COMMENTARY

MARK SCHUMANN

In a story posted online this morning, Vero Beach 32963 reporter Lisa Zahner quoted Vice Mayor Jay Kramer as saying “The sale is dead.”

The second half of Kramers sentence, “at least until 2016,” was held until the following paragraph.  Put Kramer’s full sentence together, and in context, and you may have something closer to the truth.

From the beginning of the negotiations, the Florida Municipal Power Agency has maintained its contracts must be upheld. One key provision in those agreements provides that each and every member of the agency’s All Requirements Project will have to approve Vero Beach’s request to withdraw from the project before Oct. 1, 2016. If any one of the 16 members of the All Requirements Project decides it is not in their best interest to allow Vero Beach a contract waiver then the sale of Vero Electric to Florida Power & Light simply cannot be concluded before late 2016.

FPL spokes person, Amy Brunjes, may publicly claim the company “remains confident” of closing the deal in 2014, but she is either misinformed, uninformed, delusional, or is being less than forthright.

Does an almost-certain delay in the closing until late 2016 mean the sale is dead?  Hardly. Zahner’s story makes no mention of the fact that the purchase and sale agreement between the city and FPL allows for a closing as late at Dec. 31, 2016.

Kramer has argued all along that there are steps the city can and should take to lower rates now.  Some proponents of the sale do not want that conversation. They seem to believe the higher the rate differential between Vero Electric and FPL the more support there will be for the sale.

Kramer is certainly right is pointing out that the city’s $100 million electric utility business has been without strong, permanent leadership and management since the departure of R.B. Sloan in 2009.  It is also reasonable to assert that between now and late 2016 the city can and should take steps to lower rates.  Beyond seeking ways to operate the system more efficiently, the biggest cost savings could come from renegotiating wholesale power rates with the Orlando Utilities Commission.

Under the previous Counsel there simply was no support for lowering rates, either because higher rates were seen as an advantage in pushing the sale forward, or because Tracy Carroll, Craig Fletcher and Pilar Turner actually believed FPL’s propaganda about a closing in 2014.

Zahner attempted to dismiss Kramer’s proposal to work with Gerry Hartman of GAI Consultants to optimize operation of the electric system by claiming GAI “famously appraised the Vero electric utility at $200 million.”

In truth, the value Hartman placed on the system was $189.1 million, just $10 million more than FPL’s offer of $179 million.  Add to FPL’s investment the $10 million in gas transmission rights Vero Beach will sign over to the Orlando Utilities Commission and Hartman’s valuation of $189.1 million is on the mark, regardless of what Zahner may think of it.

To counter Kramer’s case for lowering rates, and probably to make Kramer appear not to know what he is talking about, Zahner quoted a few sale proponents who, themselves, may not be the most informed on utility issues.  Confusing the potential for short-term savings with a blueprint for a partial sale, County Commissioner Bob Solar was quoted as questioning Kramer’s claim the city could operate its electric utility without the power plant.

So long as the city continues to serve 34,000 customers, it must maintain the power plant to meet peak loads.  If, however, the city were to sell its 20,000 county customers to FPL, it would no longer need to maintain generating capacity.  Instead of producing any of its own power, Vero Beach would join more than 20 municipal utilities in Florida that simply buy their power wholesale.

Winter Park, for example, bought its electric system back from Progress/Duke Energy in 2005.  Operating a two-employee utility, Winter Park purchases its power wholesale and outsources transmission and distribution maintenance. In the process, Winter Park is offering rates comparable to Progress/Duke Energy and is able to use its profits to pay to underground the system city-wide.

Kramer has argued for years that if Vero Beach sold its 20,000 county customers, it could then operate a more efficient utility with the remaining 14,000 customers.

Again quoting half sentences, 32963’s Zahner reminded her readers that supporters of Richard Winger and Amelia Graves insisted during the campaign the sale of Vero Electric is “a done deal.”  The last half of that sentence, though, is as important as the first: “as far as the Vero Beach City Council is concerned.”

The point is that the City of Vero Beach entered into a binding agreement with FPL to sell its electric system under specified terms sometime before Dec. 31, 2016.  Unless or until FPL and Vero Beach officials jointly conclude they cannot reach an agreement with the FMPA to resolve Vero Beach contract issues, the deal is not dead, only delayed –  until at least Oct. 1, 2016.