COMMENTARY
MARK SCHUMANN
Much anticipated notes of last week’s discussions between City of Vero Beach officials and representatives of the Florida Municipal Power Agency should be available by week’s end, FMPA General Manager Mark McCain said yesterday.
What is clear is that the Humpty Dumpty of a deal put before voters in March 2013 has had a great fall. Wishful thinking, legal tap dancing and a persistent public relations campaign intended to demonize the FMPA will not salvage the sales contract signed by Tracy Carroll, Craig Fletcher and Pilar Turner. That deal is dead.
What went wrong? Strident pro-sale politicians, utility activists and Florida Power & Light strategists tried to solve a legal issue through the exercise of political muscle and public relations. Legislative efforts to force the FMPA to its knees having failed miserably; and it is now obvious no amount of money will entice the FMPA to compromise the integrity of its contracts. All that is left to do is to start where the transactional attorneys should have begun two years ago and structure a deal that will satisfy Vero Beach’s obligations to the FMPA and its bondholders.
For $34 million in cash and other considerations, the Orlando Utilities Commission has agreed to assume Vero Beach’s position in three FMPA power projects as of Jan. 1, 2018. One of the major sticking points in concluding the deal, though, has been finding a taker for Vero Beach’s power commitments between now and 2018. FPL cannot buy the power, because that would likely cause tax issues. A deal for the FMPA to absorb Vero Beach’s power supply commitments for $52 million fell through when FPL stepped in with stipulations the FMPA found “unworkable and unacceptable.”
FPL is now talking with the OUC about absorbing Vero Beach’s power entitlements through Dec. 31, 2017. Reportedly, the OUC’s price is not too far off from what the FMPA said it would need to absorb 38 megawatts of power for up to three years. A short term power supply agreement with the OUC, though, will not address Vero Beach’s contingent liabilities and stranded costs, nor will it gain Vero Beach’s withdrawl from the All Requirements Project before Oct. 1, 2017.
FPL could step in and assume Vero Beach’s secondary liabilities, but has so far been unwilling to do so. It would seem easy enough for FPL to take on these contingent liabilities, given the improbability of the OUC defaulting on the obligations it is to assume on behalf of Vero Beach. Why FPL’s reluctance to backstop Vero Beach’s contingent liabilities? Quite simply, FPL does not want to set a precedent that could boomerang when it gets around to negotiating to buy other municipal utilities across the state.
Anyone who sees the struggle over the sale of Vero Electric as anything other than a single battle in a much broader campaign is missing the larger picture. By his own admission, FPL President Eric Silagy has said he is interested in acquiring more municipal utilities. Especially given that reality, the FMPA is in no mood to make unilateral concessions that could undermine its contracts, or compromise its credit rating.
Whatever path is to be pursued from here, it will be a far different course from the one charted by the transactional attorneys and FPL strategists. All the king’s horses and all the king’s men will never put that deal back together again.
Indian River Guardian 
The deal is dead, long live the deal
If I hit the rewind button on my old VCR, I believe this is what Jay Kramer was saying about $1,500,000 worth of legal fees ago. Such a waiste of time, energy, and money. Had we done what Jay said years ago we would have the millions of waisted money still in the bank and more than likely a sale around the corner.
But, doesn’t the deal stand until such time as it officially ends? And, who ends this fiasco, City of Vero Beach or FPL? Just asking. In other words, who tears up the signed contract?
As FPL’s alleged domino theory to knock off FMPA municipalities one by one failed with the last Vero election where they lost control of the city council…and as they are now losing the propaganda war they dominated early in the process…is it not likely they will just fade away from the deal? After all they clearly signaled….”The best deal is sometimes….the one you walk away from.” These guys aren’t subtle. That comment speaks volumes.
We now need to turn to the art of the possible. How about a ten year strategy to lower rates for all concerned and get Vero Beach out of it’s dependance on it’s legacy power business or at least attempt to manage our relationship with FMPA in a far more efficient manner that lowers rates for everyone. Note that the latest “deal” was to saddle us all with higher rates for the next four years to partially pay for a lower rates. We may never get to FPL rates…but we have to make Vero Electric and FMPA a far more efficient and less costly way of providing power. And that means we really need to put it to FMPA and work towards lower rates if they are going to make this kind of deal with FPL impossible.
In light of the strong potential that the FPL deal is dead, isn’t it time for everyone to stop shouting at each other and get with a long term plan that is feasible and doable in a post FPL world?
At the very least an adult, cooperative approach to this long term challenge between our electric communities and the city council should undermine the “gong show” contestants that have attempted to dominate city council meetings lately and waste our time with self aggrandizing outbursts and embarrassing tantrums that frustrate all concerned.
Lets move on and work together for lower electricity rates.
It has to be possible.