During the darkest days of the Civil War, President Lincoln often characterized his own predicament by telling the story of a farmer who sought to catch a pesky fox that had long been harassing his chickens.

One morning, upon spotting the fox breaking into his chicken coop, the farmer snuck up being the persistent predator and snagged him by the ears.  With the flailing, snapping, angry fox firmly in his grasp, the farmer began yelling, “Somebody come help me let go of this thing!”

City leaders must feel similarly about Vero Electric, for they are faced with the challenge of placating 22,000 county customers who would prefer to buy lower priced electricity from Florida Power & Light.  Their challenge, though, is to let go of county customers in a way that will not precipitate the financial collapse of the city.

Though estimates vary and are debated endlessly, realistic calculations indicate that the average county customers will save approximately 25 percent on their power bills with FPL.  Heavily dependent upon natural gas, which this year has been at or near historic lows, FPL currently offers among the lowest rates in the state.

The prospects are not nearly as positive for city customers and taxpayers.  If Vero Electric is sold to FPL, their savings on electric rates will be somewhat, if not largely offset by increases in taxes and fees, such as a new 6 percent franchise fee on power bills.

As well, city residents will likely face reductions in services, as the Council seeks to close a General Fund budget gap that will result from the loss of $5.6 million a year the city now transfers from its electric system to help pay for services such as police protection, parks maintenance, recreation programs and public works. This $5.6 million represents 6 percent of Vero Electric’s total billings, and is the equivalent of a franchise fee.

Owning an electric utility has for decades benefited the city, because the transfers to the general fund have contributed to paying for vital services, while also helping to keep taxes low.  In fact, despite its many beautiful parks, well guarded beaches and excellent police protection, Vero Beach’s tax rate is just half that of many comparable Florida cities.

Extending transmission and distribution lines into adjoining unincorporated areas without also annexing those areas has created a problem for the city.  When Vero Electric extended service into the county, state law did not allow for annexation as a prerequisite.  Further, all of the unincorporated area in which the city now offers service is part of the service territory for Vero Beach, as approved by the Public Service Commission, and agreed to by FPL.  It was the duty of Vero Beach to provide service without preconditions.

For several years now, a number of local utility activists have so successfully stoked the fires of discontent that the city’s county customers, once simply content to have electric service at all, are now railing against the city because its rates are not as low as FPL’s.  And the county commission, once grateful to the city for enabling development in the unincorporated areas, has long sense shed any signs of gratitude.

With sixty percent of Vero Electric’s customers located outside the city limits, the city is now in a precarious position.  These county customers want lower rates, and they, along with their county commissioners, are clamoring for the city to sell its electric system to FPL.  Utility activists advocating for these customers have appeared before the Council chanting, “Let my people go.”

At the same time, many customers within the city seem convinced they, too, would be better off as customers of FPL.  However, careful analysis of the full financial impact of selling the electric system suggests the city could face devastating financial consequences almost beyond calculation.

Councilman Jay Kramer has been working on an alternative plan he believes could satisfy the city’s disgruntled and disaffected county customers, while leaving the city far better off financially.  His proposal, known as a “partial sale,” would have the city selling just its 22,000 county customers to FPL.  The 12,000 business and residential customers would form the base of streamlined and restructured municipal power system, one that could offer rates within range of FPL, while also contributing some $3 million a year to help pay for city services.

Across the state, municipally owned power systems are charging an average of $118.76 per kilowatt hour, while as a group investor owned utilities, such as FPL, are averaging $114.06, after factoring in a 6 percent franchise fee.

According to Kramer, a partial sale could be far more beneficial to the city than the current plan to sell the full system.  By some estimates, the proposed sale of the full system will leave the city with just $7 million in net proceeds out of a deal valued at nearly $200 million.

By selling to FPL only its county customers, while retaining the remaining 12,000 customers within the city limits, Kramer believes the city can avoid having to buy its way out of its wholesale power contracts with the Florida Municipal Power Association and the Orlando Utilities Commission.  Under the proposed sales agreement, it will cost the city some $90 million to extricate itself from these agreements, none of which would need to be abrogated if the city continues to operate an electric utility.

Kramer will be presenting the pros and cons of a partial sale Tuesday, December 11 at 10:00 a.m. at the Utilities Commission meeting.