MARK SCHUMANN

Contradicting claims being made by a number of candidates on the campaign trail, utilities attorney Schef Wright told the City Council yesterday, “This City Council has done everything it could, and past city councils have done everything they could,” to conclude the sale of the electric system to Florida Power & Light.

Wright explained the City’s “virtual ownership position” in three Florida Municipal Power Agency supply projects and accompanying contracts are obstacles for which neither he nor representatives of FPL have a solution.

“There is no real news on the sale,” Wright said. “Nobody has any new ideas on it.”

“In practical terms, the deal as structured will not get done,” because, Wright said, the OUC (Orlando Utilities commission) has determined it cannot take Vero Beach’s legal positions in the FMPA power purchase contracts and project support contracts.

Wright explained because OUC determined its existing bond covenants prevented it from being a party to the deal, the City needs to find some other qualified and willing partner to take its place.  At this point, no one is interested.

Asking the Florida Municipal Power Agency to assume Vero Beach’s obligations would put other cities and towns at risk. “FMPA is an organization of cities just like us, some bigger, a fair number smaller. The costs are what they are . The risks are what they are. If one member drops out – Vero Beach in this analysis – all the other member cities and towns have to be willing to take on the cost risks and the other long-term risks; and they just don’t seem to be willing to do that. If you changed shoes and…if a city came to you and said we want you to take over our cost responsibilities because we want to go something else, and we want you to take on our long-term risks, I don’t know what you would say. It is not an easy proposition,” Wright said.

Wright said there is no legal basis for suing the FMPA. Further, he said he believes it is highly unlikely the Florida Legislature would be willing to interfere with the City’s contracts with the FMPA, contracts that have already been validated by the Florida Supreme Court. Wright said that if the Legislature were to obviate the contracts, the move would “send a chilling message to Wall Street.”

Wright reported that he is focusing on renegotiating the City’s wholesale power agreement with the Orlando Utilities Commission. He is also working to gain approval both from the OUC and from FPL to allow the City to decommission the power plant.

In combination with further steps to be take to optimization electric system operations, Wright said he believes decommissioning the power plant and negotiating a new contract with the OUC will enable to City to cut in half the rate differential between Vero Electric and FPL. Currently, FPL’s rates are 20 percent below Vero Electric, 15 percent allowing for a franchise fee.

Wright’s report prompted a spirited discussion between Vice Mayor Jay Kramer, Mayor Richard Winger and Councilwoman Pilar Turner. Turner pressed Wright for specific numbers on projected savings and dates for implementation. Turner even suggested that by going to the last conflict assessment meeting with Indian River Shores without specific numbers on possible savings, Wright was “running up the legal bill.”

“You can’t negotiate by time schedule, Mrs. Turner,” Winger said, explaining the City is dependent on the OUC’s willingness to renegotiate its existing contract with Vero Beach.

Winger also countered Turner’s suggesting the City can or should turn over its customers outside the city limits to Indian River Shores and to the Indian River County Commission. “We’d have to raise the (electric) rates to the city people 20 percent if we didn’t have the outside customers,” Winger said. “Additionally, if we did not have the return on investment we’d get $2 million (in transfers from the electric utility) instead of $5 million. We’d have to raise taxes on the city people 75 percent immediately, from $2.04 (Per $1,000 in taxable value) to $3.58.

“Now, if you think that I, at least, am going to vote for anything that’s going to raise the taxes on our city people 75 percent, and is going to raise the power bill 20 percent, you’ve got another thought coming,” Winger said.

Winger explained that one third of the City’s power comes from the FMPA and two-thirds from the OUC. OUC power is less expensive that FMPA power; so if the city were left with just 40 percent of it customers, and just FMPA power, rates, as a result of a so-called “partial sale,” would go up 20 percent for city residents and businesses.

Kramer said there was a time with the FMPA might have been able to help with a partial sale, but that the agency’s leaders have been so alienate by Turner’s criticisms and attacks that they no longer have any motivation to be helpful.