Gulf Coast Electric Cooperative (GCEC), based in Wewahitchka, Florida, successfully won a territorial dispute with an investor-owned electric utility (IOU) in 2019 and recently received a Cooperative System Integrity Fund grant to help cover costs of the defense of its service territory.

“Without the gracious support of CFC and the Integrity Fund Committee, GCEC would not have been able to fund the enforcement of our territorial agreement,” GCEC CEO and General Manager John Bartley said. The cooperative serves more than 20,000 members and 2,500 miles of line in the Florida panhandle.

In December 2017, GCEC received a request to serve a sewage lift station in Bay County. The cooperative reviewed the customer load requirements, proximity to existing facilities of both utilities, capabilities of the existing facilities and the cost to provide the requested service. As a courtesy, GCEC alerted the IOU the following month regarding the request to serve the lift station.

Unbeknownst to GCEC, the IOU had received a similar request regarding service to the lift station in October 2017, and prior to calculating its cost of service, was already racing to extend its electrical distribution facilities to serve the station.

GCEC Filed a Complaint to Protect Its Service Territory

“We filed the complaint to resist and block an attempt by the utility to connect the lift station due to their action to quietly expedite the connection of the lift station that was in GCEC’s distribution territory,” Bartley said. “Our action was not only important to protect our own service territory, but to set a precedent that the cooperative intends to abide by the territorial agreement.”

GCEC and the utility entered into a territorial agreement in 2000 to prevent uneconomic duplication of facilities and services based on the cost of service for each of the utilities. The agreement was approved by the Florida Public Service Commission (PSC) in 2002 with enforceable procedures for how the two utilities are to respond to requests for service.

The IOU requested a motion for summary final order; however, GCEC opposed the request because a summary final order was premature due to the number of unresolved issues.

“The utility did not provide us with sufficient notice of the service request nor did it provide us with any of the vitally relevant information we needed to assess whether its service would be cost effective,” Bartley added.

Initial Ruling Did Not Deter GCEC

Over an 11-month period, the Florida PSC held several hearings and then voted in favor of the IOU serving the lift station. However, in April 2019, a PSC order was issued to vacate the previous commission vote, approve a settlement agreement and make revisions to the territorial agreement between the two utilities to more clearly define the terms of how and what is to be communicated when new service requests are made.

“Electric cooperative staff need to stay aware of what is happening in their territory, know their legal rights and abide by the law,” Bartley concluded.

Since its creation in 1986, the Integrity Fund—administered by CFC with decisions made by a five-member committee composed of CFC, NRECA and Rural Electric Statewide Managers Association representatives—has awarded more than $29 million in grants to 290 cooperatives in 43 states to fight takeover and annexation bids by investor-owned utilities and municipal electric systems; preserve rights to offer non-electric energy services; and resist regulatory, judicial or legislative actions that threaten the cooperative business model. Cooperatives do not have to contribute to the fund to request assistance.

“Integrity Fund grants are funded exclusively by the rural electric network, for the rural electric network,” CFC Senior Vice President of Corporate Relations Brad Captain, a member of the Integrity Fund Committee, said.

For questions about the Integrity Fund, contact Captain at brad.captain@nrucfc.coop or Donna Goff at donna.goff@nrucfc.coop.