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Energy Choice Initiative would not benefit GRU customers

OPINION

BY JIM KONISH / NOVEMBER 18, 2019

Florida is a heavily-populated peninsula. There are no significant generators of electricity close enough to our borders to facilitate interstate competition.

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Hence, any Florida deregulation of electricity would be intrastate, i.e., confined within Florida boundaries.  Selling electricity wholesale within Florida is already deregulated; however, such off-site sales are only permitted among Florida utilities, or specially authorized consortiums.

As GRU nonresidential electric rates rise to 300% of the corresponding Florida Power Light (F.P.L.) rates, Darin Cook has rolled out a plan to decimate Florida’s lowest-cost electric generators/transmitters.

His “Energy Choice Initiative” would only be mandatory for investor-owned electric utilities (IOU’s)—not the 32 municipals, their incarnations, or the rural co-ops. Some municipal electric utilities are transmission only—they do not generate. The City of Alachua is an example of a city that buys wholesale and sells retail. Everyone is currently free to self-generate—but cannot sell or transmit off-site.

Mr. Cook recently served as the front man for a well-financed, but now disbanded, business group that was long on cash and devoid of political expertise. In that role, he opined that the purchase of the GRU biomass plant for $750 million dollars would “save” us a lot of money.

Mr. Cook is an energy trader. His firm, Infinite Energy, is similar to Enron except for more ethical business practices. Mr. Cook neither generates nor transmits electricity off-site at all.

The Florida Public Service Commission (PSC) exclusively determines the need for electric generation in Florida for off-site distribution—not Mr. Cook. PSC powers are derived straight from our State of Florida Constitution.

Recognizing that there are no outside-of-the-state sources, a margin of excess capacity for our rapidly growing state is not merely permitted—it is required. This is to accommodate unforeseen circumstances. This cushion gives rise to a free, open, and unregulated wholesale market that functions to suppress retail prices.  GRU regularly buys power for less than it costs GRU to generate it.

Mr. Cook’s assertion that partial retail deregulation aimed only at IOU’s would bring us more “green” energy is good political messaging, but it is simply not true.

More importantly for our own community, should our City Commission “opt in,” who would reimburse us for most of the GRU assets, freshly encumbered by massive debts and secured by revenue bonds? Should these troubled assets be decommissioned and wiped off our GRU books, what about the resultant insolvency? These “stranded” investments stand in the shadow of a mountain of secured debt. What about our lords and masters—GRU bondholders—aided and abetted by Mr. Cook and his allies?

Realistically, GRU would never opt in. It has high-cost “renewable” generation. Electing deregulation would, by itself, trigger immediate City of Gainesville bankruptcy. Thus, our beleaguered GRU ratepayers would not benefit at all—only Mr. Cook’s firm would benefit. Our only and most likely saviors, the IOU electric utilities, would be mired in chaos.  

Mr. Cook mentions franchise fees. Franchise fees can only be applied prospectively, by negotiation. Allowing occupancy without a franchise gives the utility squatters rights forever.

For non-GRU utilities, and in the unincorporated areas of Alachua County, franchise fees are foreclosed on the basis of a 1999 Supreme Court decision striking down an Alachua County “privilege fee.” 

Since Alachua County, to this day, has never bothered to require a franchise agreement in order to place utility infrastructure in its rights-of-way, utilities, including GRU, are squatting out there, paying nothing, and are subject to little or no regulation. 

GRU dumps raw sewage around the clock in Alachua County rights-of-way with complete impunity.

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