PSC ruling may have bearing on Shores’ lawsuit

NEWS ANALYSIS

“Whatever rights and powers Florida law may grant the Shores as an incorporated municipality, state law also expressly limits those powers. In short, the Shores is not “sovereign,” as Mayor Brian Barefoot claims, but is instead a creature of the State of Florida. State laws, such as the 1974 “Grid Bill”, limit the Town’s powers.”

MARK SCHUMANN

Decades ago, long before life got really complicated, essayist E.B. White predicted a bright future for complexity. If White had only known how perplexing things would get.

Take for example the contradictory and complex arguments attorneys for Indian River County and the City of Vero Beach have submitted to the Florida Public Service Commission.  In a petition filed with the PSC in July, the County is seeking clarification on what rights, if any, it has to force Vero Beach to abandon its electric customers and to remove its utility infrastructure from the unincorporated areas of the county when the 30-year franchise agreement between the County and the City expires in 2017.

It might be tempting to conclude the County has a compelling argument.  After all, unless the County Commission agrees to renew its franchise agreement with Vero Beach, wouldn’t the expiration of that agreement in 2017 terminate the City’s right to serve its 21,000 customer outside the city limits?

The County’s argument seems straightforward enough, except for the fact that Vero Beach has been providing electric service outside the city since the early 1950s, if not earlier. For at least 40 years before the Vero Beach and the County entered into a franchise agreement, the City was already serving county customers. In fact, for a full 15 years before the existence of a franchise agreement between the City and County, Vero Beach served out-of-city customers with the approval of the PSC.

In 1971, exercising its authority to ensure a stable, reliable statewide power grid, the PSC approved a territorial agreement between Florida Power & Light and Vero Beach establishing Vero Electric’s service boundaries. With the PSC-approved agreement, Vero Beach assumed the right and responsibility to provide safe and reliable power within its service territory. At the time FPL and Vero Beach came to the accord, the city was already serving at least as many county customers as it had within the city limits.

Vero Beach’s service territory agreement with FPL was amended in 1972, 1983, and again in 1987 when, at FPL’s request, Vero Beach agreed to serve the Grand Harbor area. One amendment called for some customers of Vero Electric to be transferred to FPL. Ironically, Vero Electric’s customers opposed the change. Though they did not want to become customers of FPL, they were rebuffed by the PSC, which, citing a Florida Supreme Court decision, held that “an individual has no organic, economic or political right to be served by a particular utility merely because he deems it advantageous to himself.”

Vero Beach and Indian River County first entered into a franchise agreement in 1987. Since then, Vero Beach has collected and remitted to the County a six percent franchise fee. Wright contends that because the City, with PSC approval, served unincorporated areas of the county long before a franchise agreement was in place, that agreement is not the basis for the City’s authority to serve its county customers. From the City’s perspective, then, the only effect of the termination of the franchise agreement in 2017 will be that it will no longer be authorized to assess and collect a six percent franchise fee on behalf of the County.

In a lawsuit filed within a week of the County’s PSC petition, the Town of Indian River Shores presents essentially the same arguments. Shores Mayor Brian Barefoot wrote, “In 1986, our Town signed a franchise agreement with the City of Vero Beach…That franchise agreement expires on November 6, 2016…the City needs our permission to provide electric service to our residents.”

In truth, though, Vero Beach served Shores customers long before the City and the Town entered into a franchise agreement.  In his petition to the PSC, Wright points out that FPL serves nearly 20 percent of its PSC-approved service territory without the additional “validation” of a franchise agreement. The existence, or absence, of a franchise agreement, then, cannot be the determining factor in establishing a utility’s rights and responsibilities to serve customers within its PSC-approved service territory.

Both the County in its PSC filing, and the Shores in its circuit court lawsuit, claim the authority to establish their own electric utilities, regardless of existing PSC-approved service territory agreements and assignments. Though they have described Vero Beach’s rates as “oppressive,” Shores representatives claim their larger concern is to protect and preserve the Town’s “sovereignty.”

Whatever rights and powers Florida law may grant the Shores as an incorporated municipality, state law also expressly limits those powers. In short, the Shores is not “sovereign,” as Mayor Brian Barefoot claims, but is instead a creature of the State of Florida. State laws, such as the 1974 “Grid Bill”, limit the Town’s powers.

To clarity the PSC’s authority to ensure a stable statewide power grid, the Florida Legislature in 1974 passed the “Grid Bill,” which gave the Commission “express jurisdiction over the planning, development and maintenance of a coordinated electric power grid throughout the state of Florida.”

In its PSC filing, Vero Beach is asking the Commission to rule that “neither the existence, non-existence, nor expiration of the Franchise Agreement between Indian River County and the City has any effect on the City’s right and obligation to provide retail electric service in the City’s designated electric service territory approved by the Commission through its Territorial Orders.”

Vero Beach is also asking the PSC to issue a declaratory statement affirming that the City has the right and the obligation to continue serving its customers in the unincorporated areas of the county beyond 2017, even if the County Commission should refuse to renew the franchise agreement.

The PSC is expected to respond to the City’s petition at its March 3 meeting in Tallahassee.