COMMENTARY

MARK SCHUMANN

The more the Press Journal reports on Florida Power & Light’s attempt to acquire Vero Electric, the less the newspaper’s readers can be expected to understand why the deal is dead, for with each new story the Press Journal’s tag-team reporters either oversimplify or misreport the facts.

A case in point would be reporter Lamaur Stancil’s latest installment headlined, “No solution for electric deal woes, but it’s not the end.” Stacil accurately wrote that the purchase and sale agreement between Vero Beach and FPL does not terminate until Dec. 31, 2016. Stancil did not explain, though, that the agreement, which was signed in March 2013, extends through the end of 2016 only because Vero Beach is not free to terminate its membership in the Florida Municipal Power Agency’s All Requirements Project until Oct. 1, 2016.

Stancil reported that one of the major hurdles to the deal is the City’s contractual obligations to the Florida Municipal Power Agency.  True enough. Specifically, Vero Beach is party to multi-decade power supply contracts and power project support agreements from which it simply cannot walk away.

Internal Revenue Service regulations prohibit FPL from buying Vero Beach’s FMPA contracts. Even if FPL were able to assume Vero Beach’s position in the contracts, the company has so far refused to agree to assume the City’s contingent liabilities. There was no word of unresolved contingent liabilities in Sancil’s report.

To understand more fully why the deal fell apart, and why it is not likely to experience the miracle of resurrection, it is important to know that the Orlando Utilities Commission was to assume Vero Beach’s position in the FMPA contracts. In exchange for taking on the City’s long-term obligations to the FMPA, the OUC was to be paid some $54 million in cash, and was to receive Vero Beach’s gas transmission rights, which have been valued at up to $10 million. The OUC backed out of the deal earlier this year.

Even at $64 million, no other utility eligible to participate in the FMPA contracts is even remotely interested. There is no deal for City officials to make with FPL because there is no buyer for Vero Beach power support and power supply contracts. Period.

Not only is the deal dead, the contract signed in 2013 by Tracy Carroll, Craig Fletcher and Pilar Turner will never be executed – can never be executed.

The last semblance of an agreement included a proposal from FPL for the customers of Vero Electric to pay a $26-million surcharge to help fund the deal. In essence, then, the terms of the agreement between Vero Beach and FPL have change substantially since voters approved the loosely structured contract on the table in March 2013. Any “new deal” would require yet another referendum.

One sound reason the City may have for not calling an end to this charade is the prospect evidence may yet surface showing that FPL, in collaboration with the Indian River County Commission and the Indian River Shores Town Council, may have been working both sides of the fence. If information emerges establishing that FPL is in breach of contract, then the City stands to gain up to $5 million in penalties. So long as FPL does not thwart the City’s efforts to lower rates, why not leave the contract in force and see what bubbles up?