COMMENTARY

MARK SCHUMANN

Listening to some advocates for the sale of Vero Electric, one could easily get the misimpression the City’s electric customers are paying the highest rates on the planet. Not so.

Along with almost every other public and private electric utility in Florida, Vero Electric’s rates are, in fact, higher than FPL’s.  Still, a singular comparison between the City’s 34,000-customer system and FPL’s 4-million-customer system leaves the impression the City has been entirely incompetent in running its utility. Not so.

A comparison of the state’s 39 utilities reveals that, at 1200 kWh, the City is eight percent higher than the statewide average. What we hear from the pro-sale crowd, though, are exaggerated and highly speculative claims that at all rate levels Vero Electric is as much as 40 percent higher than FPL. Again, not so.

When Tracy Carroll, Craig Fletcher and Pilar Turner made it the official policy of the City to sell its electric system to FPL Vero Beach’s rates were below the statewide average.  How and why rates have risen is debatable.  More important, though, is the question of what the City can and should do to lower rates.   When it becomes clear to everyone, including FPL, that Vero Beach’s contractual obligations to the Florida Municipal Power Agency and its bondholders make a sale impossible at this time, those left to pick up the pieces will have the responsibility of doing what can be done to reduce rates.

Based on the latest Florida Municipal Electric Association bill comparisons, it would appear a 10 percent reduction in Vero Electric’s rates would leave customers paying just below the statewide average. Certainly, between decommissioning the power plant, shedding some $1.5 million a year in legal fees, optimizing operations, restructuring debt and working with the Orlando Utilities Commission, a 10 percent reduction seems achievable.

As Councilman Jay Kramer has continued to point out, for at least the last several years, the City Council has focused on selling the electric system, while failing to identify and pursue opportunities to lower rates.

Sometimes the dogged pursuit of unattainable perfection becomes the enemy of good. In the case of the proposed power sale, the so-called “perfection” that cannot be attained is the privatization of the city’s electric system. Lowering rates now – that is the good that can be done.

As the two bar charts below reveal, over the past few years, while the City Council has focused on selling Vero Electric, rates have risen.  Just three years ago, the City’s rates were below the state-wide average for municipal and investor-owned utilities.  (Vero Beach’s rates are represented in the fourth bar from the right.)