All the steps Kramer said should be taken to lower rates are now being pursued. The net result could be a Vero Electric/FPL rate differential of 7 to 8 percent.
Editor’s note: This story, first published Oct. 14, references a report to be made today at the City Council meeting by special counsel, Schef Wright. In a memo written yesterday to City Manager Jim O’Connor and City Attorney Wayne Coment, Wright outlined the report he will give the Council this evening.
In summary, Wright will report that the Orlando Utilities Commission has agreed to significant rate reductions in a 20-year wholesale power agreement between Vero Beach and the OUC. Together with cost savings to result from decommissioning the power plant, the City, Wright will report, should be able to reduce its charge for 1000 kWh from $123.92 to $113.93, a savings of 10 percent.
To put the “target rate” of $113.93 in perspective, the current statewide average for investor owned utilities is $126.46 and the statewide average for municipal utilities, such as Vero Beach, is $121.68. Accounting for the 6 percent franchise fee the County now adds to FPL bills, the rate differential between Vero Electric and FPL would be $113.93 compared to $105.14 – a difference of 7.7 percent.
Listening recently to Fox news commentator, Shawn Hannity, brag that his exercise routine is more vigorous and “manly” than President Obama’s, I was left thinking how hopelessly trivial and biased the press can be. Take for example, Vero Beach 32963 report, Lisa Zahner’s story on Wright’s memo. She ended her report by claiming the resulting rate difference between Vero Beach and FPL will be 17 percent. Zahner arrives at her number by failing to account for the franchise fee and by percentage Vero Beach is above FPL. That comparison is an FPL propaganda number, because it leads the reader to conclude they would save 17 percent by going to FPL. The relevant comparison is the percentage FPL is below Vero Electric. That number is currently 17 percent and will drop to approximately 8 percent if and when the cost savings Wright is proposing are implemented.
The effort to sell Vero Electric began with sensationalized reporting from the island weekly, and it appears the long, sad story will end with still more slanted reporting from 32963.
COMMENTARY
MARK SCHUMANN
Vero Beach 32963 has carried on a relentless four-year campaign to discredit Vero Beach Vice Mayor Jay Kramer. The island weekly once stooped so low as to describe Kramer as “lobotomized.”
Now, as news unfolds about progress the City’s special counsel, Schef Wright, is making in negotiations with the Orlando Utilities Commission, it is becoming increasingly clear the island weekly and some of its go-to sources, including County Commissioner Bob Solari, are the ones whose credibility may be at risk.
Essentially, Kramer believes the City’s contractual obligations to its fellow Florida Municipal Power Agency members and the agency’s bondholders are insurmountable impediments to a sale of the electric system to Florida Power & Light.
While the sale remains stalled, Kramer has urged the Council to work to lower rates in four ways: renegotiating the City’s wholesale power agreement with the Orlando Utilities Commission, decommissioning the power plant, financing capital expenditures rather than paying for them out of cash and further optimizing Vero Electric’s operations.
The island weekly has regularly dismissed Kramer’s suggestions as unrealistic and “diversionary.”
In a story released Nov. 21, 2013, island weekly reporter, Lisa Zahner, published extensive quotes from utility activist, Stephen Faherty and from Indian River County Commissioner Bob Solari. Both men were sharply critical of Kramer, thought neither is a utility expert.
Zahner quoted Faherty as saying,“They ought to finalize the existing proposals because they’re waiting to hear back from the FMPA on the proposal from FPL,” he said. “It seems like that needs to be finalized before they go off in a different direction and possibly incur fines and penalties from FPL, and additional consulting fees.”
Solari was the harshest in his critique of Kramer, and the most strident in his dismissal to Kramer’s proposals for lowering rates.
Zahner wrote: “Solari took issue with Kramer’s presumption that Big Blue could simply be powered down, even with a successful renegotiation of the OUC contract.”
“How can this be a realistic plan if even FPL cannot figure out a way without the power plant for three or four years?” Solari asked. “My understanding is that the power plant is needed for peak period for transmission limitations.”
Solari’s criticisms of Kramer are not standing the test of time.
At the Oct. 7 City Council meeting, Wright reported he is making significant progress in negotiations with the OUC. Wright also said he expects to be able to secure approvals from Florida Power & Light and the OUC to decommission the power plant, just as Kramer earlier suggested could be done. Wright also said the City can further lower rates by financing capital expenditures and by streamlining operations.
Wright said, “Assuming that we can mothball Big Blue (the power plant), get the permission we need from both FPL and the OUC to do that, and I think we can, Tom (Tom Richards, Power Resource Manager) believes that we can save a couple million dollars there. A couple million dollars is a significant amount of money. Through optimization we can probably save more. Through financing capital expenditures we can reduce some more.”
In total, Wright said he believes the City can cut its bill for 1000 kilowatt hours per month to $111. For the residents of Vero Beach, if they were customers of FPL today, they would be paying $105, including a franchise fee. That comes to a rate differential of 5.4 percent.
For 1000 kilowatt hours of residential power, the current statewide average for municipal utilities is $121.68, and $126.46 for investor owned utilities.
Further outlining steps being taken to lower rates, Wright said, “We can maybe squeeze $4 million out through some optimization, through financing capital expenditures and through mothballing Big Blue. We need more from OUC. We have asked them. We have discussed it with them. They understand our needs and our desires…In my opinion, they have negotiated in good faith with us, and I am looking forward to our meeting on Friday (Oct. 17).”
Wright is scheduled to report to the Council on Oct. 21. When the extent of the progress Wright has made becomes clear, the island weekly and its sources, namely Stephen Faherty and Bob Solari, are going to be wiping egg off their faces as they dine on crow.
Indian River Guardian 
Throw in a couple million for Turner’s and Flethcher’s do nothing attorneys and all the other money we spent on this present terrible sales agreement, we are starting to talk real money.
And, let us not forget how many things in the City got swept under the rug during the process, because we had a one issue Council for too many years. It is nice to know that the City is finally going to begin some road repair however…..why are they starting with a widening of the road that councilperson Pilar Turner lives on. And, to think, taxpayer monies are being spent to widen this road so that she and the handful of others may more easily get past the lawn mowing services that park on the street while mowing lawns. TOT….Turn off Turner should be the mantra from the Vero Beach voters.
Bob Solari is one of those who wants to have the city of Vero disintegrated and become a vassal state possession of the county where he is a county commissioner. Feherty wants to shift the tax burden to city taxpayers. Our enterprise funds keep our taxes low; he would change all that,and remember Feherty does not live in the city and has too much to say locally. It looks like Jay Kramer was correct in his thinking from the start.