VERO BEACH ELECTRIC
COUNTY CUSTOMERS
WILL PAY
$62,742,000 MORE
WAITING FOR A FULL SALE*
From the time FPL first submitted its proposal to the City of Vero Beach on April 4, 2011, through October 1, 2016, Vero Electric’s county customers will have paid $62,742,000 more than they would have paid, if the city had simply transacted a partial sale, setting county customers free.
*Glenn Heran estimates Vero Electric’s 33,000 customers paid about $40,000 more per day from April 4, 2011 through January 1, 2012. Heran estimates the rate differential to be $58,000 per day as of January 1, 2013. Sixty percent of Vero Electric customers are located outside the city limits.
BY MARK SCHUMANN
Just as commentator Keith Obermann once counted the days since former President George W. Bush declared “mission accomplished” in Iraq, utility activist Steven Faherty sends out a monthly email updating his followers on how much Vero Electric’s customers have paid in unnecessarily high rates since Florida Power & Light first made a tentative offer on April 4, 2011.
Faherty’s monthly “Utility Update,” which is formatted much like the parody above, makes no mention of the fact that during the time the city has been bound by a memo of understanding with FPL, it has been unable to pursue other options for lowering rates, including simply setting county customers free by selling Vero Electric’s service area outside the city limits to FPL, or to some other power provider who will agree to match FPL’s rates for at least a few years.
This is an example of how there is almost always two or more sides to a story. Yes, there is a significant rate differential between Vero Electric and FPL. Heran estimates that from early April 2011 through the end of 2012 Vero Electric’s customers, collectively, paid an average of $40,000 more per day than they would have as customers of FPL. He also estimated that as of January 1 of this year, the daily rate differential is $58,000. Sixty percent of that rate differential is being paid by the city’s 20,000 county customers.
Some argue Heran’s numbers are high, but giving him the point, that still begs the question of why he and others who claim to be so concerned about the plight of county customers aren’t pressing the city to find a way to lower rates now.
An oft repeated charge of the city is that it has held its county costumers “captive,” in an arrangement that amounts to “taxation without representation.”
In truth, the city’s 20,000 county customers are now being held captive by the very utility activists who claim to be working on their behalf.
Rather than committing to negotiate exclusively with FPL for a sale of the full system, which the city did without first conducting fair and open bidding, it could have pursued a partial sale. In fact, rather than signing the proposed asset purchase and sale agreement, as the Council troika of Tracy Carroll, Craig Fletcher and Pilar Turner plans to do next week, the city could begin now working toward a partial sale.
A partial sale would enable the 20,000 county customers to have FPL rates long before October 1, 2016, which is the earliest possible date for a closing. Unlike a full sale, a partial sale avoids the need to extricate the city from complicated wholesale power contracts with the Florida Municipal Power Agency and the Orlando Utilities Commission.
Assuming Heran’s numbers are accurate, every day of delay costs county customers a total of $34,800. And make no mistake about it, these 20,000 customers are being held captive, not by the city, but by those who have become so committed to a sale of the full system that they are unwilling to pursue other options.
Indian River Guardian 
For the sake of perspective why not at least make mention of how the “partial sale” idea was received by FPL? Their response was “not do-able”. Why not at least include the fact that the FMPA (Florida Municipal Power Agency) which represents the other 33 municipal utilities in Florida, continues to bully and threaten the COVB in an effort to keep them from selling? Why not include the likely scenario that would likely result from a partial sale leaving the smaller pool of city rate-payers to foot the bill for exorbitant upgrades?
While I appreciate the concept of relaying “the other side of the story”, I found this article to be inflammatory. If there is any question of motives it should be directed toward those who are fighting tooth and nail to retain the utility and not at people who have worked without personal gain for the emancipation of those who are being extorted on a daily basis.
FPL has never stated publically that they would be unwilling to purchase the city’s 22,000 county customers. When asked about this publically, FPL spokespersons have stayed on script with a carefully worded statement about how they are focusing their efforts on acquiring the full system. Again, that statement is far short of “not do-able.” I cannot report what FPL spokespersons told me off the record. I can only point out what they have and have NOT said publically.
When you consider the herculean effort FPL recently put forth to retain 7,500 customers in South Dayton, when the city council there tried to buy the system back for the city, it seems inconceivable that FPL would stand on the sidelines if the city of Vero Beach issued an RFP for its 22,000 county customers.
To suggest that the FMPA is “bullying and threatening the COVB,” is indeed inflammatory. What the FMPA is really doing is protecting the interests of their other member cities. They must also preserve the integrity of their contracts and the credit rating of their bonds.
One often repeated misstatement is the suggestion the city must make “exorbitant upgrades to its system.” For starters, in a partial sale, the power plant can be decommissioned, saving the city some $5 million a year. Secondly, the power plant is not the dinosaur it is made out to be. The technology may be dated, but the equipment has been well maintained. And certainly the city’s transmission and distribution lines are also in good condition.
Does this “fall short of not do-able?”… Friday Aug 26th, 2011 in a local paper… “But an FPL official said earlier a few days earlier that breaking up the current Vero electric utility was “not do-able.” Either that paper was lying or it does, in fact, reflect the stance of FPL.
How about this on June 7, 2012, “It would also assume that FPL had any interest in buying just the customers outside the city, which representatives have repeatedly said is not the case.” Is someone simply making things up here or is FPL continuing to let it be known that they are not interested in a partial sale?
Regarding bullying and threatening, the city manager has described “power players” as “big brother” who “beat up on their little brothers quite a bit.” I’d call that bullying. And they have, in fact, come across as threatening. Regarding Barry Moline’s arguments and FMEA’s 19 page report, Brian Heady stated, “It’s a scare tactic to get us to not sell”.
Regarding upgrades, why not get some hard data on the current upgrades and maintenance needed and do so from more than just those who are holding on for dear life to the city’s cash cow.
For sake of full disclosure, although we live outside the city limits, Vero electric robs my family to the tune of $2-3k every year in higher electric rates. I suppose we all have our biases.
Finally, if the journalistic bar is fixed at “I can only point out what they have NOT said publicly”, how can readers take articles as “news”? This logic can easily leads to assumptions that are not based on definitive fact but mere conjecture. Just one man’s two cents.
I can point out what FPL representatives have and have NOT said publicly, but I cannot report what they said to me off the record. However, what was said to me off the record does inform what I report. To reveal what was told to me off the record would, in fact, be to lower the journalistic bar.
Regarding the upgrades, if you believe the city needs to make “exorbitant upgrades,” perhaps you could provide some “hard data.” After all, you are the one making the claim.
I’ve spoken with Jim O’Connor about the city’s dealings with FMPA, and he has given me no sense that he feels the city is being “bullied or threatened.” I’ve also spoken at length with sources at the FMPA, and I get no sense from them that they have any intention of obstructing this deal. They are, however, going to required that the applicable contracts be honored, and that the interests of their other member cities be protected.
I notice that you are using a quote from Brian Heady to support your claim that the FMPA is playing hardball. I think even Brian would admit that he is given to hyperbole, as in “liars, cheats and thieves.”
I am told from a number of sources, both with the city and outside the city, that the system can be divided, and that a partial sale is “do-able.” It may serve FPL’s purposes to claim otherwise. If FPL is convinced they wouldn’t prefer two-thirds of something as opposed to all of nothing, then they would certainly be free to stand aside while the city seeks other prospective buyers for its county customers.
Ironically, if a partial sale could take place more quickly than a full sale, you will continue to pay “$2-3K” more every year this drags on.