Duke Energy Florida has warned St. Petersburg that its expired franchise agreement has raised questions about $24.2 million in city revenue, Duke’s access to public rights-of-way and protections against certain legal claims involving the utility’s operations.
The agreement expired July 31 as the city moved forward with a study of whether to buy Duke’s local distribution system and form a municipal utility. One week later, Duke Associate General Counsel Matthew Bernier sent a three-page letter to Mayor Ken Welch urging the city to negotiate a new franchise agreement. Duke said no talks were scheduled as of Friday.
Clearwater kept its expired franchise terms in place while it conducted a similar review, then approved a new 30-year agreement in July. St. Petersburg allowed its agreement to expire without an extension, leaving several provisions that governed Duke’s operations and payments to the city unresolved.
Electric service will continue. Welch’s recommended fiscal 2027 budget, however, counts on $24.2 million in franchise fees, according to figures provided with the letter. Duke collects the 6% charge from customers inside St. Petersburg and sends the money to the city, where it flows into the general fund that pays for police, fire protection and other city operations.
Duke now questions whether it has the authority to continue collecting and remitting that money without an agreement. Duke cited a Florida Public Service Commission rule limiting collection of a municipal franchise fee to customers served within that municipality. The letter did not explain how that rule resolves Duke’s authority to collect the fee after the agreement expired.
“If the City intends to continue imposing a franchise fee in the absence of a franchise agreement, we respectfully request formal notification identifying the legal authority supporting such collection and remittance,” Bernier wrote.
The city’s recommended budget also projects about $32 million in utility-tax revenue, bringing the two revenue sources to more than $56 million. Duke’s letter, however, specifically challenges the legal basis for collecting the franchise fee. It does not say the expiration prevents the city from imposing its separately authorized utility tax. The city’s fiscal 2027 budget remains under review. St. Petersburg has scheduled public hearings for Sept. 3 and Sept. 17, with the new fiscal year beginning Oct. 1.
The old agreement also allowed Duke to place, maintain and repair electrical infrastructure in city-owned rights-of-way while establishing procedures for construction and permitting. Without that framework, Duke said the rules governing work on power lines and other equipment have become uncertain, although the company did not identify any delayed repairs or projects.
The same contract required Duke to protect the city against certain claims tied to its equipment and operations on public property. Those provisions could apply when a person alleges injury, property damage or another loss involving utility infrastructure in a public right-of-way. Duke said it remains unclear whether the city retains comparable protection now that the agreement has expired.
City officials did not respond before publication to questions about whether St. Petersburg would direct Duke to continue collecting the franchise fee, why the agreement expired without an extension or whether the city disputes Duke’s interpretation.
The contract lapse comes as St. Petersburg evaluates whether to acquire Duke’s electric distribution system and form a municipal utility. Duke distinguished St. Petersburg’s situation from Winter Park’s acquisition of its electric system, which led to a case before the Florida Supreme Court.
The Winter Park agreement contained a purchase option and a process for valuing the system. St. Petersburg’s expired agreement contains no purchase option, acquisition procedure or valuation formula, Duke said, leaving the city without a purchase process established by the contract.
Duke also said any municipal takeover would move through Florida Public Service Commission proceedings because the state regulator controls electric service territories. The company predicted the effort would require years of regulatory review, litigation and valuation work, although the letter did not include a legal analysis or estimated acquisition cost.
The ownership study now runs alongside the unresolved franchise agreement. Duke said it would consider investments, partnerships or other commitments through a separate memorandum of understanding, but it wants the city to renew the franchise agreement first.
“Duke Energy Florida believes it would be prudent for the parties to begin discussions regarding a new franchise agreement as soon as practicable,” Bernier wrote.