NEWS ANALYSIS

MARK SCHUMANN

Urging patience and pointing to detailed minutes to be made available early next week, representatives of the Florida Municipal Power Agency and the City of Vero Beach are not yet offering much in the way of specifics about what may have been accomplished in a four-hour meeting held in Orlando Wednesday.

Off the table, though, is Florida Power & Light’s proposal to pay the FMPA $52 million to absorb for three years Vero Beach’s power entitlements. FPL’s $52 million offer came with several conditions FMPA General Manager Nicholas Guarriello said are “unworkable and unacceptable.”

In the same March 5 letter to FPL President Eric Silagy in which he rejected FPL’s offer, Guarriello encouraged Silagy to pursue a deal with the Orlando Utilities Commission to take on Vero Beach’s power entitlements through Dec. 31, 2017.

The OUC has already agreed to permanently assume Vero Beach’s position in three FMPA power projects as of Jan. 1, 2018. “It seems more straight forward, as I have mentioned before, for FPL and OUC to directly negotiate a price — be it $52 million or any other figure — for the up-to-three-year power sale, which would avoid any IRS private use restrictions,” Guarriello wrote.

City Manager Jim O’Connor said yesterday FPL negotiators got Guarriello’s message loud and clear, and is now “pursuing other options.”

If FPL is able to make a deal with the OUC to take on Vero Beach’s 38 megawatts of Stanton I and II power through Dec. 31, 2017, one more hurdle to the sale will have been cleared.

Beyond finding a buyer for Vero Beach’s power entitlements, still to be resolved are the City’s contingent liability and stranded cost obligations to the FMPA. Also to be determination is a date when the City will be able to withdraw from the All Requirements Project.

Given that FPL will be taking on Vero Beach’s 34,000 customers, the company could assume Vero Beach’s secondary liability, but has so far been unwilling to do so. The stranded cost figure, officials say, is a moving target that cannot be calculated until a closing date is set. Absent a waiver that must be approved by all 14 members in the All Requirements Project, Vero Beach will not be free to sell its electric system until Oct. 1, 2016.

With their rejection of FPL’s $52 million offer, which included contingencies intended to clear aside Vero Beach’s secondary liabilities, stranded costs and the All Requirements Project withdrawal provisions, FMPA officials reiterated their position that no amount of money will buy their willingness to compromise the integrity of FMPA’s contracts.

Though pro-sale advocates have been loathe to hear the message, FMPA officials have from the beginning insisted their primary responsibility is to preserve the integrity of contracts that protect member cities, and more importantly, bondholders.

Legislation proposed by State Rep. Debbie Mayfield intended to force the FMPA to compromise failed in committee, never making it to the House floor. Talk of suing the FMPA is likely to go nowhere positive. And the public relations war FPL has been waging against the FMPA has done nothing to alter the agency’s position.

It now seems clear any path toward a sale of the City’s electric system to FPL will be determined, not in “political theatre,” but in the domain of contract law, as the City finally seeks a way to comply with, rather than to circumvent, its FMPA contracts.

As a footnote, it is also clear FMPA officials were impressed with Mayor Richard Winger’s orientation toward solutions and his intimate knowledge of contract provisions and other details. Though pro-sale utility activist Charlie Wilson has twice gone before the City Council recently and publicly accused Winger of attempting to obstruct the sale, the reality seems to be that Winger was at least ten times more effective in representing the City and its ratepayers that the abrasive Wilson could ever have been.