NEWS ANALYSIS

MARK SCHUMANN

In a story reporting on a meeting to be held Aug. 21 between representatives of the City of Vero Beach and the Town of Indian River Shores, Press Journal reporter, Henry Stephens, wrote, “The Shores Town Council also decided not to renew its electric franchise agreement with Vero Beach when it expires on Nov. 6, 2016, which would effectively bar Vero Beach from having hardware in the town’s rights of way.”

Stephen’s story is not correct.  In addition to a franchise agreement with Indian River Shores, Vero Beach has a service territory assignment from the Florida Public Service Commission.  Without unilateral action by the PSC changing Vero Beach’s service territory, a move that would be highly unprecedented, the City will remain legally obligated to continue providing reliable electric service to its Shores customers, regardless of whether the Shores Town Council acts to renew its franchise agreement with Vero Beach.

Rich is property tax revenue, the Shores Town Council has so far chosen not to assess a franchise fee on utility services. In contrast, the Indian River County Commission receives nearly $6 million a year in franchise fees from customers of Florida Power & Light and Vero Electric. The legal mechanisms making this taxation possible are the County’s franchise agreements with the City and with FPL.

Absent a renewed franchise agreement between the City and the County, and absent action by the PSC altering Vero Beach’s service territory, all that will change is that the City will no longer to authorized to collect some $2.8 million in franchise fees on behalf of the Indian River County Commission.

Unlike other municipalities, such as Winter Park and South Daytona, which negotiated franchise agreements with Duke Energy and FPL giving those cities an option to purchase the utility infrastructure and customers base at the termination date of the agreements, Indian River Shores and Indian River County have no such agreement with Vero Beach, just as the County has no such agreement with FPL.

The Shores lawsuit seeks to force Vero Beach to remove its utility infrastructure and its customer base from the Town without compensation. The County Commission’s PSC complaint seeks much the same result.  If the courts or the PSC grant the Shores or the County what they seek, they will be turning upside down service territory agreements which have made possible the long-term financing necessary to fund hugely expensive power plants.

Utilities across the state are watching what is happening in Vero Beach.  Many of them, including FPL, have reason to be concerned that if the Shores and the County prevail, service territory assignments that have made it possible to secure long-term financing for power generation projects may no longer be the bedrock of Florida’s power industry.