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2	Agenda Project Goal Why Consider Municipalization Concerns of Municipalization Recommendations Council Action
3	Project Goal To identify the potential benefit to municipalization of electric service on Marco Island
4	AGENDA Project Goal Why Consider Municipalization Concerns of Municipalization Recommendations Council Action
5	WHY CONSIDER MUNICIPALIZATION? The need to try and reduce the costs of electricity to the residences, businesses and City of Marco Island The urgent need to develop alternative revenue sources that are not dependent on property taxes
6	WHY CONSIDER MUNICIPALIZATION? The need to try and reduce the costs of electricity to the residences, businesses and City of Marco Island 31% cost increase over past 4 years Does not include franchise fee $38 million per year from Marco Island 20% of Utility operating cost
7	WHY CONSIDER MUNICIPALIZATION? The need to try and reduce the costs of electricity to the residences, businesses and City of Marco Island 6 % rate increase in July 2008 4/12/08 to 5/13/08 electric use - 2,268 kWh Electric cost - $ 246.96 As of July 2008 - $ 261.53 36.34% increase since 2004
8	WHY CONSIDER MUNICIPALIZATION? The need to try and reduce the costs of electricity to the residences, businesses and City of Marco Island Marco subsidizes the rest of LCEC operations LCEC revenue per sq. mile - $ 148,000 Marco Island revenue sq. per mile - $1,700,000 Municipal owned electric system have lower rates FPL is 6.4 % lower then LCEC
9	WHY CONSIDER MUNICIPALIZATION? The need to try and reduce the costs of electricity to the residences, businesses and City of Marco Island LCEC spent $250 million in past 3 years expanding their system (Ave Maria) Limited expenditure on Marco Island Raised rates to meet growth demand
10	WHY CONSIDER MUNICIPALIZATION? Availability of million of dollars per year to be added to General Fund 33 Florida municipalities own electric system “Profits” used pay for police, parks, etc Obtain competitive electric generation Synergy with current Utility operations
11	WHY CONSIDER MUNICIPALIZATION? Municipalization could result in significant reductions in the cost of undergrounding Avoid high LCEC operating overhead Avoid sales tax Avoid inventory fees Avoid transfer of ownership of new lines
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13	WHY CONSIDER MUNICIPALIZATION? The urgent need to develop alternative revenue sources that are not dependent on property taxes State legislative action Reduced taxes Portability of Homestead credits Further cuts in property taxes Appraised property value FY09 – 10% reduction
14	Developing an Electric Utility Purchase the distribution system Contract out wholesale power supply Contract out distribution services City performs customer service City sets Utility’s operating policies City sets RATES
15	AGENDA Project Goal Why Consider Municipalization Concerns of Municipalization Recommendations Council Action
16	Concerns of Municipalization Public support Public referendum Rates COLA plus 3% for 5 years for operations Actual cost of power supply
17	Concerns of Municipalization Hurricane Response Use same contractors LCEC uses/FPL Mutual aid by Municipal Electric Association Lengthy purchase process LCEC does not want to sell Condemnation and eminent domain
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20	NO EASY SOLUTION Do nothing Municipalization of electrical system Long term arrangement with LCEC
21	AGENDA Project Goal Why Consider Municipalization Concerns of Municipalization Recommendations Council Action
22	Recommendations Council direct staff to contract with an expert consultant to complete an analysis of the Municipalization option and have the electric franchise fee pay for this service Prepare a 20 year financial pro forma Estimate purchase price Evaluate bulk power supply
23	Recommendations Public Works creates an Electric System Municipalization ad-hoc Advisory Committee to help staff with this issue Open invitation to join the working committee Financial background Electric Utility background Business background Lay citizens
24	Recommendations Staff work with LCEC to provide the benefits of municipalization without actually having to take over the system
25	Recommendations Staff report back to Council within six-nine months of the municipalization study findings and work with LCEC.
26	AGENDA Project Goal Why Consider Municipalization Concerns of Municipalization Recommendations Council Action
27	Council Action Authorize the selection of an expert consultant in Electric Utility Municipalization and have the electric franchise fee pay for this service Approve Public Works creating an Electric System Municipalization ad-hoc Advisory Committee to help staff with this study and long term arrangements with LCEC Direct staff to report back to Council within nine months of the study findings.
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