Editor’s Note: Russ Lemmon, now publisher of Lemmon Lines, once wrote a regular column for the Press Journal. There he took every opportunity to push for the sale of Vero Electric, often repeating Florida Power and Light’s public relations claims as if they were fact.
This week, writing about revived efforts to sell Vero Electric to FPL, Lemmon pointed out that when steam first began to build for the proposed sale Vero Electric’s rates where some 30 percent higher than FPL. The master of half truths, Lemon does not now mention that the rate differential between the two utilities is less than 10 percent.
Lemmon has long credited utility activists Stephen Faherty and Glenn Heran, along with civic activist Charlie Wilson, for helping push for the sale. This week, Lemon wrote that Heran “built ‘The Model’ to show the public the financial benefits of the sale.”
Heran did, in fact, create a model projecting what has proved to be wildly exaggerated benefits to selling Vero Beach’s electric utility. Most notably, Faherty and Heran made presentations around the community promising the sale of the City’s electric utility would not lead to higher taxes or cuts in services. They claimed interesting earnings from some $150 million in sale proceeds would make up for any loss in revenue to the General Fund. Excluding the electric utility reserve fund of some $30 million, the City is now expected to net $36 million, not $156.5 million, as Faherty and Heran promised.
After publishing Heran’s model, InsideVero.com received an email from Heran, in which he wrote, “The example sheet you are referring to was one of MANY scenarios we presented.” Heran did not provide examples of other models he now claims were developed.
The story below reporting on now debunked financial projections may be utility activists Stephen Faherty and Glenn Heran was first posted April 29, 2013.
Heran’s 2009 financial model projected $156.5 million in net proceeds from sale of Vero Electric
On October 29, 2009, utility activist Dr, Stephen Faherty wrote the following email to then City Council candidate Ken Daige: “Ken, Attached is summary of what Glenn’s financial model can do. It shows no City tax increase, possible tax decrease, and $625 in each customers pocket. Also attached are legislative proposals. Good Luck. Glenn and I look forward to working with you. Steve”
Faherty’s email to Daige included, not “many” possible scenarios, only the one reproduced below.
The following is the InsideVero.com article first published April 29 of this year detailing the extent to which the financial projections used by Heran and Faherty in 2009 to create support for the sale of Vero Electric have proved to be significantly course.
The $2 million to $3 million general fund budget gap likely to result from the sale of Vero Electric was certainly not envisioned by utility activists Glenn Heran and Stephen Faherty, when, five years ago they were projecting the deal would net the city $156.5 million. Heran’s “voodoo” economic model, which called for the city to buy the 17-acre power plant site from Vero Electric for $10 million, also suggested the city’s general fund would get an annual boost of nearly $600,000.
In November 2009, Brian Heady and Charlie Wilson where elected to the city council, backed by Fahery, Heran and Operation Clean Sweep, a political action committee that promoted candidates who supported the sale of the electric system. Before the year was out, Wilson was removed from office by court order for having failed to meet residency requirements.
One year later, riding a pro-sell tidal wave created in part by Heran and Faherty and their now-debunked economic model, four new city council members were swept into office. Heran’s projections, which arguably were the impetus for the now irresistible momentum for a sale, have proved exceedingly optimistic. (See below)
In an e-mail to a former city council member in the fall of 2009, Faherty wrote, “Attached is a summary of what Glenn’s financial model can do. It shows no City tax increase, possible tax decrease, and $625 in each customers pocket.”
The $156.5 million in net proceeds Heran and Faherty were telling the public the city could expect from the sale simply will not materialize. For example, they projected the city could sell its interests in the Stanton I and Stanton II coal-fired generators and the St. Lucie 2 nuclear project for $56 million. As it turns out, getting the Orlando Utilities Commission to take those projects off the city’s hands is costing some $90 million.
Rather than netting $156.5 million on the deal, the city will likely be left with a mere $3 million, according to estimates by the Finance Commission. In fact, the city may have to use some or all of its $30 million in utility reserves to cover contingent liabilities. If so, the reserve fund money will not be available to restructure the city’s underfunded pension obligations. City leaders are counting on this money to make changes in the pension plans, changes they say are key to the city’s long-term financial position.
There is, of course, no consequence to the utility activists who appear to have been 179 degrees off course. Meanwhile, city residents and taxpayers are left working through hard choices about raising taxes and/or cutting services.
Below are the first two pages of the financial model Stephen Faherty attributed to Glenn Heran in the fall of 2009.