BY MARK SCHUMANN

If the sale of Vero Electric cannot take place until late 2016, which now seems all but certain, the Orlando Utilities Commission will wind up with $30 million that could otherwise have gone to Vero Beach.  This $30 million giveaway is just one example of how the city’s transactional attorneys failed to negotiated a good deal for the city.

When the transactional attorneys and Florida Power & Light first sat down to negotiate power purchase agreements with the OUC, they believed the sale could close in early 2014, so they structured the deal accordingly.  At least that’s what they tell us. 

These agreements call for FPL to buy from the OUC 54 megawatts of power Vero Beach would otherwise have taken.  If the deal were to close in early 2014, the agreements would insure the OUC a buyer for the power through 2016.

Here’s that catch.  With the closing delayed until late 2016, the OUC will be able to count on FPL buying the power through late 2020, and at a $30 million premium.  This amounts to a $30 million windfall to the OUC, and it is coming at the city’s expense.

Because the $30 million premium is a component of FPL’s offer for Vero Electric, the money could otherwise have gone to the city.

Apart from this $30 million giveaway to the OUC, the transactional attorneys structured the deal so that the OUC will get another $20 million for letting Vero Beach out of its wholesale power agreement.  But with the closing delayed until late 2016, Vero Beach will be delivering another three years of fulfillment on its contract with the OUC – another windfall to the OUC.  It is hard to imagine how the transactional attorneys could have negotiated a deal less favorable to the city.

Let’s be clear about this. If the city’s $500-hour attorneys had been paying attention to important details, they would not have missed an all-important deadline for giving the proper notice needed to leave the Florida Municipal Power Agency’s All Requirements Project in 2015.  As a consequence of this oversight, the city’s 34,000 customers will, over the course of the 12-month delay, pay some $20 million in additional electric charges.

Oh, well. No big deal.  With the transactional attorneys looking for Council authorization to continue racking up $25,000 to $100,000 a month in charges, look to Councilmembers Tracy Carroll, Craig Fletcher and Pilar Turner to approve their request, probably without reservation.

In one sense, the city is being taken to the cleaners.  A sale utility activists Glenn Heran once proposed would net the city $156.5 million, is really going to leave the city with no more than $3 million in proceeds, not including utility reserve funds.

In another sense, it is the city’s ratepayers who are getting the shaft.  In addition to picking up the tab for the city’s legal bills, Vero Electric’s customers will bear the full cost of capital improvement projects over the next few years.  In the previous and current fiscal years alone, the Council’s decision to pay cash for capital improvements has and is costing ratepayer more than $4 million.

Four million dollars here, $30 million dollars there – and pretty soon you are talking about real money.