COVB	FPL	FPL + 6%
Nov. 2006	116.01	105.89	112.24
Nov. 2007	132.17	100.8	106.85
Nov. 2008	141.01	108	114.48
Nov. 2009	158.82	107.95	114.43
Nov. 2010	114.81	92.63	98.19
Nov. 2011	115.62	94.13	99.78
Nov. 2012	121.43	92.38	97.92
Nov. 1013	130.93	92.73	98.29
Jan. 2014	130.87	99.95	105.95

MARK SCHUMANN

Proponents of selling Vero Electric to Florida Power & Light continually point to the growing rate differential between the city and FPL as a compelling reason for the city to get out of the power business.  But why are Vero Electric’s rates rising faster than FPL’s?  Could it be that higher rates serve the purposes of those interested in maintaining public support for the troubled sale?

The year after the city stopped buying power from the FMPA’s All Requirements Project, and instead entered into a wholesale power agreement with the Orlando Utilities Commission, rates tumbled from $158.82 to $114.80.  Since 2009, though, Vero Electric’s rates have risen steadily and are now at $130.87.

Vice Mayor Jay Kramer says the fundamental problem is that the City Council and staff are solely focused on concluding the sale to FPL to the exclusion of any effort to lower rates.  By fixating on one objective, Kramer believes the Council is failing to take advantage of several opportunities to lower rates.

Kramer points out that operating costs are not up significantly, and wholesale power costs are actually dropping.  The reason rates are up, he says, is because the previous Council majority was content to let rates rise -all for political reasons.

Vero Electric has been without a permanent director since R.B. Sloan left in 2009.  No one is minding the store, at least not when it comes to leading integrated approach to optimize the system.  “My best guess is that our rates should be closer to $118 per kilowatt hour, not $130,” Kramer said.

In addition failing to renegotiate with the OUC for lower wholesale power costs, and upgrading transmission capacity into the city to enable the decommissioning of the power plant, the city has adopted policies that have, Kramer says, contributed to higher rates.

While negotiating to sell the system, the city has chosen not to take advantage of lower interest rates to refinance debt.  The Council in 2009 set aside a 5-year plan to finance $26.5 million in capital improvements, and has instead added those costs to current rates.  Last year, the city paid some $4 million in cash for regularly scheduled maintenance to two generators, an investment that will largely benefit FPL if and when the company ever takes over the power plant.

Though the city is often criticized for the debt Vero Electric is carrying, Kramer says the debt to revenue ratio compares favorably to other electric utilities and is falling by $5 million a year.

Vero Electric customers, in the form of higher rates, have picked up the tab, not only for increased debt service payments and capital improvements, but also for some $1.5 million in legal bills.

The bottom line, Kramer says, is that Vero Electric’s rates are much higher than they need to be.

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