Advocates for the proposed sale Vero Electric to Florida Power & Light give as one compelling reason their claim that the state’s largest investor-owned utility is more efficient and thus less expensive than any other utility in Florida.  Municipally owned utilities, they say, are hopelessly uncompetitive.

Monthly statewide rate comparisons compiled by the Florida Municipal Electric Association confirm that FPL is among the state’s lowest cost providers.  But FPL’s rates are not always the lowest at every level.  For example, according to FMEA’s October’s rate comparison, Lakeland and Winter Park, both municipally owned utilities, had rates lower than FPL at a number of levels of commercial use.

More important than a direct month-to-month comparison of rates, though, is the larger question of whether smaller, municipally owned utilities are able to compete with investor-owned utilities like FPL.

The question of competitiveness in the larger context is far more relevant than spot comparisons of rates, for it addresses the subject of whether municipalities benefit from owning their utilities.

Zeroing in on this more pertinent question first requires drawing the distinction between rates and bills, for a surcharge of approximately 6 percent is typically included in the bills issued by municipal utilities.  The additional revenue raised from these surcharges helps pay the cost of running local government.  Without these revenue transfers, cities that own their utilities would either have to charge higher taxes or offer fewer services.

The important difference between rates and bills came up in an email correspondence I had recently with a local utility activists.  He took strong exception to an FMEA rate analysis in which the typical municipal utility’s 6 percent surcharge was factored into a rate comparison with FPL.

Based on that FMEA’s rate comparison, if the typical 6 percent surcharge were subtracted from the bills of the state’s municipal utilities, many of them could offer rates competitive with and in some cases lower than FPL.

Proponents of public power contend these revenue transfers, in addition to local control, are significant benefits to cities that own their utilities.  Sebastian City Manager Al Miner agrees.  “Owning their own utilities is vital to the longevity of municipalities,” he said recently.

When the argument is put forward that no municipality can compete with FPL’s rates, the obvious implication is that municipal utilities cannot be run to the benefit of their communities.  Answering that question requires consideration of more than simple comparisons of rates and bills.

Advocates for the nation’s more than 2,000 municipally owned utilities contend that any comparison of rates should account for the money these utilities are able to contribute each year to help pay for vital services such as police protection and public works.

Vero Beach, however, finds itself in a dilemma, because 60 percent of the customers of Vero Electric are located outside the city limits. This group of Vero Electric customers does not benefit directly from lower city taxes, though certainly some avail themselves of city services.

Given the growing discontent among Vero Electric’s county customers, the time may well have come for the city to sell its electric utility.  Whether the city will be better off in the long run selling its entire system, or just its 22,000 county customers is a completely separate issue from the dizzying debate over rates and bills.

Tomorrow at 10:00, Councilman Jay Kramer will be presenting to the Utility Commission a plan for a “partial sale.”  Kramer’s plan would leave the city still owning an electric utility, while setting its county customers “free.”