COMMENTARY
MARK SCHUMANN
Ironically, some of the electric sale’s most ardent supporters seemingly oppose every proposal short of a sale to lower rates now. Most recently, they have criticized, and appear ready to sabotage efforts to re-negotiate the City’s long-term wholesale power contract with the Orlando Utilities Commission.
To bolster support for the proposed sale to Florida Power & Light, pro-sale activists, including some in the press, are prepared to keep rates high. They also seem blind to cold, hard facts and impervious to new information; and they appear quite willing to mislead the public by greatly exaggerating the likely savings to result from a sale and by misrepresenting the truth about the OUC negotiations.
For example, pro-sale advocates claim proposed amendments to the current agreement between the City and the OUC will put Vero Beach and its electric customers on the hook through 2029. They are wrong, for Vero Beach is already contractually obligated to buy power from the OUC through 2029. Amending the existing contract to the benefit of the City’s electric customers – to the tune of $72 million – does not amount to signing a new contract.
To be sure, the proposed changes to the City’s contract with the OUC will not turn a sow’s ear into a silk purse. In other words, the rate concessions utility attorney Schef Wright has been able to negotiate with the OUC, though they will benefit the customers of Vero Electric, will come at a cost to the City.
By lowering electric rates $72 million between now and 2029, the City will lose more than $4 million in transfers to the general fund. That lost revenue will have to be made up by Vero Beach residents, who comprise only 40 percent of Vero Electric customer base. All will share the savings, but the costs will be born by city residents.
In exchange for rate concessions, the OUC is also asking Vero Beach to give up several utility assets, including gas transmission rights and its fractional interest in the Saint Lucie Two nuclear plant. The value of these assets is likely far less than the $72 million in rate concessions the OUC is offering. Still, everyone should be clear that rate reductions benefit all 34,000 customers of Vero Electric, not the City of Vero Beach.
Another criticism of the proposed changes to the OUC contract is that they will “deepen Vero Beach’s engagement” with the OUC. This is not true. Yes, the City is being asked to commit not to reduce its customer base through 2029, but that commitment would be contingent on future court rulings, Public Service Commission directives, as well as on the existing contract between Vero Beach and Florida Power and Light. Nothing in the proposed amendments to the OUC contract would prevent the execution of the purchase and sale agreement between Vero Beach FPL.
For much of the past six years, the City Council has been controlled by councilmembers willing to sell to FPL at any cost. Despite their every effort, including spending $2 million in legal fees with their handpicked attorneys, pro sale advocates have failed to close the deal. Today, the City is farther from a sale to FPL than it was six years ago, when Brian Heady and Charlie Wilson were elected to the City Council.
The electric sale’s proponents have had their day. Given the seemingly insurmountable odds to closing a deal, the only responsible path forward is to find other ways to lower rates for the benefit of all the customers of Vero Electric, even if that means Vero Beach residents must pay another $4 million in taxes over the next 15 years, and even if the City must give up its gas transmission rights and its interest in the Saint Lucie Two nuclear plant.
Detractors and critics, including the members of the Indian River Shores Town Council and the Indian River County Commission, can continue to criticize a previous City Council’s decision to enter into a 20-year wholesale power agreement, but none of their Monday-morning quarterbacking will change the fact that the City is contractually obligated to the OUC until 2029. Improving the terms of that agreement, even at some expense to the City, will benefit the customers of Vero Electric.
Beyond renegotiating with the OUC, the City can decommission the power plant. The potential direct savings are unclear, because there will be additional transmission charges. More important in the long run, though, could be the benefit of shedding potential future liabilities, including environmental hazards.
Surely a major debate will be waged over how best to make use of the riverfront power plant site; but that debate and community discussion will never take place as long as the City owns and operates a power plant.
Other steps can and should be taken to further optimize the City’s electric utility. Despite the objections of the pro-sale crowd, the time is now to lower rates.
Indian River Guardian 
This news is indeed so sad. It is as if one had a retail store and the products it sold were intangible and really of no relevance to itself! Vero is in the electric business and it should be a profitable utility. Why can’t we the customers take it over and do just that? Over over payments can now become investments. Do the investigation on what happened to get all these good people of Vero into this mess, show that there was unscrupulous dealings, void the existing contracts and let all of the present customers be involved in a healthy Vero Electric business, make us partners! I would love to see this happen, and I feel that those responsible for this mess be found out and properly dealt with so that innocent residents are not on the “hook” for their misdeeds!
Not a single member of the Indian River Shores Town Council could express more effectively expressed than you have the completely unrealistic and selfish attitude that seems to have infested the Shores like a virus.
The issue of surrendering our existing St. Lucie power entitlement and gas contract appears to contradict PA consultant’s position that our power supply contracts have a negative value. It appears at least OUC thinks there is positive value in these contracts. I would like to see what the cost per megawatt hr. assigned to recent executed power supply contracts in addition to the going rate on the spot market. The above pricing should include any transmission costs. I can understand OUC wanting to improve their fuel mix.
With OUC showing interest in an early contract exit without penalty, has the cost of a mutual early exit been expored? Correct me if I am wrong but wasn’t the 50 million penalty reduced to 20 million withing the proposed FPL/OUC/VB contract.
If the existing power plants reliability is questionable to run 24/7 why have we been pumping millions of dollars into this facility? Did we not just spend 3 million in overhauling the gas turbine of the combined cycle unit?
I applaud the City Council for conducting the ongoing negotiations and for bringing onboard, consultants with expertise in the subject at hand. The future of Vero Beach Electric is the hands of the city council or the courts. Let’s not run scared and let’s take the time to explore all possibilities
I own a property in another part of the state and my electricity there is supplied by a co-operative.
We pay very reasonable rates, have first class service, pay online and even get a dividend! The meters are read centrally too!
We could improve the system here and follow Larry’s idea……….making us all happy!
Interesting no one complained when the gas rights were assigned to OUC in the FPL PPA agreement with OUC, nor did they complain when OUC got St. Lucie. In fact everyone cried out to pay $26 million more to make it happen, now when we can do the same thing without spending $26 million everyone is complaining its a travesty? Wow, maybe amendment 2 has already passed in some areas. It is going to be interesting to watch the Shores argue they want lower rates by fighting us to get lower rates. It is also going to be interesting to watch the County bash the City in their special call meeting because we have higher rates, then do whatever they can to keep the City from lowering the rates. I think the County people would probably complain if they got hung with a new rope.
Voiding contracts is easier said than done,if not impossible. Making Indian River Shores a partner sounds like a good idea,so send Vero millions of dollars and we will make you our partner, Until then you are customers and we have a right to earn enough money to off set costs and earn a profit on our investment like any other business. It’s not called Vero Beach Electric for any old silly reason,it’s called Vero Beach Electric because we paid for it with hard earned taxpayer money. Besides we are going to need all the money we can raise to defend Vero against any and all lawsuits.
This council majority of Winger, Kramer and Graves did, what Pilar Turner, Tracy Carroll and Craig Fletcher refused to do which was to lower elecric rates. Lowering rates was not in their plan to sell Vero Electric at any cost,in fact ,lowering rates would have worked against them in their sell at any cost stratergy. Five times they raised our rates while they were in control,and now when Pilar Turner is not calling the shots electric rates have been lowered and it looks like they can be lowered still more. But look who is complaining ,the very people who were calling for the sale inorder to lower rates .The leader of the pack is none other than Councilwoman Turner; the same Turner who tried, and failed, to have rate payers hand $26 million over to FPL. One must wonder why FPL has poured $9,000 into this campaign. For the record FPL does not have the lowerst rates in Florida. The tune is getting stale. Her worst decision was to try to defend Indian River Shores in their law suit against the city of Vero. Just this one act alone should disqualify her from any consideration in this election.