MARK SCHUMANN

Now that the June 11 deadline has passed for citizens to submit input to the Federal Energy Regulatory Commission on FPL’s proposed purchase of Vero Electric, federal regulators have much to review and consider.

Though the Department of Justice and the Internal Revenue Service may eventually review the deal, the transaction must be approved by the FERC, the Florida Public Service Commission and the Florida Municipal Power Agency’s board of directors.  If history is any guide, the biggest hurdle may well be the FERC.

When FPL attempted to acquire Vero Electric in the last 1970’s, FERC regulators raised such serious concerns about anti-trust issues that FPL eventually tossed in its cards and walked away from the deal.

In addition to hearing from more than 20 individuals who weighed in on the proposed sale, the FERC received input from The City of Vero Beach, Citizens for A Brighter Future, the Taxpayers Association of Indian River County, Vero Beach City Councilman Jay Kramer and the Civic Association of Indian River County.  Though the local Tea Party did not give the FERC direct input, local developer Louis Schlitt indicated that he submitted his comments “on the advice of the Tea Part of Indian River County.”

In the City’s filing with the FERC, transactional attorney John Igoe wrote that the primary benefits of the sale would be retail rate reductions and “improved public use of Vero Beach’s waterfront property.”  In fact, reclaiming the “valuable” waterfront property was a refrain through the City’s filing.

The “motions to intervene” submitted by the Taxpayers Association of Indian River County, Citizens for A Brighter Future, along with input from utility activists Glenn Heran and Dr. Stephen Faherty all revealed a degree of cross pollination, raising, almost word for word, concerns about “taxation without representation,” “price inefficiencies,” and “losses of over $25 million per year in consumer wealth.”

Kramer’s comments to the FERC raised questions about “anti-competitive practices” that he alleges were intended to “reduce competition in the sale of the Vero Beach utility.”

Kramer told the FERC the approach the City and FPL took in their negotiations has prevented rate improvements and has “over run any credible sale process.”

Describing the sale as “a single bidder deal,” Kramer objected to what he said have been exclusive negotiations intended that prevented the City from entertaining higher offers from other interested parties.

Kramer also claimed the negotiating process insisted upon by FPL has prevented City officials from taking steps to reduce rates, thus making it easier for FPL to influence public opinion in favor of the sale.

Kramer wrote, the sale price of $111.5 million represents “half of what is FERC’s replacement value.”

In additional to negotiating what he believes to be a low purchase price, Kramer told the FERC that by precluding open biding, FPL was able to extract concessions from the City, “such as valuable land given to them (FPL) at no cost, as well as below market leases and reductions in payments in lieu of taxes.”

Kramer’s points were echoed in a lengthy filing submitted by the Civic Association of Indian River County.  The CA’s intervention, submitted by attorney and former Vero Beach City Councilman Lynne Larkin, raised anti-trust issues similar to those that derailed the proposed sale in the late 1970s.

At the heart of the CA’s filing is an assertion that FPL is using anti-competitive practices to acquire Vero Electric as the first step in a much larger plan to use its “market power” to expand both its wholesale power sales and its retail service territory in Florida.

“FPL has publically stated its intent to take over municipal power and cooperative utilities in Florida,” the CA claimed, further asserting that FPL is employing “a monopolistic goal of squeezing out competitors at all levels.”

Speaking at an investor conference of March 12, FPL C.E.O. Eric Silagy said, “FPL’s opportunity to grow earnings comes from a variety of sources, including: Base rate increases and settlement agreement: Service territory volume growth; Wholesale/service territory expansion.”

Silagy added, “One of the things that’s happened is I’ve now got the governor of Florida going around to the munis saying, ‘Why aren’t you selling yourself to FPL?’”

The same month Silagy told investors FPL could grow earnings by acquiring municipal utilities and cooperatives, FPL Vice President Pamela Rauch was quoted in Florida Trend magazine saying, “FPL has no such strategy to take over municipal electric utilities.”

References to utility activist Glenn Heran were prominent in the CA filing, which alleged that he is acting as an operative and “political agent of FPL,” while positioning himself as  “a grass-roots organizer.”

“He (Heran) became a demonizer-in-chief of cities who have income from utilities, the CA filing alleges, as it attributes two direct quotes to him. “Everyone’s (owners of municipal electric utilities) better off getting out of the utility business.”  And, “What’s the FMPA even doing in business?”

Heran, according to the CA filing, has been a “principal covert agent for FPL, drumming up discontent for the municipal utility business among the citizenry across the entire state.”

Heran, the CA filing claims, “effectively runs a one-person operation, funneling money from FPL to hire campaign consultants and fund a political campaign in support of COVB selling its electric utility to FPL.”

Citizens for A Brighter Future, a political action committee for which Heran serves as both treasurer and chairman, received $92,000 in contributions from FPL in advance of last March’s referendum on the sale of the electric system, representing 92 percent of the funding for the group.

Because Citizens for A Brighter Future spent $62,000 on the campaign, the CA filing reasons that, “FPL paid 100% of the campaign to convince the voters of COVB to sell their electric utility to FPL.”

Like Kramer, the CA filing objects to the failure of the City to use an open bidding process in negotiating the sale of its electric system.  According to the CA, by avoiding competitive bidding, FPL has effectively been able to negotiate a sale price so low that, “The transaction could serve to drive down market prices across the nation.”

As an example of how FPL is allegedly using its “market power” to further expand its retail service area, the CA told the FERC that FPL enticed the Orlando Utilities Commission to help facilitate the deal by offering the OUC an option to participate in its new Turkey Point 6 & 7 nuclear plants to be built in south Dade County. “We allege FPL is trading on its nuclear market control to obtain OUC cooperation,” the CA filing states, adding, “We contend FPL had to give the OUC a nuclear option agreement it has not offered to any other utilities.”

The CA filings also argues that because so much of the deal has yet to be resolved regarding the City’s ongoing obligations to the FMPA, FPL’s request for FERC approval is premature.

As the FERC staff and commissioners consider FPL’s application to acquire Vero Electric, their options are to approve the deal, deny the application or call for hearings, in which sworn testimony will be taken from participants in the negotiations