Editor’s note: This commentary was first posted in March 2014. Now that Glenn Heran is being allowed to use the pages of the Press Journal to erroneously claim the current city council is responsible for the power sale being stalled, it is worth noting the many other ways Heran, a strident Florida Power & Light apologist and political operative, has be wrong. Most notably, when Heran and Dr. Steven Faherty first built public support for the sale, they claimed the deal would net the City of Vero Beach some $156.5 million.  

Heran used his “credentials” as a CPA to add credence to his claims. It is now clear a sale of the city’s electric system, even if it did not violate existing contracts, would net the city closer to $13 million, not the $156.5 million Heran and Faherty first promised.  

Despite being wildly wrong in their projections, Heran and Faherty, every loyal to FPL, continue to push for the sale. The dogged persistence of these two activists/operatives proves the old adage that nothing dies harder than a bad idea. Like dogs on a bone, they will not let go, at least not until they have dragged the City of Vero Beach down with them.

COMMENTARY 

MARK SCHUMANN

In 2009, utility activist Glenn Heran circulated a financial model projecting the City would net $156.5 million in cash from the sale of Vero Electric.  In his calculations, Heran proposed the city should pay itself $10 million for the power plant site.

Apparently desperate to sell the public on the benefits of accepting a $26 million surcharge to help fund the sale, Heran is now playing another shell game with the numbers.   This morning he went before the County Commission claiming the City will net nearly $40 million from the sale.  In his calculations, Heran is proposing to count reserve fund money already in the City’s bank accounts as “proceeds” from the sale.

Earlier estimates based on a Jan. 1, 2014 closing, which were compiled by members of the Finance Commission, projected the City would likely net no more than $2 million to $3 million from the sale, exclusive of reserve funds.  Given that the reserve fund money, though encumbered, already belongs to the City, is seems a stretch to create the impression the money will “proceed” from the sale.  It is not as if Florida Power & Light is bringing that money to the table.  The reason the cash proceeds from the sale increase over time is because the debt is being paid of at about $6.7 million from Vero Electric’s annual earnings.

Above is Finance Director Cindy’s Lawson’s latest projection of what the City may net, if and when the sale goes through.  Lawson’s numbers, however, do not allow for additional separation costs the City will incur for employees who do not accept positions with FPL, for other costs associated with a delayed closing, or for other potential closing costs, such as the premium on an insurance policy the City has proposed to buy to cover its contingent liabilities with the Florida Municipal Power Agency.

According to the FMPA, there may be other stranded costs for which the City will have to compensate the FMPA in a lump sum payment to be made at closing.  Based on Lawson’s latest estimate, it would seem the best the City can hope for is to net $$13 million on a deal FPL has valued at $179,5 million, not the $40 million Heran is claiming.

Below are Heran’s 2009 projections.  Notice that Heran made not allowance for reserve funds in 2009.  Now, apparently to keep his 2009 model from being any farther off, Heran now proposes to count the City’s electric utility reserve funds as proceeds from the sale.