NEWS ANALYSIS

MARK SCHUMANN

Consider this: by late summer of 2008, customers of Florida Power & Light were paying 45.3 percent less for 1000 KWH of residential power.  Allowing for a 6 percent franchise fee, the 2008 differential would have been 42 percent.

Just three years later, the gap between FPL and Vero Electric was down to 11.7 percent, the lowest it had been in more than a decade.  Over the past two years, though, under the direction of a City Council that is far more focused on selling Vero Electric to FPL than it is in managing the system efficiently, the rate disparity has been allowed to rise. This begs the question:  Is the current City Council jacking up rates to bolster public support for the electric sale?

The first thing to be said about rate comparisons is that pro-sale advocates use a number that is, at best, misleading.  The relevant number, because it translates into expected savings, it the percentage which FPL rates are below Vero Electric.  For example, 100 is 25 percent more that 80, but 80 is 20 percent less than 100.  Is it simple math, but it is math local utility activists refuse to acknowledge.

Currently, even though they have secured passage of a referendum on the sale and despite the fact that the City has signed a binding sales agreement with FPL, proponents of the sale are appearing before City Council, the County Commission and attempting to flood the radio airwaves with propaganda about a 40 percent rate differential between Vero Electric and FPL.  In truth, allowing for the 6 percent franchise fee that will be added to FPL rates, the current savings for users of 1000 KWH per month would be 23.4 percent.

While 23.4 percent is a significant savings, it is not 40 percent.  But then, for the most ardent proponents of the sale of Vero Electric, the truth has long since ceased to matter.

In addition to exaggerating the likely savings for the average customer of Vero Electric, utility activists are working hard to reward Tracy Carroll for her past support of the sale, and they are doing so by sowing seeds of fear and by attempting to create the false impression that Carroll’s continued presence on the Council is vital if the deal is ever to be concluded.

There are a few other numbers you will never hear quoted by Tracy Carroll, Craig Fletcher, Pilar Turner, FPL spokespersons, or local utility activists.

According to a report in the Palm Beach Post, FPL rates will increase to 100.26 per 1000 KWH on January.  Add a 6 percent franchise fee to FPL’s projected January 1, 2014 rate, and now you are looking at a differential between Vero Electric and FPL of 17.3 percent.

Proponents of the electric sale will also never mention that in 2017 Vero Electric will retire $1.12 million in debt payments. Another $5.25 million in annual debt payments will be retired in 2022.

Though the latest rate increase approved by Carroll, Fletcher and Turner will raise $900,000, and is being attributed to wholesale power costs, you will never hear the Troika mention the fact that included in the latest rate sufficiency study is a budgeted $1.2 million in legal and professional fees for the 2013/2014 fiscal year.  However they might try to spin the truth, the fact is those legal expenses are being added directly to this year’s electric rates.

Finally, you will also never hear Carroll, Fletcher or Turner express even the slightest interest in bringing the City’s natural gas power generating units 2 and 5 online.  Doing so would lower the CIty’s power costs, and the absolute last thing the Troika wants is to be faced with the “necessity” of reducing electric rates.