In a meeting between the city’s transactional attorneys, John Igoe and Rick Miller, and officials of the Florida Municipal Power Association held in Orlando today it became clear city leaders are hoping against hope that Vero Electric can be sold to Florida Power & Light before late 2016.

In an effort to persuade FMPA officials the city should be free to terminate its membership in the All Requirements Project before October 1, 2016, Igoe and Miller argued that the proposed transaction between the city and FPL should be seen as an abandonment of assets, not a sale.

Perhaps if their argument had been grounded in reality, it would not have taken Igoe and Miller eight pages to make their case.  Either way, FMPA officials weren’t buying it.

The bottom line is that if the deal cannot be closed until 2016, the nearly three-year delay will drive up costs for all of Vero Electric’s 34,000 customers.

According to City Manager Jim O’Connor, whether the sale takes place on Jan. 1, 2014 or Dec. 31, 2016, or some date in between, the city is still committing to pay the Orlando Utilities Commission $35 million to assume its FMPA entitlements.

The same is true with the city’s agreement with the OUC.  According the O’Connor, regardless of the closing date, the city is prepared to pay the OUC an additional $20 million to terminate a 20-year wholesale power agreement signed in 2007.

Because the city will have further paid down its proportionate share of FMPA’s bond indebtedness by late 2016, why would it not be reasonable to give the OUC something less than $35 million to assume these obligations later rather than sooner?

Further, if the cost of terminating the OUC contracts on Jan. 1, 2014 is to be $20 million, why would it not cost something less than that to exit the contracts three years later?  After all, the city will have fulfilled is obligation to the OUC for three additional years.

A three-year delay will also see the city making some $20 million in long-term capital improvements to Vero Electric’s transmission and distribution system.  Because the city is planning to pay cash for those capital projects, rather than financing them as it has customarily done, the additional $20 million will need to be worked into the city’s rates.

In short, between Jan. 1, 2014 and late 2016, Vero Electric customers will be billed an additional $20 million to pay for upgrades to the transmission and distribution system.  The value of those improvements will largely benefit FPL.

Already for the current year, the city raised rates to pay for millions in long-term capital projects it would in previous years have financed.

Finally, at least according to estimates done by utility activists Glenn Heran and Stephen Faherty, the city’s 34,000 customers are collectively paying $20 million more a year than they would as customers of FPL.

If the city works some $20 million in capital projects into its rates from 2014 through 2016, the total cost to the city’s electric customers of a three-year delay could add up to more than $80 million or more.

Councilman Jay Kramer has argued the fastest way to lower rates for everyone would be to sell FPL the right to serve the city’s 22,000 customers located outside the city limits.  Kramer also believes such a partial sale would enable the city to reduce rates for city customers by 15 percent or more.

Councilman Richard Winger agrees that a partial sale has merit.  Especially if the sale of the full system is necessarily delayed, Winger thinks the city should more thoroughly consider the pros and cons of a partial sale.

While a partial sale has a number of moving parts, so to speak, the basic idea is to let county residents on city power become customers of FPL.

The city would then operate a smaller, 12,000-customer system more efficiently by decommissioning the power plant, renegotiating wholesale power contracts and paying off debt.

Given today’s developments at the FMPA today, the city should move now to consider a partial sale.  Anything less is irresponsible.