- Aug 13
- 4 min read
St. Petersburg is entering uncharted territory as its 30-year franchise agreement with Duke Energy Florida has officially expired, triggering a high-stakes standoff between city leadership and the utility giant.
Duke, in an Aug. 7 letter addressed to Mayor Ken Welch, warned that the expiration leaves millions in franchise fees, critical legal protections, and future local investments in jeopardy. City Councilmember Richie Floyd is dismissing the missive as little more than a political play.
The agreement, which ended on July 31, governed everything from the use of public rights-of-way to liability allocation and allowed St. Petersburg to collect approximately $23.5 million in franchise fees. Duke also pays the city nearly $29 million in annual utility taxes.
Duke’s letter claims that “no negotiations are currently scheduled,” and “believes it is in the best interests of both parties to renew the franchise agreement.”
Welch’s office disputed the conglomerate’s sense of urgency and uncertainty in a statement to Power Broker Magazine. “The franchise agreement remains in place, and there will not be an interruption in service,” said Samanth Bequer, public information officer.
The administration is “simultaneously moving forward with the city council’s requested municipal electric utility feasibility study,” she added.
According to the letter, the decision to consider acquiring Duke’s electric distribution system “raises important questions” regarding the future of a relationship that, when including the utility’s predecessors, has lasted for over a century. The company's headquarters are in St. Petersburg.
Floyd, a vocal proponent of exploring a municipal utility, voted in favor of the feasibility study in June. He believes there are now “political reasons” for Duke’s letter.
Welch is campaigning for a second term. The utility publicly aired its concerns three weeks before the primary election.
Floyd pointed to other municipalities as evidence. “Clearwater just went without an agreement for a while - there was no problem there,” he said. “The City of Pensacola went years without an agreement, and there was no problem there.”
“So, why are they doing this to us?” Floyd continued. “This letter really feels like a political play to me.”
Concerns
Duke noted that the expired agreement included indemnification clauses that protected it against property damage and personal injury claims arising from power infrastructure within public rights-of-way. Those legal protections are now “unclear.”
“Also, long-term infrastructure planning and resiliency investments are best supported by stable governance structures and clear expectations regarding future system ownership and operation,” wrote the company, which also touted its reliability, storm-hardening, and grid modernization efforts.
Duke’s foundation has distributed over $8 million throughout Pinellas County since 2020, according to a website highlighting its commitment to the area. The company also supports several local organizations, including the Woodson African American Museum of Florida, the St. Petersburg Chamber of Commerce, the St. Petersburg Innovation District, the NAACP’s St. Petersburg chapter, and St. Pete Pride.
The publicly traded utility “remains interested in exploring opportunities that support St. Petersburg’s economic development, resiliency objectives, and broader community priorities. However, the letter adds that those discussions “are most productive when they’re built upon a clear and stable long-term relationship.”
Duke wrote that the most immediate issue is uncertainty regarding franchise fees. The company collects the 6% charge - approximately $2 million monthly - from customers and transfers it to the city.
The letter cited a Florida administrative rule prohibiting utilities from collecting franchise fees from non-customers. Floyd said Duke’s warnings don’t hold water.
“The way this works was settled by the Florida Supreme Court in 2004,” he said, referencing a landmark ruling against Duke’s predecessor. “When the contract expires, we continue as though everything's the same until a new agreement is reached.”
Duke also seemingly refutes its own argument. The letter concludes with a pledge to “continue serving customers in the city with the same focus on safety, reliability, and responsiveness.”
A draft MOU
In June, Power Broker Magazine obtained a draft memorandum of understanding (MOU) that outlines a broad strategy for future collaboration with Duke. The eight-page document covers community alignment, affordability, resilience, sustainability, and guiding principles.
A separate, draft 10-year franchise agreement includes a buyout clause. Ana Gibbs, director of corporate communications for Duke, noted the utility had not agreed to the city’s terms.
Duke’s letter states that an MOU could include “additional initiatives, partnerships, or other commitments intended to create value for customers and the community” - all aspects of the city’s draft version.
The accompanying draft franchise agreement, however, would allow officials to request a valuation and condition assessment of Duke’s electric system after nine years. They would analyze the results to validate cost estimates, and then have the right to purchase utility assets within the city.
Duke - now referencing a potential purchase, not fee collections - is “evaluating the distinction between circumstances here and the Supreme Court ruling” that allowed Winter Park to create a municipal utility. That agreement contained acquisition provisions.
In June, Gibbs said the city’s “decision to conduct a feasibility study pauses negotiations.” Floyd vehemently defended the initiative and expense.
“It would be absurd and irresponsible for us to sign a new agreement for something so important without having done our due diligence and looked into the issue,” Floyd said. “We can have discussions, but we can't finalize anything without the data that we've requested.
“I know that they’ve had negotiations, and I expect them to continue. It’s going to be up to the council, and the council’s the one who approved the study in the first place.”