With the current franchise agreement between Duke Energy and the City of
St. Petersburg expiring this week, criticism of the City’s approach has largely come from the Downtown Partnership, an organization that is financially sponsored by Duke Energy and whose Board of Directors includes Duke Energy Florida’s President Melissa Seixas. While folks can draw their own conclusions about those relationships, the concerns raised deserve to be answered.
The franchise agreement simply grants Duke Energy the right to operate in the City’s public rights-of-way. Its expiration does not mean Duke Energy loses the ability to provide electric service or that customers face any interruption in service. Instead, they continue operating under the existing agreement on a month-to-month basis, much like a lease that remains in effect after its term expires.
Likewise, there is no risk that the City will suddenly lose its franchise fee or utility tax revenue. In a 2004 decision, the Florida Supreme Court held that an investor-owned utility cannot avoid paying franchise fees or utility taxes simply because a franchise agreement has expired while it continues using a city’s rights-of-way. As long as Duke Energy continues operating within St. Pete, those obligations remain in place. This is exactly what occurred in Clearwater, where the City’s franchise agreement with Duke Energy expired in 2025 without any disruption to electric service or franchise fee payments while officials continued evaluating their options.
One of the concerns related to Clearwater’s municipalization study is that because the City of Clearwater has already completed this analysis, St. Petersburg does not need to conduct its own study and can simply rely on Clearwater’s findings. This completely ignores the reality that these are very different cities with varying customer bases, territory considerations, municipal goals, and electric infrastructure. A study conducted for Clearwater cannot fully determine the costs, challenges, and potential benefits of municipalization for St. Petersburg.
It is also important to note that Clearwater’s certified appraisal produced more favorable results than its initial study, estimating the total buyout cost, including going concern, at approximately $265 million. The analysis showed the potential for customer savings of up to 15% in the first year. Although Clearwater is currently considering a renewal with Duke Energy, the Mayor and City Council members shared that municipalization was feasible and that the City could successfully operate a public power utility. However, they determined that the timing was not right for Clearwater and used the results of their analysis to negotiate significant concessions from Duke Energy that other cities have not recently received.
With that in mind, the City of St. Petersburg should not rush into another franchise agreement with Duke Energy before fully evaluating all options available to residents. Some have argued that the cost of the study is too high, however, the cost of the study represents only about 1% of the value generated in a single year under the current agreement, or less than 0.04% of the total value over the full term of a franchise agreement. Given the potential long-term financial impact, conducting a thorough analysis is a small investment to ensure the City makes the right decision. As the City completes its study, Duke Energy should explain why its current proposal before the Florida Public Service Commission fails to include meaningful protections for residential customers from the costs associated with serving data centers and other large-load customers.