“In truth, going into the 2013-14 fiscal year, the City budget $60,907 in profit for Vero Electric.  The actual profit for the fiscal year was $854,084. That fact did not keep Scripps from claiming fuel costs are eating into Vero Electric’s profits.”

COMMENTARY

MARK SCHUMANN

Of all the poorly reasoned stories and misleading headlines Scripps Treasure Coast Newspapers has published about Vero Electric, perhaps none is more off the mark than a report posted yesterday on TCPalm.com headlined, “Fuel costs eat Vero Beach electric utility’s bottom line.”

Reading the headline on reporter Keona Gardner’s story, one might never realize Vero Electric’s profit for the 2013-14 fiscal year was nearly $800,000 more than budgeted. It is true fuel costs were $1.1 million over budgeted, or 1.9 percent; but given that sales were also above budget, the increased fuel coast should come as no surprise. Purchased power, after all, is a variable cost for Vero Electric, and variables expenses rise with sale and revenue.

In truth, going into the 2013-14 fiscal year, the City budget $60,907 in profit for Vero Electric.  The actual profit for the fiscal year was $854,084. That fact did not keep Scripps from claiming fuel costs are eating into Vero Electric’s profits.

Gardner also reported the proposed sale of Vero Electric unraveled last year, “when legal  counsel for the Florida Municipal Power Agency said agreements needed to give municipal customers to investor-owned FPL would violate covenants to its bond holders.”

While it is true Internal Revenue Service private use restrictions loomed from the beginning as a likely impediment to the sale, the deal fell apart when leaders of the Orlando Utilities Commission determined the OUC could not take on Vero Beach’s FMPA power supply agreements and project supports contracts without violating its own existing bond covenants. The OUC’s willingness to assume Vero Beach FMPA contracts was, in fact, the centerpiece of the deal.

Given that Scripps Publisher Bob Brunjes is married to a Florida Power and Light executive, and given that FPL wants to acquire Vero Electric, one might think Scripps would be more careful with its reporting on Vero Beach power saga.

Below is the Gardner story as posted Thursday evening. The full text is reported here so readers can do their own fact checking.

Fuel costs eat Vero Beach electric utility’s bottom line

VERO BEACH — The increased revenue the city’s electric utility department received last year was eaten away by higher fuel costs.

The city anticipated collecting $89.5 million from electric customers but collected about $91.6 million, which shows a $1.9 million revenue increase. However, $1.1 million of that went to paying the $60.1 million bill the city received from its power supplies. The city has budgeted $59 million for the expense, city records show.

That leaves the city with $850,000 in revenue, City Finance Director Cynthia Lawson.

The city will put the windfall into operating reserves to pay for any unexpected, unbudgeted expenses, City Manager Jim O’Connor said.

The City Council will discuss an ordinance to amend the fiscal year 2013-14, which ended Sept. 30, at its 6 p.m. Tuesday meeting.

The proposed ordinance is routine and doesn’t affect the current budget because the expenses occurred in the last budget year, O’Connor said.

When city officials created the budget in the summer of 2013, staff used projections based on prior years’ budgets but now the city has the actual numbers, O’Connor said.

The budget change is the latest in the city’s electric utility saga.

The proposed sale of the city’s electric system to Florida Power & Light Co. fell apart earlier this year, when legal counsel for the Florida Municipal Power Agency said agreements needed to give municipal customers to investor-owned FPL would violate covenants to its bond holders.

The FMPA used anticipated revenue from its 32 member cities as collateral for those bonds — a business model later upheld by the Florida Supreme Court. With the sale to FPL apparently dead, the majority of City Council has turned to utility attorney Robert “Schef” Wright to negotiate a better deal with FMPA and fellow power agency partner Orlando Utilities Commission. They hold contracts lasting through 2028 in which Vero Beach pledged to buy electricity from them for resale.

IF YOU GO
What: Vero Beach City Council meeting
When: 6 p.m. Tuesday
Where: City Hall, 1053 20th Place, Vero Beach