Clearwater to move to next step in dumping Duke, establishing municipal electric utility

Clearwater City Council is moving forward with the next steps in establishing a municipal electric utility, rather than contracting electric service through Duke Energy. 

By a unanimous vote Monday, Mayor Bruce Rector and all four members of City Council voted to seek an appraisal for acquiring Duke Energy assets and a timeline. 

The vote came after a presentation from NewGen, a consulting firm that serves municipal utilities, on a feasibility report it conducted for the city of Clearwater looking at establishing a city-owned electrical utility. ^[1]

Clearwater’s franchise contract with Duke Energy ends Dec. 31. 

In addition to the presentation, which laid out details of how much the city might spend to acquire Duke’s assets as part of a transition and how much ratepayers might save, dozens of speakers showed up to share their thoughts on the matter. 

Split about evenly with detractors, most of those who spoke in favor of Duke remaining the city’s electric provider were Duke employees, many of whom also live in the city. 

The NewGen report estimates that eliminating Duke and establishing a Clearwater Municipal Electric Utility would save ratepayers approximately 7% each year for the first five years, with savings increasing to 18% over the subsequent 25 years. In the first year, that would translate to nearly $18 per month for the average residential customer, and about $115 per month for the average commercial customer. 

In supporting taking the next steps in the process, Council members and the Mayor all noted that it doesn’t mean they are definitely moving forward with creating a municipal utility, and even if they decided to go that route, there would be “off-ramps” to return to an agreement with Duke. 

City Attorney David Margolis also confirmed that, in his legal analysis, the city of Clearwater would still be eligible to receive the 16% franchise fee Duke Energy pays the city under its current contract, clarification meant to assuage concerns that the city could be left without compensation during a transition should they go that route. 

Council member Ryan Cotton, who made the motion to move forward with an appraisal and timeline, responded to some concerns expressed during extensive public comment, including that Duke would be better equipped to maintain equipment and service and, importantly, storm recovery following hurricanes. 

He touted the city’s response last year following hurricanes Helene and Milton, noting Clearwater was one of the first in the region to deal with massive amounts of debris from the storm. He said that work was completed timely thanks to contracts with vendors who provide service.

“We would do similar contracts,” Cotton noted regarding power restoration following storms. And better, he continued, those contractors wouldn’t be bound by policies established to prioritize areas of highest need, as Duke Energy does, because they would work exclusively within city limits. 

Reading from a written statement after public comment, Cotton called the utility issue a “monumental decision” where the city now has “the ability to take control over our own future” by lowering electricity rates and ensuring every dollar of power revenue stays in the city. 

“Over generations, that’s hundreds of millions of dollars,” he said. 

But the issue is far from over. Duke has already said their assets are not for sale, which would require the city of Clearwater to utilize eminent domain, a process that could be lengthy and costly. 

Speakers from Duke spoke extensively, often echoing talking points the company provided to the city^[2] ahead of Monday’s meeting to be included in the record. In it, Duke disputes the NewGen study’s methodology and findings. 

Duke Energy Florida President Melissa Seixas pointed out that NewGen’s study cannot guarantee cost savings or lower rates to customers, adding the study even acknowledges that plan could cost nearly $1 billion, nearly double what NewGen pitched as the most likely cost. ^[3]

The NewGen study values the cost of acquiring Duke property at $572 million, but notes the real cost of Duke’s assets could be 50% lower or 100% higher than its estimate. That means the actual cost could range from $386 million to nearly $1 billion.

Costs could soar even higher, given that the NewGen study assumes an immediate takeover, which Duke reminds would not happen, and a longer process would drive costs higher. 

The Duke letter also claims NewGen used obsolete rate data and assumptions in creating its rate analysis, and that using correct data would have all but eliminated the hypothetical savings to ratepayers. 

NewGen, according to Duke, used rates 9% higher than what the company will actually be charging customers in 2026 to compare rates. 

The NewGen report also uses Boulder, Colorado, as an example. But according to Duke, that might not be the flex they think it is. 

Boulder spent $29 million and a decade trying to municipalize before abandoning the effort, having fallen behind on climate goals while the private utility accelerated renewable energy adoption.^[4]

Duke offered a possible solution, by way of a franchise agreement negotiation related to undergrounding power lines, vegetation management, distribution system reliability and service metrics, and new customer programs boosting affordability, stated priorities in the city’s municipal utility inquiry. 

“Duke Energy is already undergrounding one of the areas shown in the study on Myrtle Avenue between Court and Cleveland and is currently undergrounding lines in seven other areas in the City,” Seixas wrote. “Vegetation management was completed in the City earlier this year with enhanced notification procedures that successfully ensured our customers and the City are well-informed about vegetation management activities in Clearwater and why.”

Duke pledged to welcome “meaningful discussion” and to remain “open to considering a shorter franchise term, such as a 10-year renewal.”

And it was clear Monday night that City Council members are being careful to maintain a positive relationship with Duke. All members thanked the company, including Mike Mannino, who said, “I don’t want this discussion to overshadow any of the relationships that we have with Duke.”