St. Petersburg’s franchise agreement with Duke Energy expired a week ago, leaving roughly $2 million in monthly city revenue and other legal protections in question as officials simultaneously explore creating a publicly owned electric utility.
In an Aug. 7 letter to Mayor Ken Welch obtained by the Catalyst, Duke said the agreement expired July 31 with no negotiations currently scheduled. The company urged St. Petersburg to begin negotiating a new franchise “as soon as practicable.”
Councilmember Copley Gerdes said today that he had not yet discussed Duke’s letter with city attorneys, “but it’s $2 million a month in revenue to the city that’s at stake. We need to be prudent on how we move forward,” Gerdes said. He plans to speak with the city’s legal team later today.
The immediate financial issue (a $2 million per month loss) stems from a 6% franchise fee Duke collects from customers in exchange for using public rights-of-way. The Catalyst reported shortly before the agreement expired that those payments generated about $23 million annually for St. Petersburg. Duke recoups the money from its customers.
Duke’s letter questions what happens to that arrangement without a franchise agreement.
The utility cited a Florida administrative rule stating that when a municipality charges a franchise fee, a utility may collect it only from customers receiving service within that municipality. Duke said its authority to continue collecting and remitting the fee without an agreement is now “uncertain.”
The company asked St. Petersburg to formally identify the legal authority supporting continued collection and remittance if the city intends to keep imposing the fee.
The expired agreement also governed Duke’s use of city rights-of-way, permitting, construction coordination and liability. Duke said provisions requiring the company to indemnify the city against certain claims involving its infrastructure are no longer clearly in place. Those could include claims pertaining to property damage, personal injuries and traffic incidents.
“I don’t have an answer to that, that would be a questions for legal,” Gerdes said when asked whether the city could pursue an interim agreement addressing those issues while determining a longer-term path.
Meanwhile, the city is spending up to $590,000 to determine whether it should ultimately sever its longstanding relationship with Duke.
NewGen Strategies and Solutions, which conducted a similar analysis for Clearwater, is examining whether St. Petersburg could acquire Duke’s local infrastructure and operate a publicly owned utility. Councilmembers Gerdes, Gina Driscoll and Mike Harting voted against funding the study.
Gerdes has consistently questioned comparisons to Winter Park, which established a municipal electric utility in 2005.
“Winter Park is different, geographically, population-wise,” Gerdes said. “We are connected to other municipalities, Gulfport, et cetera, their energy runs through us. All of those things make this way more complicated that this seems.”
There is another significant difference: Winter Park’s agreement contained a mechanism for purchasing the utility’s infrastructure. St. Petersburg’s does not.
Duke highlighted that distinction in its letter, stating that the expired agreement contains no purchase option, acquisition mechanism or contractual method for determining the value of its assets.
The company also noted that the Florida Public Service Commission retains jurisdiction over areas including electric service territories and said municipalization would likely entail years of regulatory proceedings, litigation and asset valuation.
Gerdes previously told the Catalyst that acquiring Duke’s St. Petersburg system could approach $2 billion if costs were extrapolated from a Duke-commissioned analysis of Clearwater. He estimated debt service at that price could add roughly $80 to each customer’s monthly bill.
Clearwater nevertheless continued exploring municipalization.
NewGen’s study there projected that a municipal utility could initially save an average customer $17.70 monthly, although Duke disputed several of the firm’s assumptions and argued that acquisition costs and a prolonged eminent-domain fight could eliminate those savings.
Clearwater ultimately opted to remain with Duke, approving a renewed franchise relationship and a memorandum of understanding that included additional city investments.
St. Petersburg began its process much later. A council committee first requested a feasibility study in July 2025. Welch agreed to move forward following a full council vote the following month, but the administration did not issue a request for proposals until February 2026. Council selected NewGen in June, less than two months before the Duke agreement expired.
Gerdes stressed that the decision originated with council rather than Welch, whom he has publicly endorsed for reelection: “It was a city council prerogative, and Welch let city council make the decision,” Gerdes noted.
Municipalization, however, is not the city’s only opportunity to seek concessions from Duke. Other options include a shorter franchise agreement. Rather than another 30-year commitment, the city could negotiate a 10-year term while retaining the ability to reconsider its options sooner.
Welch said in August 2025 that he had discussed such an extension with Duke. He argued that a decade would preserve reliable electric service while giving St. Petersburg time to determine whether municipalization is financially feasible and, if so, accumulate the substantial capital necessary to acquire and operate a system.
Gerdes also sees an opportunity to address affordability through negotiations: “We could create an account for lower-income people if they are behind in their power bill. Things that show that Duke is trying to be a good partner to the city.”
Gerdes hopes future negotiations can capture some benefits sought by municipalization advocates without requiring St. Petersburg to assume the financial and operational risks of running an electric utility.
He is also considering phasing out the franchise fee. Because Duke passes that cost along to customers, eliminating or reducing it could lower bills. Doing so would also force the city to contend with the loss of roughly $2 million in monthly revenue.
“We need to show we understand this, too,” Gerdes said. “We understand we have to make it affordable for residents, and we have to help Duke in that pursuit.”
Duke’s letter indicates the company is willing to discuss more than a franchise agreement, stating that negotiations could include a memorandum of understanding containing “additional initiatives, partnerships, or other commitments” benefiting customers and the community. However, those discussions would be more productive after establishing a stable, long-term franchise relationship.
Also in limbo are the many assets in St. Pete that Duke helps subsidize, such as the city-owned Duke Energy Center for the Arts – Mahaffey Theater, the downtown performing arts venue that serves as a home stage for The Florida Orchestra and hosts educational programming.
Historically, when the Mahaffey had less profitable months, Duke footed the bill. The exact monetary value of those subsidies could not be independently established by the Catalyst prior to publication, but is estimated in the hundreds of thousands annually, so any impact the stalled franchise negotiations could have on that relationship remains unclear, but there will be an impact, especially as the city, during a lapse in Mahaffey management, struggles to finalize a new public-private partnership to take over the theater’s reins.
One thing that is not in question is whether Duke will continue providing electricity. Spokesperson Ana Gibbs said, before the July 31 expiration, that service would continue if the franchise agreement lapsed. Duke reiterated that commitment in Friday’s letter.
“While we await the City’s decision regarding the future of the franchise relationship, we will continue serving customers in the city with the same focus on safety, reliability, and responsiveness,” Duke wrote.