JEANNIE ANDERSON/PUBLIC POWER DAILY

A plan long in the works for investor-owned Florida Power & Light to buy the municipal electric utility in Vero Beach, Florida, seems to have unraveled. The plan has the faint possibility of being revived, because an agreement between the city and FPL does not expire until the end of 2016. But that possibility seems to be very faint indeed.

The investor-owned utility offered $111.5 million to buy the municipal utility’s 34,000-meter distribution system after the city asked FPL to consider a purchase. Three years ago, the Vero Beach City Council signed a letter of intent offered by the private utility. Last October, the Federal Energy Regulatory Commission gave its stamp of approval to the proposed transaction.

A complex aspect of the deal was that a municipal electric utility buyer was needed to assume ownership of a share of coal-fired generation the city owns through its membership in the Florida Municipal Power Agency, said Barry Moline, executive director of the Florida Municipal Electric Association. Under the FPL offer, Vero Beach was required to find a buyer for the share it owns through FMPA, Moline told Public Power Daily on June 5. When the city had trouble finding a municipal buyer, FMPA considered accepting the city’s share, but decided not to do so.

Next, Moline said, FPL asked the Orlando Utilities Commission to take the Vero Beach share, and OUC seriously considered it. But the Orlando utility found that agreeing to the terms of the FMPA contract was too difficult, he said.

In a June 2 letter to Vero Beach City Attorney Wayne Coment, OUC Vice President and General Counsel Chris Browder said OUC could not assume the power entitlements the city has with FMPA.

“We have reached an impasse with FMPA on these discussions and we see no feasible means by which to consummate the proposed assignment and assumption of the Vero Beach Power Sales Agreements,” Browder said. Based on a May 30 letter OUC received from FMPA General Counsel Fred Bryant, “FMPA has likewise been advised by Bond Counsel that such [contract] modifications cannot be granted without jeopardizing FMPA’s bond commitments,” Browder wrote.

“Now there are practically no other options for selling those resources,” Moline told Public Power Daily. However, he added, FPL said on June 4 that it is not ready to let Vero Beach out of the contract for the sale. “FPL told Vero Beach it needs to try harder to sell off its power supply resources – even though Vero has already contacted every public power utility in Florida and hit contractual snags with two of them,” said Moline.

The agreement between the two does not expire until Dec. 31, 2016, and if either Vero Beach or FPL breaks the agreement, it must pay a $5 million penalty.

Moline said the deal is not entirely dead yet, because of this agreement, but he likened it to a car that has stalled along the side of the highway, and has had its wheels removed, battery confiscated, and spark plugs pulled out.

“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,” wrote Mark Schumann in a commentary in Inside Vero, the local news magazine.