profiles in partnership Powering Through Industry Flux Progress Energy Florida, Inc. and Carlton Fields, P.A. By Scott M. Gawlicki A merica’s electric power industry has literally been turned inside out over the last decade. In many parts of the country, competition is now the watchword. Access to electric transmission is open, making it easier for sellers and end users to deal directly with one another. Nobody knows that better than Alex Glenn, deputy general counsel for Progress Energy Service Company, a subsidiary of Raleigh, N.C.-based Progress Energy, Inc. “I came here in 1996 and there have been Photography by Jay Carlson changes impacting our operations virtually every year since,” Glenn says. “In the 1990s, Florida considered and then rejected a plan to deregulate its electricity markets. In 2000, Florida Power merged with Carolina Power & Light to form Progress Energy. And now, to keep up with Florida’s population growth, we’re facing major transmission and power plant construction projects.” Pictured from left are Sylvia H. Walbolt and Gary L. Sasso, Carlton Fields, P.A., and Alex Glenn, Progress Energy Service Company As a result, Progress Energy Florida, Inc.’s near-50-year legal partnership with outside counsel Carlton Fields, P .A. has changed began in the early 1960s, the regulatory Bureau, Florida’s population grew by nearly as well. landscape was pretty stable. But it’s changed 25 percent in the 1990s, and continues to dramatically in the last 10 years. Every matter rise by better than 2 percent annually. That “I’m no longer on the front lines, but it’s we work on involves some type of legislative, growth, combined with changing federal interesting how different the issues are today regulatory or technological change.” and state laws, has altered the way the compared to when I represented Florida utility serves its customers. Power in 1965,” says Sylvia H. Walbolt, Rapid Growth Brings who chairs Carlton Fields’ board of directors. For example, although Florida rejected Big Changes “Back then our defense in most cases deregulation, its electric utilities are still Progress Energy is a Fortune 250 diversified involved Public Services Commission bound by relatively new federal regulations energy company with more than 24,000 regulations, which were designed to protect that allow large customers to use their megawatts of generation capacity and the utility. Now, with regulatory change wires to import power from alternative $9 billion in annual revenues. Progress and environmental concerns, the business suppliers—usually other in-state investor- Energy Service Company’s legal department has evolved to a whole new level.” owned or municipal utilities. provides legal services to Progress Energy, “The partnership has grown in parallel with Inc., and its subsidiaries—including That, in turn, has affected the 30-year the complexity of the industry,” adds Gary Progress Energy Florida, Inc. “franchise” agreements Progress Energy has L. Sasso, a Carlton Fields shareholder and with 110 Florida municipalities. Some of The country’s fourth most populous state, the firm’s relationship partner who will the agreements, which cover the rights-of- Florida continues to grow by leaps and become president and CEO of the firm in way Progress Energy needs to operate the bounds. According to the U.S. Census February 2006. “When the relationship local electrical distribution system, included 04 www.martindale.com
major departments in the company , including accounting, operations and regulatory affairs.” “We actually did a full inventory of all the assets in the city ,” Walls adds. “We had to go out and count poles, electrical lines and substations, and place a value on the property under the substations. The arbitration award accounted for every aspect of value Progress Energy said should be included in the award. But it was a fully litigated proceeding.” Fighting to Build Another somewhat similar issue is being driven by state legislation. With the state’s communities continuing to grow, acquiring land either voluntarily or through eminent domain in order to site new transmission Alex Glenn, Progress Energy lines has become increasingly difficult. Nancy G. Linnan, Service Company Carlton Fields, P.A. For example, in 1985, Florida implemented its Growth Management Act, which requires “To build the case, they “How do you site linear all local governments to plan for the impacts of development, including land use siting. In had to interact with most resources like power a recently decided test case, Gadsden County argued the act gave it the right to determine of the major departments lines across the state where new transmission lines could be in the company, including when you’ve got 476 placed within its boundaries. Unfortunately , Progress Energy was forced to sue, and the accounting, operations local governments court ultimately ruled in its favor, saying power lines in established rights-of-way and regulatory affairs.” thinking they can tell cannot be regulated by local governments. you where you can and “How do you site linear resources like power a clause that gave each municipality the lines across the state when you’ve got 476 cannot build?” option to purchase the system and operate local governments thinking they can tell you as a municipal utility. One municipality , Winter Park, recently partnership exercised that right. That led to nearly four at a glance years of litigation, including two months of arbitration hearings to establish the price for the system. “The federal open access laws Progress Energy Florida, Inc. renamed Progress Energy Florida, Inc., make it feasible for a municipality with no serving more than 1.6 million customers power plants to use Progress Energy’s wires to Like many power companies, it began in 32 counties. The utility generates buy power from others,” explains Carlton with ice. In the early 1890s, the St. more than 9,000 megawatts of power Fields Shareholder James Michael “Mike” Petersburg Ice Company delivered its and has more than $4.3 billion in assets. Walls. “Prior to that, a municipality like product to customers for food Winter Park would not have had that option.” preservation. In 1896, the company While the city wanted to value only the offered to provide electricity from its Alex Glenn joined Progress Energy system’s equipment, Progress had to place a generator to power 30 downtown in 1996 after working in the Energy value on it as an ongoing, revenue-producing streetlights. and Litigation department at the business concern. Further, the cost of Washington, D.C., office of Morgan, Then, in 1899, the company became the separating the system from the utility-owned Lewis & Bockius LLP. St. Petersburg Electric Light & Power grid, and stranded costs—the costs incurred Company, providing electricity to the city by the utility to build generating plants to As deputy general counsel-Florida of through the company’s first “franchise.” power its territory—had to be figured into the Progress Energy Service Company, he St. Petersburg Electric Light & Power price as well. manages the Florida legal operations for later became Florida Power and, over the company. Progress Energy Service “I was the principal in-house lawyer and the next century, grew into the second- Company's legal department serves the handled the day-to-day management of the largest provider of electricity in Florida. holding company, Progress Energy, Inc., case. As our principal outside litigation Today, after merging into the Progress and its subsidiaries, including Progress counsel, Carlton Fields handled the caption Energy family, Florida Power has been Energy Florida, Inc. arbitration hearings,” Glenn says. “To build the case, they had to interact with most of the 05 JANUARY 2006
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