grant the governmental body jurisdiction, or governance, over the utility or its business practices. Governance of investor-owned utilities falls upon the Public Service Commission. Governance of cooperatives (like LCEC) is the responsibility of an elected Board of Trustees (who are also customers of the cooperative).

The mission of LCEC is to provide reliable electricity and quality service at the lowest possible cost. We are a not-for-profit company in business only to serve our members and not to make a profit for investors or to collect funds for other projects unrelated to serving our members. The revenues we generate are used to purchase power, operate the business, maintain the electric system, and improve service to our members.

We have worked hard not to raise electric rates in 9 years. In fact, we have reduced rates five times in the past four years. This is in spite of increases in the cost of materials, equipment, labor, services, and fuel. We have been able to reduce electric rates by finding more efficient ways to work and examining our processes very closely. I’m proud to say that not only have we reduced rates, but service has improved. Our reliability record continues to be impressive and we offer our customers more convenience, energy management tools, and information about their electric usage than ever before, which helps save them even more money.

This question and answer published July 26, 2017. See more questions and answers, and ask your own question. We will publish it on the Questions & Answers page.

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