Updated, 7 a.m., Wednesday

MARK SCHUMANN

The Press Journal carried news across its front page yesterday reporting the City Council was set to decide whether the customers of Vero Electric would pay an Florida-Power-&-Light-proposed $26 million surcharge over three years or four years. “Lower for 4 years or higher for 3? – Vero Beach council to set surcharge rate for electric sale to FPL,” read the newspaper’s headline. The Council meeting did not unfold as Scripps’ editors had apparently expected.

Mayor Richard Winger and Councilmembers Jay Kramer and Amelia Graves tabled fellow Councilmember Craig Fletcher’s proposal to authorize FPL to negotiate a deal with the Florida Municipal Power Agency that would require the 34,000 customers of Vero Electric to pay a $26 million surcharge to help fund the sale of the city’s electric system.

“I refuse to be boxed in and we have to answer something this day,” Winger said. “I have to insist that we pass this on to our Commissions…No blank check today.”

In objecting to FPL’s request that the Council act on no more than a few days notice, Winger pointed out that FPL took nearly three months to decide if it would accept FMPA’s offer to assume Vero Beach’s power entitlements through 2017 for $52 million.

Half of the total proposed payment to the FMPA would be collected over three or four years from the City’s current 34,000 electric customers and would be matched with $26 million from FPL.  FPL’s $26 million share would be in place of the $30 million premium the company was to spend buying Vero Beach’s power entitlement from the Orlando Utilities Commission for three years.

During public comment, the Council heard from a number of residents.  While many objected to FPL’s proposal, an equal number spoke in favor of moving forward with the sale under the latest terms, despite the prospect that current customers of the city’s electric system will have to wait three or four years after a sale to get FPL rates.

Prior to public comment, Winger read a lengthy prepared statement.  While expressing concerns about the surcharge, Winger reiterated his desire to conclude the sale with FPL this year, if at all possible. Winger went on to outline the ways he believes the city could lower rates on its own, if necessary.  The mayor also raised the prospect that, should the sale to FPL fall through, the formation of a Utility Authority may be the best way to address the representation concerns of out-of-city customers. (Read Mayor Winger’s full statement…)

Both Kramer and Graves said it would be premature to approve the surcharge, or even to put the proposal before the Finance and Utilities Commissions, before a fully negotiated contract is available to consider.

Councilwoman Pilar Turner, who supported Fletcher’s motion, stressed that even while paying a surcharge for three of four years, current customers of Vero Electric would still benefit from rates some 10 percent lower than they are currently paying.

Following the tabling of Flethcer’s motion, FPL spokeswoman, Amy Brunjes, asked Winger and City Manager Jim O’Connor to schedule a meeting with the FMPA before the Council meets again on March 18.  Still to be resolved are several nagging issues, including how to cover the city’s contingent liabilities, how to compensate the FMPA for stranded costs, as well as the all important question of when the city will be able to leave the FMPA’s All Requirements Project.  Without a waiver to exit the ARP before October 1, 2016, the City will not be free to sell its electric system until late 2016.

Earlier in the meeting, Brunjes said that if the surcharge were not agreeable to the Council, the original contract is still on the table.  Later in the meeting, though, O’Connor said the concept for resolving the city’s power entitlements as provided for the in the original purchase and sale agreement, the so-called Plan A, was, in his words, “a dead end.”

FPL attorney Patrick Bryan explained that FPL’s willingness to pay the FMPA to take on Vero Beach’s power for three years comes with several conditions.

• The FMPA must publically support the transaction and must draft a resolution to facilitate timely procurement of the necessary consents and approvals from the Federal Energy Regulatory Commission, the Florida Public Service Commission, the FMPA board of directors, FMPA’s member cities, bond counsel, bond trustees, bond insurers and other third-party stakeholders.

• The FMPA must honor the City’s request for early withdrawal from the All Requirements Project.

• The FMPA and the City must resolve all contingent liability issues.

Essentially, FPL’s conditions constitute a counter offer, which, presumably, the FMPA will have to accept before negotiations can continue.

Prior to the Council’s discussion and debate, O’Connor said, “If we want FPL to go forward in talking with FMPA, we need to give them some support in the concept of whether are we willing to burden some of the cost associated with this $52 million…If we are not, then obviously that’s not going to work.”

O’Connor continued, “If we are going to go to FMPA, and if Wayne (City Attorney Wayne Coment) and I are going to be a part of that conversation, we have to understand that the Council, either we go back to Plan A, which I even hate to use that because that is going to be a dead end and in a year from now we will still be talking about this, or we go forward with this concept understanding what the number is and how do we pay back that $52 million.”

Kramer opened Council discussion. “My understanding is the $52 million is a starting point. There are going to be other expenses on top of that.  Keep in mind we have a lot of people who seem to enjoy demonizing FMPA. FMPA does not even have to take that power.  The $52 million was just kind of a good will gesture from FMPA.  They can just flat say, ‘We don’t want it.’  They can easily walk away from it.  I just find it amazing that we will go down any road FPL tells us to and somehow it is going to turn out beautifully.  We’ve been doing this for four years.  The old contract is dead.  There’s three years thrown away. Good grief.  How much longer are we going to do this for?,” Kramer said.

Turner countered, “Although this $52 million is an outrageous sum, this is what we are going to have to pay to extricate ourselves from the terrible, terrible contracts that we are in. If not, we are committed until 2066 to the Florida Municipal Power Association (Agency).  And what does that mean? Sixty percent of your power bill is coming from them, completely out of our control.”

Turner added, “When FMPA in its good wisdom came out with this number, they wanted it to be so preposterous, so outrageous that we couldn’t go forward, but yet we have come up with an option, obviously not ideal, but an option to go forward with this.”

The Orlando Utilities Commission also gave FPL a price at which it would absorb Vero Beach power entitlements through 2017.  No one explained yesterday why FPL prefers to pursue a proposal from the FMPA, an offer which Turner characterized as “preposterous.”

Following Turner, Graves said, “I think giving a concept to our Commissions to review is futile.  They need an actual contract to review. Until we have a contact, our Commissions can’t give an opinion. So, do we ask FPL to go forward and bring us back a completed contract so then we can give you a recommendation based on what our Commissions say. We need a completed contract, and we can’t have our Commissions review anything until that happens.”

Fletcher followed, “This is a path to exit our FMPA and OUC contracts.  You’ve got to remember the bottom line here. Our goal is to extricate  ourselves from those contracts, get rid of the power plant, and then in doing that we will have the lower bills…The bottom line is we need to authorize Florida Power & Light to continue the negotiations with the understanding that we are going to split the $52 million with them, so they can get on with the business of putting something on paper that we can review.

Fletcher than made a motion to authorize Florida Power & Light to continue the negotiations with the understanding that the $52 million to be paid the FMPA would be split evenly between FPL and the ratepayers of Vero Electric. Turner seconded Fletcher’s motion.

“I’m for further discussion,” Winger then said. “I cannot accept the $26 million without further vetting and further time…I refuse, I refuse to be boxed in and we have to answer something this day. If you want to have a vote at the next City Council meeting in two weeks, I can live with that, but today I cannot live with it.”

Pointing out that Fletcher’s motion was made under public comment, and not under an agenda item, Kramer said, “I make a motion to table until next meeting.”

Kramer’s motion to table was seconded by Winger and supported by Graves.

At Winger’s encouragement, the Council then unanimously approved a motion requesting the Finance and Utilities Commissions to begin studying ways the City could begin lowering rates on its own. “I think we ask our Commissions to do those things that are in the public interest to bring down costs,” Winger said in making his motion.

In his prepared remarks, Winger raised the prospect of forming an independent utility authority, which, he said, would give all customers of the electric system an equal voice in decisions affecting rates. Winger also outlined several steps he believes the city can take to significantly lower rates, including closing the power plant and re-negotiating the OUC wholesale power agreement.

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No one who participated in yesterday’s City Council meeting was more spirited, or animated than utility activist Charlie Wilson.