Faherty once pushed for a partial sale

BY MARK SCHUMANN

Utility activists Glenn Heran and Stephen Faherty dismiss Councilman Jay Kramer’s suggestion to sell Vero Electric’s county customers to Florida Power and Light. To listen to them, you might get the impression they think a partial sale is one of the craziest ideas ever to come down the pike. Councilwoman Pilar Turner, repeating the pro-sale party line, claims a partial sale is “unworkable at ever level.” The island tabloid once critiqued Kramer’s ideas on a partial sale by suggesting the city councilman had been “lobotomized.”

Well, all the criticisms of a partial sale leveled against Kramer over the past two years doesn’t exactly square with the fact that in the fall of 2009, Faherty drafted legislation that would have forced the city to sell its customers outside the city limits to Florida Power & Light.

In advance of the March referendum on the proposed sale of Vero Electric to FPL, Faherty, Heran and the pro-sell crowd were singing a completely different tune about a partial sale. Far from promoting it, they were suggesting a partial sale was the most recidivous idea they had every heard – never mind that it was a plan they themselves once sought to force upon the city through special legislation.

Why their change of heart on a partial sale? Personally, I suspect many in the pro-sell crowd receive their marching orders, at least indirectly, from FPL. Rather than settling for two-thirds of the city’s customer base, the utility giant is far more interested in acquiring all of Vero Electric, which is why, when asked, FPL spokespersons offer a ready answer about how the company is focused on acquiring the full system. They have always been careful, however, to stop short of saying the FPL would not accept a partial sale, if that was all that was being offered.

If the city’s transactional attorneys ever get around to determining what solutions, if any, can be found to resolving the city’s contractual obligations to the the FMPA and its bondholders, then, and only then, will we know if the sale can go forward. Should it turn out that the sale as currently proposed is unworkable, don’t be surprised to see Faherty, Heran and others start calling for a partial sale – never mind that they now say it is a bad idea.

Below is the full text of the special legislation Stephen Faherty proposed in 2009 that would have cleared a path for a partial sale.

Dr. Stephen J. Faherty, Sr.

2120 Captains Walk

Vero Beach, Florida 32963-2821

(As of October 16, 2009)

LOCAL LEGISLATIVE PROPOSAL

A. Legislation to Authorize A Referendum for the Transfer of Outside City Electric Customers from the City of Vero Beach (COVB)

to Florida Power and Light (FPL)

?Section 37. Subsection (?9?) is added to section 366.04,

Florida Statutes, to read:

366.04 Jurisdiction of commission.–

(8)(a) As used in this subsection, the term “affected municipal utility” means the City of Vero Beach electric utility.

(b)(i) The Indian River County Supervisor of Elections is directed to conduct a Referendum of all electric customers serviced by the City of Vero Beach utilities in the two jurisdictions outside of the City boundaries served by the City’s utilities (i.e., Indian River County and Town of Indian River Shores). For purposes of this Legislation, any billed or metered customer serviced all or partially in St. Lucie County is considered to be attributable to the jurisdiction of Indian River County. It is also understood that some customers will not be registered voters in the jurisdictions and may in fact be foreign nationals residing all or part of the year outside of the United States. All materials related to the Referendum are to be in the English language

(ii) One vote is to be allowed for the service of an electric “billed or metered (whichever count is higher) customer” under the customers and billing system existing on December 1, 2009. The same or similar names on accounts are not a reason for an exclusion from voting in the Referendum. All votes must be for either a “Yes” or a “No” vote to the question in section (c) below.

(iii) The Supervisor of Elections is to establish a seven (7) member Canvassing Board to oversee the Referendum. Such Board is to be composed of three (3) members appointed by the Indian River County Board of Commissioners, two (2) members to be appointed by the Vero Beach City Council, one (1) member appointed by the Indian River Shores Town Council, and the Supervisor of Elections. Such appointments are to be made in writing and the Supervisor of Elections notified within 20 calendar days after this legislation is signed into law. If the appointments are not made known in writing to, and received by, the Supervisor of Elections within that period, that official is to make such an appointment for such jurisdiction. Issues are to be resolved by the Canvassing Board in a fair, impartial, and reasonable manner.

(iv) Final voting on the Referendum is to be completed at the next scheduled election occurring 90 calendar days after this legislation is signed into law, or no later than 150 days after this legislation is signed into law. Because the residences and/or mailing addresses of some customers are outside of the jurisdiction (and even foreign countries), it would be appropriate for mail-in ballots to also be used for the Referendum with a cutoff date for ballots to be postmarked on or before the date of the election with a final receipt date of ballots established by the Supervisor of Elections within 7 calendar days after. (c) The ballot for the Referendum election required under paragraph (b) above shall contain the following question: “Should the City of Vero Beach electric utility allow customers outside of the City boundaries to become customers of Florida Power and Light (FPL)?” The statement shall be followed by the word “Yes” and the word “No.”

(d) The provisions of the Election Code relating to notice and conduct of the election shall be followed to the extent practicable. Costs of the referendum election shall be borne by the City of Vero Beach electric utility.

(e) If a simple majority of all votes of the of the utility’s billed or metered (whichever is higher) customers outside of the City’s boundaries are in favor of transferring to Florida Power and Light (FPL) then:

i) Within six (6) months after the Referendum, the City of Vero Beach shall competitively select an appraiser qualified to perform a “best use” appraisal of the value of the electric utility and all of its assets, including, but not limited to, power generation, transmission & distribution facilities, etc., as well as that portion of the outside City customers to be transferred,

ii) Within 12 months after the Referendum, that portion of the assets, particularly transmission and distribution, attributable to the customers outside of the City’s boundaries shall represent an asset of the customers outside of the city.

iii) Liabilities of the electric utility, e.g., Revenue Bonds, attributable to customers outside the City shall be debited against the proceeds of the sale of the assets to Florida Power and Light (FPL) in arriving at a net proceeds amount to be used at the City’s discretion.

iv) The Public Service Commission shall accordingly approve the modifications to its Territorial Agreement (Docket No. 800596-EU, Order No. 10382, dated November 3, 1981) and any subsequent territorial agreement, between the City and Florida Power & Light (FPL) to correspond with the transfer of customers outside of the City to the purchaser of the City’s electric utility.

(h) An Arbitration Panel with a representative appointed by the Indian River County Board of Commissioners and a representative appointed by the City Council of Vero Beach shall appoint a third member to the Arbitration Panel. The best interests of the efforts to implement the Referendum for all customers are to be the guide for resolution of differences.

(i) The Public Service Commission shall oversee the transfer of customers from the City to FPL.

B. Legislation to Authorize a Referendum of only City Customers for the Sale of the City of Vero Beach Electric Utility

?Section 37. Subsection (?8?) is added to section 366.04,

Florida Statutes, to read:

366.04 Jurisdiction of commission.–

(9)(a) As used in this subsection, the term “affected municipal utility” means the City of Vero Beach electric utility.

(b)(i) The Indian River County Supervisor of Elections is directed to conduct a Referendum of electric customers serviced by the City of Vero Beach electric utility only in the jurisdictions of the City of Vero Beach. It is understood that some customers will not be registered voters in the jurisdiction and may in fact be foreign nationals residing all or part of the year outside of the United States. All materials related to the Referendum are to be in the English language

(iii) The Supervisor of Elections is to establish a five (5) member Canvassing Board to oversee the Referendum. Such Board is to be composed of four (4) members to be appointed by the Vero Beach City Council and the Supervisor of Elections. Such appointments are to be made in writing and the Supervisor of Elections notified within 20 calendar days after this legislation is signed into law. If the appointments are not made known in writing to, and received by, the Supervisor of Elections within that period, that official is to make such an appointment for the City. Issues are to be resolved by the Canvassing Board in a fair, impartial, and reasonable manner.

(iv) Final voting on the Referendum is to be completed at the next scheduled election occurring 90 calendar days after this legislation is signed into law, or no later than 150 days after this legislation is signed into law. Because the residences and/or mailing addresses of some customers are outside of the jurisdiction (and even foreign countries), it would be appropriate for mail-in ballots to also be used for the Referendum with a cutoff date for ballots to be postmarked on or before the date of the election with a final receipt date of ballots established by the Supervisor of Elections within 7 calendar days after. No “early voting” shall be allowed on this matter.

(c) The ballot for the Referendum election required under paragraph (b) above shall contain the following question: “Should the City of Vero Beach electric utility be sold, the assets be used to pay off debt, and the remaining assets invested and used for the benefit of the City of Vero Beach?” The statement shall be followed by the word “Yes” and the word “No.”

(e) If a simple majority of all the votes of the utility’s billed or metered (whichever is higher) customers are in favor of selling the electric utility, then:

v) The passage of this legislation shall be deemed to be a modification by statute of Section 15.11 of the Agreement between the City and the Orlando Utilities Commission.

(h) An Arbitration Panel with a representative appointed by the purchaser and a representative appointed by the City Council of Vero Beach shall appoint a third member to the Arbitration Panel. The best interests of the efforts to implement the Referendum for all customers are to be the guide for resolution of differences.

f) An Oversight Board composed of five (5) members to be appointed by the Vero Beach City Council is to be established on behalf of the City and the customers in order to oversee the implementation of the sale.

g) The Public Service Commission shall oversee the appraisal and sale of the COVB electric utility by the City to a purchaser.

Note: These Legislative Proposals have unique features:

They authorize the vote of metered or billed customers (whichever is higher) as of December 1, 2009 as opposed to only registered voters in the jurisdiction.
Consequently, as a result of a legal opinion provided to the Indian River County Supervisor of Elections, Kay Clem, in August 2008, her office cannot under existing Florida law handle votes by other than registered voters. This legislation authorizes her to handle votes from metered or billed customers (whichever is higher) as of December 1, 2009, who may not be registered voters.
The customers may be outside of the City, County, State, and Country. Therefore, the legislative proposal authorizes a mail in ballot to be postmarked on or before the date of the General Election in November 2010 and with receipt within 7 calendar days after.
The Public Service Commission (PSC) is instructed to oversee the transfer of outside customers and/or sale of the City’s utility assets and to also modify its Territorial Agreements to reflect the change in the customer base.