February 13, 2015
CERTIFIED MAIL
CORNERSTONE BAPTIST CHURCH PO BOX 22 BUSHNELL, FL 33513 To Whom It May Concern: You are a member of a not-for-profit electric cooperative. As a member-owner, you have a vested financial interest in SECO Energy, and conversely, SECO’s guiding principles require that we make decisions that are in your best interests. Therefore, we are obligated to let you know that the City of Bushnell is attempting to acquire additional electric service territory and become your electric provider. To provide a brief history, SECO Energy’s “franchise agreement” with the city expired in 2011. By law, franchise fees are collected from consumers as pass-through fees that are paid to a city for the utility’s use of street rights-of-way for placement of power lines. Despite the expired agreement, our cooperative continues to pass these fees through to the city and has been negotiating in good faith over the last three years to renew the agreement – without success. The sticking point in the negotiations is the city’s continued quest to alter SECO’s “territory agreement” by expanding the city’s electric service territory by taking over land areas within SECO’s service territory (largely) within Bushnell city limits. The city’s first proposition in May 2012 was to acquire 14 land areas within Bushnell city limits – your premise address/account falls within those land areas. SECO did not agree with the proposal. In June 2014, the city proposed the concept buying out all SECO facilities within the city limits – your premise address/account is included. Just a few weeks ago, the city reduced the buyout proposition to only 6 land areas – your premise address is still included. It is SECO’s understanding that Bushnell city leadership has not mentioned their plans to those who would be affected – this is troubling. SECO has asked the city for its financial analysis for expansion - for the entire area, the 14 areas or the 6 areas most recently proposed. The city has yet to provide data. We are disappointed - but not surprised - that the mayor and city manager advised they had not conducted a cost-benefit analysis and that it would be weeks before they had calculations to present. Sound business practices would require doing the analysis before proposing to take on additional debt, costs and responsibilities. During the January 5 city council meeting, SECO presented an expansion analysis using the city’s published budget and taking the entire area buyout into account since that proposition was on the table at the time. The mayor questioned the accuracy of SECO’s calculations. SECO management takes exception to this tactic when the city has no basis to determine if expanding its electric service area is financially viable. It also leads SECO to question how the city has made its decisions to request the buyout of 14 areas, change the request to include all SECO facilities in Bushnell, and to later reduce the request to six areas. If the city continues the quest to acquire SECO facilities in any or all of these areas, there are concerns with all propositions. And it is likely that the disagreement will end up in mediation – which will be costly to both SECO and the City of Bushnell. You may not be aware that Bushnell already has the highest electric rates of any Florida municipal utility. Some city residents pay up to 12 percent more than
CORNERSTONE BAPTIST CHURCH Page 2 February 13, 2015 SECO residential customers pay. Large load consumers could face increases of up to 40 percent. Though the city mentioned “matching” the SECO rate for a time for those SECO members who may be acquired into the city’s electric service, we’re unsure how that concept will go over with the PSC and are pretty sure other city consumers would end up subsidizing the differential. Consider the following expansion consequences if the city were to acquire all SECO facilities: 1. Residential electric rates in the expanded territory will immediately increase by more than 10 percent without delivering improved service. 2. Costs to businesses could increase by as much as 40 percent. This will make it harder for employers to hire new workers, and businesses will pass increased costs to their customers. 3. The City’s taxpayers will immediately lose more than $150,000 per year that SECO and its customers currently pay to the city in franchise fees. 4. If Bushnell buys the SECO system, the debt service and operating costs will put Bushnell’s budget into a first-year deficit of approximately $300,000. And that’s just the first year. 5. Lastly, reliability for SECO members acquired by the city will be questionable due to the cost to the city of extending service to them and because of the city’s limited resources to maintain its electric system. You, our members, are SECO’s priority. We don’t want a fight with the City of Bushnell, but we have an obligation to do the right thing for our members. There is still time for the city to make decisions that are less costly to you and better for Bushnell. Contact your council members to approve the franchise agreement SECO has proposed and to discontinue its expansion quest so that SECO continues to provide reliable, low-cost power to the Bushnell areas it currently serves. You can reach your council members through the City of Bushnell website at http://cityofbushnellfl.com – scroll to the bottom of the page and click “Contact Us.” You can call (352) 793-2591 or you can send a letter to 117 E. Joe P. Strickland, Jr. Avenue, PO Box 115, Bushnell, FL 33513. Or you can attend a city council meeting and speak during the citizen’s forum – they’re held the first Monday of every month on the first floor of city hall. SECO is committed to remaining a viable part of Bushnell and a partner in the community. Sincerely,
Kathryn Gloria Director of Corporate Communications and Energy Services Kathryn.gloria@secoenergy.com 352 569 9565