GUEST COMMENTARY
JAY KRAMER
In politics sometimes you have to take a humorous approach to some things, otherwise the craziness can cause you to go blind. So, here we are five years after engaging a single bidder for the electric utility. Some thought that by having a new Council full of people who could not say “no” that we would get the best deal. Sounds reasonable, right?
Well, from what was explained to me, here is the deal as it stands today. The residents and taxpayers of Vero Beach will get the privilege to have higher taxes, reduced city services, award winning auto attendants and smart-meters from Florida Power & Light, and we have to wait until Oct. 1st of 2016.
For all of these “benefits,” the customers of Vero Electric will have to pay a $26 million surcharge. In the meantime, we will continue to hold our electric rates high. After all, we wouldn’t want to offend FPL by actually managing our utility.
The way this deal is going down it is like hiring a real estate agent to sell your house who tells you the market is so bad there is really only one buyer out there (like we believe that).
So, we decide to get one bid for our house, and the bidder says, “Wow, this guy is a real fool. Let’s see how far we can take this.”
When it comes time to seal the deal, the bidder says, “We ran into a problem on the closing, and you know just how bad the market is, so you are going to have to help us out a bit and pay us some money to help get it through closing.”
I think at this point a seller of sound mind would say, “Wait a minute. What happened to the other buyers and options here?”
Lake Worth, for example, was dealing with FPL, but their real estate agent gave them more choices. Lake Worth’s decision was to not go with FPL, and in around six months they dropped their rates down to $105 per kilowatt hour. When you start to look at the other cities around Florida, you find that FPL no longer has the lowest bills in the State! (actual bills, not rates)
I specifically remember FPL in their open letter to the community saying, “FPL continues to work toward completing the purchase in the near future … with the goal of delivering … the lowest electric bill in the State.” (Amy Brunjes, Oct 2, 2013). What happened? I wonder if the Governor will be going around to the FPL cities and asking the question why they don’t sell themselves to some of the FMPA members in order to lower their electric bills?
Remember, we were supposed to get $150 million in profit, with no tax increase, the lowest bills in the state, no surcharges, a closing in 2014, and a partridge in a pear tree. Lets see, hmmm, not even close, nope, nada, yeah right, no chance that could happen.
The credibility of the players involved is now coming into question. You can’t say we are getting a fair price anymore, unless you are talking from FPL’s perspective.
This has turned from a deal in which the city was to sell its $200 million asset to a very different transaction in which we are essentially handing over the electric utility for nothing and buying FPL services for a $26 million surcharge. I just can’t wait to start roasting marshmallows over my new FPL smart meter.
At this point, I wonder if anyone even remembers statements by the utility activists who suggested that we would make $10 million by selling the power plant land to the City to be made into a park? I would love to sell my house to myself and make $10 million. And, of course, there was that jab to the naysayers who predicted FPL was just going to come in and lowball the price on the system and steal it away. I think FPL exceeded expectations on that one: they want us to pay to make that happen.
The politics of this deal is so bad it can only be met with humor. I am just waiting for any of the Council members who vote for this deal to sell their house. When that happens, I want to be the first one in line to have them pay me to take their house.
Just remember this fall for annual daylight savings to set your clocks back and vote on yet, another referendum. Maybe this time your vote may actually count.
Indian River Guardian 
Let me condense your commentary, Jay. This deal stinks to high Heaven and we’re downwind.
Listening to some of the pro-sale spin, even that coming out of city hall, one might get the idea marijuana has already been legalized in Florida. These people seem to actually believe the City will be able to skate around having to pay to resolve contingent liabilities and stranded cost issues. From what I have been told, such a cakewalk is almost surely not going to happen. The public should know that, unfortunately for the residents and businesses within the city, these additional costs will not be shared proportionately by all customers of Vero Electric. These costs will fall solely and squarely on the taxpayers of Vero Beach. Now we are talking of driving off the car lot in a used Yugo that has a nearly empty tank of gas and bald tires.
Jay I hate to disagree with you but here are the facts. On October 29,2009 Dr Stephen Flaherty promised the following from Glenn Heran’s model. In addition to the $156,500,000 (you were 1/2 $ Million off) they show on their NEW ELECTRIC UTILITY FUNDING MODEL they stated the following And I quote “Glenn’s financial model shows NO tax increase, possible tax DECREASE, and $625.00 in each customer’s pocket”. The letter ends “Good luck. Glenn and I look forward to working with you. Steve”. Now I DO NOT really care that they were off to their side by $182,500,000 (that’s millions) and I do not really care if I get a tax DECREASE, But I sure as hell want my $625.00.
So, fair price Winger just might be considered in political circles as the swing vote. Certainly he can not consider this latest revelation of Vero Beach having to pay FPL to buy the electric utility a fair price…could he?
The value of FPL’s offer might be considered fair, except that some of the value will go to pay for capital improvement that will benefit FPL, such as transmission and distribution upgrades and a new substation. Even if the city were not asking that the power plant site be cleared, FPL would still need a new substation. Yet, they expect the city’s residents and taxpayers to essentially bear the costs for this substation and other upgrades to the system.
Then there is the question of terms. Vero Beach is only receiving $111.5 million in cash for an asset worth $180 million to $200 million, but the city gets the same $111.5 million whether the sale closes in late 2014, or in late 2016, or some time in between. Remember that when the city accepted FPL’s original offer, the company’s spokespersons assured everyone of their supreme confidence in an early 2014 closing. While the closing is delayed, the city is paying for capital improvements that will ultimately benefit FPL, and new customers are being added to the system, for which there will be no consideration. Every Vero Electric employee who retires between 1/1/14 and the eventual closing date will become a pension liability for the city rather than for FPL. These are not fair terms.
FPL may make something of the $26 million they are proposing to pay the FMPA, but they were to spend $30 million buying power from the OUC.
Finally, with this $26 million surcharge, FPL’s offer is now worth $26 million less.
The terms were never fair, and now the price is no longer fair.
Since I had never heard of a utility service that was a revenue stream for a city prior to moving to Vero Beach, I am curious as to just how and when the COVB got involved in providing electricity in the first place.
My previous experience with electrical service was as a customer of PEPCO (Potomac Electric Power Company) which was an investor own utility service providing electricity to the District of Columbia, Prince Georges and Montgomery Counties in Maryland. It has been in operation for over 100 years and is not used as a source of income by any governmental entity. Reliability was never an issue and rates were reasonable.
I know that the South beach area had no power lines, etc, when development first began for the newly built communities. However, I also know that the developers paid most of the upfront costs. The contribution that the COVB made to this effort has long since been repaid with the high costs for electric service paid by all the new customers over many decades.
Now I am learning about a $26 million surcharge on a contract that has already been signed. So I am more confused than ever. It is even legal for FP&L to change the price once a deal has been signed?
the city of vero beach bought vero electric in 1925.