COMMENTARY

MARK SCHUMANN

Florida Power & Light’s epic struggle to acquire Vero Beach’s electric system is finally nearing an end. There will be no cake cuttings or clinking of Champaign glasses, though, for the FPL/Vero Electric power sale has finally run into an insurmountable hurdle.

Quite simply, that obstacle is the lack of a buyer. No one, not even the Orlando Utilities Commission, not even for $54 million, is willing and able to assume Vero Beach’s position in two coal-fired power plants east of Orlando.

In an April 30 letter explaining why the OUC cannot accept a clean assignment of Vero Beach’s power supply contracts with the Florida Municipal Power Agency, OUC Vice President and General Counsel Chris Browder essentially signaled the deal was on the verge of unraveling.

In a way, then, Browder’s June 2 letter informing City Attorney Wayne Coment the OUC simply cannot go forward with the deal is almost anti-climactic. In fact, Browder’s “Dear John” letter of June 2 would hardly be news, except that so many sell-at-any-price pro-sale fundamentalists have persisted, at least until yesterday, in minimizing the obstacles to the sale.

Instead, the pro-sale crowd has continued to embrace FPL’s strategy of putting public and political pressure on the FMPA to disregard the advice of its bond counsel and accept fundamental changes to its contracts.

The real surprise for many is that the weak spot in the proposed transaction turned out not to be the City’s contingent liabilities or stranded costs with the FMPA, or the need to find someone to take the City’s FMPA power entitlements through December 31, 2017. (That question has yet to be resolved, but is now a moot point.)

What finally brought the deal down were issues that could and should have been identified and addressed long before the City Council signed a purchase and sale agreement with FPL, an agreement that does not expire without mutual consent until December 31, 2016.

More than a year after provisionally accepting the power transfer agreements, the OUC has finally concluded the changes it needs to Vero Beach’s FMPA contracts will not work for the FMPA. At the heart of the matter is the legal obligation both the OUC and the FMPA have to preserve existing protections for their bondholders. Neither organization’s bond covenants allow for the interests and claims its creditors to be subordinated to the other’s.

To hear transactional attorney John Igoe and the OUC’s Chris Browder tell it, there was simply too much time pressure to work out all the issues and still meet the “deadline” of signing the power transfer agreements and the purchase and sale agreement in time to put a contract before Vero Beach voters in March 2013.

The obvious question to be asked now is who was setting the deadlines and who was compressing the timeline? Was is the 2012/2013 City Council majority of Tracy Carroll, Craig Fletcher and Pilar Turner, or was it FPL strategist, who have seemingly orchestrated every move, often meeting individually and in private with City Council members, while also spending more than $100,000 in an attempt to control the outcome of local elections?  Did FPL want to push the contract through before the next Council election, when it might loose a three-person majority willing to let the power giant dictate the terms of the deal?

Further, who was advocating and executing a strategy of seeking premature voter approval for an incomplete purchase and sale agreement as a way of waging a public relations fight with the FMPA? Referring to the outcome of the March 2013 referendum, Turner said, “This will be ammunition to use with the FMPA board.”

Soon after the contract signing in late February 2013, Turner was asked, “How could you have signed a contract without knowing the FMPA’s terms and without knowing if you can meet those terms?”

Turner reportedly replied, “We are going to bring the FMPA to its knees.”

Considering Turner’s attitude toward the FMPA, and given the importance of maintaining a positive working relationship with the FMPA, why Turner is allowed to continue to represent the City on the FMPA board is mystifying.

Hopefully the unraveling of FPL’s attempted acquisition of Vero Electric will not bring anyone to their knees. Though all parties have given it their best effort, a deal could not be structured that satisfied existing contracts. It is now time to move on.

City leaders have a lot of work to do as they begin a rate and system optimization study. With wise leadership from the Council and effective management of the electric system, the City should be able to bring rates down to within the statewide average.

The issue of fair representation for some 22,000 out-of-city customers must be addressed, and now rather than later. It may even be time for the City to form a utility authority and to agree to oversight by the Public Service Commission.

As the roiling waters recede and the dust settles on what has been a long struggle, hopefully the heightened level of contentiousness that has come to characterize local politics will also subside. It is time to move on.