MARK SCHUMANN

Utility Commission Chairman Scott Stradley today questioned the reasonableness of the Florida Municipal Power Agency’s calculation of the $46 million in stranded cost the City will have to pay when it leaves the All Requirements Project in the fall of 2016.

Specifically addressing the FMPA’s calculation of possible environmental cleanup costs, Stradley said, “Another interesting thing is the stranded cost for the fuel spill at the power plant.”

City Manager Jim O’Connor explained the City has already cleaned up the two known spills and has received certification from the state that no further clean up related to those spills is required.

“Jim, there must be another spill that the FMPA knows about that we are not aware of,” Stradley said.

O’Connor then told the Commission the FMPA’s exposure for possible environmental clean up at the power plant is related to the years when the City was generating power for the All Requirements Project.  O’Connor also explained that the City of Fort Pierce found that the environmental cleanup issues at its plant were far granter than had been anticipated.

“But they must have a reasonable basis for the $3.5 million figure.  Otherwise they can’t asses us the $3.5 million,” Stradley said.

“So let me understand,” Commission member, Michael Ochsner, then said, “they (the FMPA) are assuming we have clean up associated with our plant that we don’t know about.”

“That is correct,” O’Connor replied.

However, in its negotiations with Vero Beach, FPL allowed for up to $3.5 million for environmental cleanup at the power plant site. According to the sales contract, any clean up costs above that amount would have to be paid by the City. At the time, FPL negotiators said their number was based on an environmental study commissioned by the company.

FMPA General Manager and CEO Nicholas Guarriello cited FPL’s environmental study in his June 4 letter to O’Connor.  “Based on a initial environmental study done by FPL, it appears the estimated cost with fuel oil contamination is $3.5 million.  However, until decommissioning and dismantlement of the plant site, the actual cost cannot be known,” Guarriello wrote.

The FMPA general manager went on to explain, “If the actual costs are not known prior to Vero Beach’s withdrawal date of October 1, 2016, this will be considered a stranded cost, and Vero Beach will be responsible for paying the estimated cost as of that date.”