BY MARK SCHUMANN

In an interview with InsideVero today, former mayor Tom White denied ever telling a reporter from the island weekly that the so-called “exit penalty” was “inserted” in the city’s wholesale power agreement with the Orlando Utilities Commission.

“I never told the reporter R.B. Sloan (Vero Beach’s former utilities director) was the one who proposed it,” White said.

Further, White explained, he voted to approve the contract with full knowledge of the now-controversial early termination provision.   “I initially questioned the $50 million and $20 million damage amounts,” the former mayor said.  However, White explained that he came to understand how the provision would protect either party in the event of a breach of contract. 

For example, if wholesale power costs were to increase well above the agreed upon price, the OUC might be tempted to break its agreement with Vero Beach.  In order to walk away from the deal, the OUC would have to pay damages to the city, just as Vero Beach is now required to compensate the OUC for breaking the 20-year agreement.

As former city attorney Charlie Vitunac has pointed out, the $20 million “penalty” also serves as a stop-loss clause, thus preventing Vero Beach being saddled with the cost of compensating the OUC for the full amount of the damages it will suffer as a result of the city leaving the $1 billion deal 17 years early.

White explained that during his review of the contract he asked about the early termination provisions and initially questioned the amounts.  Based on the total value of the deal, and the potential damages that could result from early termination, White said he accepted the recommendation of the city’s negotiating team, which include Sloan.