OCTOBER 2012 - VOL. 28 NO.

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South Daytona residents to vote in November on whether to create a municipal utility

by Jeannine Anderson, APPA Public Power Daily, August 27, 2012

The South Daytona City Council on August 20 approved a resolution calling for a special city election to be held on November 6 to determine whether the Florida city is authorized to create a municipal electric utility. South Daytona has been thinking about unplugging its investor-owned utility, Florida Power and Light Co., for the last couple of years. The city's long-term franchise agreement with FPL, which ended in 2008, included language that gave the city the option to buy the local distribution system at "the existing cost of replacement" of the system, minus depreciation on that equipment up to the date of the sale.
(Related article below.)

When city officials were negotiating a new franchise with FPL, they asked to keep that provision, but the utility refused. City leaders then began to investigate the option of forming a municipal utility and buying the distribution system from the private utility. Last summer, the South Daytona City Council voted to create a municipal utility and buy FPL's wires, poles and substations for $15.5 million -a price established by a court earlier that year. Since then, the city and FPL have agreed on a lower price of $12.1 million, according to city officials. Meanwhile, an organization called Take Back Our Power, which has received financial backing from FPL, gathered signatures on a petition drive that called for residents to vote on an amendment to the city charter. The amendment, which was approved by South Daytona residents on August

14, requires a referendum to be held before the city can form a municipal electric utility, officials said. FPL spent more than $140,000 to put the charter amendment on the August ballot, South Daytona officials said. South Daytona Mayor George Locke has described the decision over whether the city should form a municipal utility as "likely the most critical decision we will ever face as a community." "The future of 12,200 South Daytona residents rests on a 60-year-old, one-time opportunity that we will never see again," Locke said. "We must not throw it away." Forming a public power utility is "a good business decision that will benefit every resident" and keep millions of dollars of revenue within the city, instead of sending it out of the city, the mayor said.

Judge: Referendum for South Daytona-FPL purchase question

by Ray Weiss, The Daytona Beach News Journal Staff Writer, August 25, 2012

A circuit judge has thrown out a challenge to the city's August 14 charter-amendment referendum that ultimately might decide the fate of South Daytona buying Florida Power & Light's electrical distribution system. Circuit Judge William Parsons ruled late Tuesday the language on the ballot was not misleading or unclear, a claim made in court by Empowering South Daytona's Future, a political action committee that supports buying the system from FPL, currently at a price of $12.1 million. So barring any unforeseen circumstances, the referendum is headed to the voters.

"The judge didn't find substance in the complaint," City Manager Joe Yarbrough said Wednesday. "As far as I'm concerned, I don't see why the City Council would want to file an appeal for a complaint it didn't file." The city actually found itself in a paradox, having to defend a referendum it initially opposed. But earlier in the year, the City Council voted to put the issue on the ballot, and Yarbrough said he anticipates no change in that position. Pat Mozden, chairwoman of the PAC that filed the case, said the ruling was disappointing. "We were trying to make a case that the fine points of the text were not accurate, and if residents were going to vote on it, it should be," she said. "The judge felt maybe it wasn't as

precise as we'd like, but not enough to throw it out." Finalized city ballots must be sent to the Volusia County Supervisor of Elections office no later than June 8. The successful referendum petition drive was spearheaded by Take Back Our Power, a PAC that opposes South Daytona buying FPL's system. "I think it was a reasonable ruling. He found the language was unambiguous," said Ray Lawrence, chairman of the committee. "The referendum is on as scheduled, the last I heard."
(Continued on page 2.)

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Engaging the Electric Grid - From Information to Intelligence

Guest Post by Peter Kelly-Detwiler, August 22, 2012

In the very near future, the North American power grid will be populated by a bewildering array of distributed energy resources ranging from building-integrated solar photovoltaics and micro-cogen to intelligent control systems and mesh network lighting. The game is about to change for electric utilities and whether you like it or not - for the customers they serve too. The question is when, not whether. It may take two years or two decades, but the conventional consumer will soon go the way of the passenger train. The future of Americas electric grid belongs to a new breed of energy customer that is half consumer and half producer. Meet the prosumer. There are three core capabilities that will transform todays electric consumer into tomorrows prosumer. Those capabilities are the following: (1) access to real-time energy usage information; (2) access to

real-time market information, including energy costs and spot power prices; and, (3) the ability to respond to changing price signals. To optimize the economics of these disparate elements, the customer must turn information into intelligence. Actionable knowledge is the sine qua non of the prosumer revolution. Markets work most efficiently when actors have perfect information. Knowledge of both prices and quantities consumed allow for elasticities (short and long-term price responses) to kick in and result in supply/ demand equilibrium. That is, the optimal amounts of goods are both produced and consumed. We buy more stuff when its cheap. We buy less - or substitute - when things are expensive. We do it countless times every day and it generally works as a good way to allocate resources and effort. But to make rational consumption choices, we need to know how much we are buying and what it costs - in real time. The U.S. consumed over 3.8 billion kWh in 2011, costing well over $300 bn. And yet for the majority of that electricity, the consumer knew neither the price nor the value at the time it was consumed. Imagine filling up at the gas station with a pump that showed neither price nor quantity, but the gas station sent you a bill five weeks later. How would you know what that long trip was costing you? But thats how we generally buy electricity. When the consumer does not know how much and at what price, there is no ability to establish any meaningful short-term or longer-term price response. The only other item we buy in such quantities with such poor real-time pricing information is health care. Need I say more? It is difficult enough with health care, but at least health care pricing is not hyper variable. By contrast, electricity prices are by far the most volatile prices on the planet. In a market such as Texas, the average energy price in 2011 was 5.3 cents per kWh, but hourly prices can currently increase by a factor of 80 to a capped price of $4.50 per kilowatt-hour

(these caps may go to as much as twice that in 2013). Other markets are less volatile, but can still increase by a factor of 10 or 20x. Such prices reflect scarcity on the supply side during periods of peak demand, and are meant to bring about a reduction in consumption while stimulating more investment in generation. But if the consumer doesnt know about those high prices or what his real time total costs are (or opportunities - he may want to sell back into the grid), whats the point? Without this knowledge, the customer doesnt have a true picture as to the economic value of the investments he is considering. The solution to this dilemma is to make real-time (and day-ahead) pricing and meter data information available to the customer at all times. In order to optimize the investment, the key is to start making this information available to the biggest and/or most elastic customers (some larger customers have done this years ago, on an ad hoc basis, but most have not) and work your way down the food chain. Start where volatilities and avoided costs are highest. The smart grid effort will help, as many more customers now have hourly meters than they did a few years ago. What they dont have is real time access to this usage information or to prices, and associated energy platforms that integrate this knowledge to make optimized decisions. This needs to change, and until this happens, the smart grid is still pretty stupid.

South Daytona cont.

Alvin Davis, FPL's lead attorney in the fight over South Daytona's electrical system, added: "That case is now over, at least at the trial level. So the proposed amendment will presumably appear on the November 6 ballot in its present form." Meanwhile, FPL and South Daytona's attorneys continue to move closer on finalizing a sales agreement with Circuit Judge William Parsons, who set the sale price at $15.5 million in May 2011. The amount was subsequently lowed last month by an estimated $3.5 million in an agreement between the city and FPL, which requested retaining a substation and distribution lines across the Halifax River. South Daytona and FPL have been in conflict for more than six years. City leaders refused to sign a 30-year franchise renewal agreement in 2008 that would have eliminated what was considered the best buyout option in the state.

Public Power Week to be celebrated October 7-13

This year will mark Public Power Week's 26th anniversary as a country-wide program to celebrate the importance of public power to local citizens and other key publics, including state and national officials. Public Power Week is a national, annual event sponsored in conjunction with the American Public Power Association (APPA) in Washington, D.C. APPA is the service organization for community- and state-owned electric utilities.

TRANSMISSION is prepared for members of the State Legislature by the Oklahoma Municipal Power Authority (OMPA), 2701 W I-35 Frontage Road, Edmond, Oklahoma 73013. Copies have not been printed, but are available through the OMPA website. OMPA is a wholesale power supplier to 39 municipal electric systems, who operate the agency to provide wholesale electricity for their distribution. OMPA was established by the Oklahoma Legislature on June 2, 1981. The Authority is a member of the Municipal Electric Systems of Oklahoma (MESO), American Public Power Association (APPA), and Southwestern Power Resources Association (SPRA). Bruce Ackerman, Editor. OMPA MEMBER CITIES: Altus, Blackwell, Comanche, Copan, Duncan, Edmond, Eldorado, Fairview, Frederick, Geary, Goltry, Granite, Hominy, Kingfisher, Laverne, Lexington, Mangum, Manitou, Marlow, Newkirk, Okeene, Olustee, Orlando, Pawhuska, Perry, Ponca City, Pond Creek, Prague, Purcell, Ryan, Spiro, Tecumseh, Tonkawa, Walters, Watonga, Waynoka, Wetumka, Wynnewood, Yale