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Ratepayers would save millions if 'munis' sell out to fpl: study by wgre ethbtn
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Ratepayers would save millions if 'munis' sell out to fpl: study |
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Business,Business News,Business Opportunities
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Florida taxpayers could save hundreds of millions of dollarsannually in utility costs if cities turned over their municipalelectric systems to Florida Power & Light, an independent studyshows. Of the 33 Florida cities that own and operate electric utilities,none have rates lower than FPL and only two are within 10 percentof FPL pricing, according to the analysis compiled by Glenn Heran,a Vero Beach-based CPA and consultant. Heran calculates that residents currently served by municipal powerauthorities would get a net savings of $597.9 million if FPL becamethe service provider. The savings would be generated through acombination of lower rates and new property taxes paid on theformerly exempt utility properties. Dominic Calabro, president and CEO of Florida TaxWatch, said, "Allof our cities and local governments have a fiduciary response toratepayers and taxpayers to find the most economical and properservice level of power generation.
"If they can save a substantial amount, they should look at anyoption that investor-owned utilities have to offer," Calabrorecommended. Unlike investor-owned utilities such as FPL, Florida's "munis" arenot price-regulated by the state Public Service Commission. Thathas given cities the latitude to raise rates and use the extraproceeds to pad budgets of other departments. Cities justify these "transfers," saying their utility revenueshelp to keep property taxes down. Combined, the 33 munis shifted$270 million in electric revenues to their city general funds lastyear, Heran determined.
But such transfers anger ratepayers who live outside the citylimits, and thus receive no benefit from the rake-offs. "Bartow and Wauchula are classic examples of cities who abuseunprotected outside electric customers for the benefit of insidecity residents," Heran says. "As a percentage of electric ratepayer revenue, Bartow and Wauchulatransfer 25 percent and 21 percent [of their utility revenues]respectively," said Heran, who found that most munis only transfer6 percent to 10 percent. By contrast, in 2010, FPL paid only 2.4 percent of its revenues toits shareholders as a dividend.
"These cities are incentivized to increase price-unregulatedelectric rates at the expense of outside city customers," Heranasserted. Of the 22 munis that have electric customers outside their citylimits, five of them have 40 percent or more living beyond themunicipal boundaries: Vero Beach (61 percent), Jacksonville Beach(59 percent), Kissimmee (55 percent) and Key West and Ocala (both40 percent). Debate has raged in Vero Beach, whose electric rates run 30 percenthigher than FPL's rate in surrounding Indian River County. Thatdisparity has stoked cries of "taxation without representation"from county residents on the city power grid.
"These customers have no representation and the PSC has nojurisdiction over them," Heran states. Neither the author nor his family has any financial interest inFPL. Heran owns no FPL stock, nor receives any form of compensationfrom FPL. After a turnover at last year's City Council elections, officialsbegan negotiating to sell Vero's aging riverside power plant toFPL.
A contract for purchase is under consideration. Heran says the rate differential in Vero Beach means "the communityis losing over $21 million per year by not having access toFPL rates." Meanwhile, transfers to the general fund from the electric utilityrun $5.7 million a year. Lakeland, where electric rates are 8 percent higher than FPL's,also would benefit by getting out of the power business, Heranargues. "The community as a whole would be better off by $14 million peryear, with 'outside customers' saving over $22 million," he says. I am an expert from Baby & Childrens Fashion Accessories, usually analyzes all kind of industries situation, such as carte sd wifi , scsi controller card.
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