News Summary
Clearwater, Florida, is exploring the option of establishing its own municipal utility, with costs estimated between $1.13 billion and $1.52 billion. A recent Duke Energy analysis highlights the potential financial impacts, including the loss of property tax revenue from Duke. City officials are conducting a nine-month feasibility study, while the community remains concerned about high electric bills and service responsiveness. Next steps will depend on the forthcoming study results and necessary data from Duke Energy.
Clearwater’s Prospective Municipal Utility Faces Over $1 Billion Cost, Duke Energy Reports
Clearwater, Florida, is considering the establishment of its own municipal utility, a decision that could come at a staggering cost of over $1 billion according to a recent analysis by Duke Energy Florida. The study was conducted by the consultancy firm Concentric Energy Advisors and released earlier this week. Clearwater city officials have allocated $500,000 to evaluate the feasibility of this venture through a nine-month study that was unanimously approved by city leaders.
The current contract between Clearwater and Duke Energy is set to expire on December 31, 2024, prompting city officials to explore the potential benefits of a municipal utility, such as lower rates and enhanced service responsiveness. The analysis concluded that if Clearwater were to move forward with establishing its own utility by 2029, startup costs could range from $1.13 billion to $1.25 billion. This figure could escalate significantly, potentially reaching between $1.38 billion and $1.52 billion by 2034.
Considerations for Cost and Implementation
The report assessed various costs tied to the transition, including startup and transaction expenses, compensation for Duke Energy’s power plant investments, and the replacement of key infrastructure such as substations and underwater cables. Additionally, Clearwater would need to hire new operational and administrative staff to manage the proposed utility.
Clearwater’s municipal boundaries and the presence of unincorporated areas add complexity to the establishment of a new utility. The Concentric report did not account for potential costs associated with stranded assets, storm damage, debt refinancing, and necessary capital improvements. This omission raises questions about the total financial implications of creating a municipal utility.
Impact on Property Taxes and Service Areas
If Clearwater were to establish its municipal utility, the city would lose the revenue generated from property taxes currently collected from Duke Energy. Duke Energy services approximately 70,000 customers in Clearwater, while neighboring St. Petersburg, which also relies on Duke Energy, has around 161,000 customers. This customer distribution is expected to play a significant role in determining the feasibility and cost management of a potential municipal utility.
The forthcoming feasibility study is essential, as it aims to address long-standing concerns among residents regarding high electric bills, the maintenance of the urban tree canopy, the burial of power lines, and ensuring efficient right-of-way maintenance. The results are anticipated within the next 90 days, provided that Clearwater receives the necessary data from Duke Energy to proceed.
Duke Energy’s Position
In response to the feasibility study, Duke Energy’s representatives have conveyed that the financial assessment conducted was “well below” the budget allocated by Clearwater. They emphasized that the costs incurred from the report will not be transferred to local customers. Duke’s President underscored the company’s commitment to customer service, pointing to their coordinated response to over two million power outages during recent hurricanes.
Broader Context in St. Petersburg
The topic of municipal utility has also captured the attention of St. Petersburg City Council members, with discussions underway as their contract with Duke Energy is set to end in 2026. The St. Petersburg feasibility study will focus on similar issues, with an eye towards evaluating both costs and the potential benefits of changing power providers.
Many municipal utilities in Florida operate at lower rates compared to investor-owned utilities, making the prospect of a municipal utility appealing for Clearwater residents. As discussions and evaluations continue, Clearwater city officials are committed to thoroughly assessing the viability and impact of a transition toward municipal power.
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Additional Resources
- Fox 13 News: Duke Energy Claims Would Cost $1 Billion for Clearwater
- St. Pete Catalyst: Duke City Owned Utility Cost Analysis
- MSN: Duke Energy Says Clearwater Would Have to Pay Over $1B
- Wikipedia: Municipal Utility
- Google Search: Clearwater Municipal Utility
