COMMENTARY

“The Shores’ lawsuit is hardly a way of seeking an amicable divorce.  In fact, it is more like the lawyer who told his wife, ‘Here is how this divorce is going to go.  What mine is mine, and what’s yours is mine.'”

MARK SCHUMANN

The Press Journal today published a “guest column” by Indian River Shores Mayor Brian Barefoot explaining why he and his fellow Town Council members resorted to filing a lawsuit against the City of Vero Beach. Notably absent from Barefoot’s epistle was any discussion of the potential cost of such a suit on the residents of Indian River Shores and the customers of Vero Electric.

Barefoot repeated the claim that “on average” the 2300 or so Shores residents served by Vero Electric are paying 30 percent more with the city than they would with Florida Power & Light.  Using the 1000 KWH comparison so popular with FPL and its local pro-sale advocates, the true rate differential between the two utilities is 17.9 percent. Currently, Vero Electric’s rate for 1000 KWH for residential use is $123, and FPL’s $101.  Add a 6 percent franchise fee, as does the Indian River County Commission, and FPL’s rate rises to $107.38.  FPL’s rates have been going up this year, while Vero Electric’s have declined, a fact scantly reported by the Press Journal.

Barefoot claims Vero Electric’s rates are “unreasonably high,” though his only measure seems to be a comparison with FPL.  Based on the latest statewide electric rate comparison, Vero Beach’s current rate for 1000 KWH of residential use is actually below the average for investor-owned utilities, all of which are regulated by the Florida Public Service Commission.

In challenging the fairness of Vero Beach’s practice of transferring what amounts to 24 percent of its general fund operating budget from its electric utility revenue, Barefoot did not mention that the approximately 5.6 million amounts to just 6 percent of Vero Electric’s total revenues, and simply represents a reasonable return on investment.  The state’s investor-owned utilities, which are currently charging an average rate for 1000 KWH higher than Vero Electric’s rate, are allowed a return on investment of more than 11 percent.

Barefoot’s letter is silent on the fact that Vero Beach’s practice of earning a reasonable profit on its electric utility operations pre-dates the Town’s franchise agreement with Vero Beach.  In asserting that this practice amounts to taxation without representation, Barefoot also did not acknowledge that the Shores has a designated representative on Vero Beach’s Utilities Commission.

On its face, the Shores’ suit seeks to force Vero Beach to remove its utility infrastructure from the Town when the existing franchise agreement expires in late 2016.  Barefoot would have his readers believe Vero Beach’s right and responsibility to service its Shore’s customers expires with that agreement. Nowhere in his letter does the Shores mayor discuss the fact that underlying the franchise agreement is a service territory assignment that predates the existence of Indian River Shores as an incorporated municipality.  Whether the service territory assignment supersedes the franchise agreement, the courts will have to decide, and at great cost to the residents of Indian River Shores and the customers of Vero Electric.

When Winter Park’s franchise agreement with Duke Energy expired, the city exercised a provision in the agreement allowing it to buy Duke’s utility infrastructure within the city. The City of South Daytona tried unsuccessfully to exercise a similar provision in its franchise agreement with FPL.  In FPL, South Daytona was up against a far more formidable opponent.  In fact, FPL spent some $500,000 forming and funding a political action committee to fight South Daytona’s attempt to gain its independence for the utility giant.

It may seem like a minor detail to some, but, unlike Winter Park or South Daytona, neither the Shores’ nor the Indian River County Commission’s franchise agreement with Vero Beach provides for the forced removal, or the purchase of Vero Electric infrastructure.

Barefoot’s letter may be a nobel effort to attempt to cast the downtrodden residents of Indian River Shores as helpless victims of a tiny municipally-owned utility charging “unreasonable” rates, but the truth seems to be far different.  Knowingly or otherwise, the Shores’ suit against the city, along with the Indian River County Commission’s effort to persuade the PSC to carve up Vero Beach’s service territory, may only serve to help FPL pull off a partial “steal” of Vero Electric’s out-of-city customers.

The Shores’ lawsuit is hardly a way of seeking an amicable divorce.  In fact, it is more like the lawyer who told his wife, “Here is how this divorce is going to go.  What mine is mine, and what’s yours is mine.”