Pensacola council approves $15.9 million settlement, moves to replenish utility fund via bonds and rates study

The Pensacola City Council on June 12 approved a settlement related to Frank v. City of Pensacola and adopted a supplemental budget resolution to allocate cash to pay the agreed settlement amounts.

The council approved a settlement agreement (item 25-715) and then adopted supplemental budget resolution number 2025-34 to carry forward the Pensacola Energy fund balance to satisfy the settlement. The mayor and city staff said the settlement payment will total $15,900,000 and that the city plans to replenish the cash via a bond issuance expected in October and, over time, by adjusting Pensacola Energy rates informed by an upcoming rate study.

City officials emphasized the distinction between approving the settlement and setting future rates. Mayor DC Reeves said the cash payment will deplete the Pensacola Energy cash balance and that the city intends to use proceeds from a planned bond issuance in October to restore the cash on a short-term basis. City staff said the bond proceeds will also fund previously planned capital projects; council members pressed staff on whether bond proceeds earmarked for capital were appropriate to use, and on long-term rate strategy.

Council members expressed concern about the fairness and timing of future rate increases. Council member Baer said he would not support a rate increase intended principally to cover the legal settlement. Council member Baker and others said they were supportive of settling the case but worried about how the city will rebuild reserves without unduly burdening utility customers. Council member Baer asked for clarity about whether the bond proceeds would be used as short-term cash replacement only; staff said the bond will refund cash flows now and that longer-term replenishment would come through rate adjustments phased in after a rate study.

A member of the public, Sherry Myers, spoke during public comment and criticized utility taxes and fees on low‑income households and urged the council to consider the burden on seniors before any future rate changes.

City staff also noted the legal costs for the litigation were under $4 million over the life of the case; an attorney on the dais said legal fees were “less than 4” million dollars and characterized that as spread over about 10 years. The council voted, on motions recorded in the meeting, to approve the settlement terms and the supplemental budget resolution; both measures passed 7–0.

The council directed that a rate study be completed and discussed before or alongside any rate action, and members asked for more detail about how bond proceeds, freed debt service and reserves interact in the city’s longer-term financial plan.

The actions taken were limited to approving the settlement documents and the supplemental budget appropriation; the council did not vote on any rate changes at the June 12 meeting.