COMMENTARY

Editor’s note: FMPA Assistant General Manager Mark McCain said today the agency’s staff will recommend to the governing board that a “well-respected” consultant be hired to work with the agency to address the Auditor General’s findings regarding hedging practice. These issues the Auditor General raised in his first three findings.

McCain said that in seeking an outside consultant the FMPA would issue requests for proposals in a process he said would be “very transparent.” McCain said the FMPA board would also be addressing each of the remaining 13 findings, which included recommendations for improving personal and expense policies and procedures.  

MARK SCHUMANN

The Indian River County Commission Wednesday approved hiring a consultant to help facilitate a “statewide dialogue” among the 31 member cities of the FMPA.  Following the release of a State Auditor General’s preliminary report, which raised serious questions about several of the FMPA’s past hedging practices, Commissioners are calling for state regulation of the FMPA.  Currently, a board made up of representatives from its member cities governs the FMPA. The agency is not regulated by the Florida Public Service Commission, just as the electric utilities owned by its member cities are not subject to PSC oversight.

The Vero Beach City Council is to meet in special session today at 9:30 a.m. to discuss the FMPA audit.  Newly elected Councilman Randy Old, who now represents the city on the FMPA board, said he asked for Thursday’s meeting because he wants a clear sense of what message the Council would like him to deliver to the FMPA.

Whether the Florida Legislature moves to place the FMPA under PSC regulation may depend on the FMPA board’s response to the State Auditor General’s report. A long list of plausible excuses may be offered for why the FMPA has lost nearly $250 million in hedging practices, but the fact remains the losses were substantial and have led to higher rates for FMPA members.

The FMPA board should act immediately to hire an outside management consulting firm to report directly to the board in recommending how to implement more effective controls and oversight. The hedging decisions were made in 2008 and before, when no one would have imagined interest rates would fall to zero or that a newly elected governor – Charlie Crist – would unilaterally reverse his predecessors call for Florida’s electric utilities to build more coal plants. Still, the agency needs to a more proactive board.”

It is also true State Senator Joe Negron, not long after receiving a $50,000 contribution from Florida Power & Light, slipped $200,000 in the state budget to pay for the FMPA audit. Negron served as chairman of the powerful Senate Committee on Appropriations. He was lobbied directly by representatives of FPL and by lobbyists hired by the Indian River County Commission at the urging of utility activist Glen Heran, who has close ties to FPL.

It might also be pointed out that as a member of the Vero Beach City Council, now County Commissioner Bob Solari voted to spend $10 million in taxpayer dollars to buy the old Dodgertown golf course property. The move was speculation pure and simple. Today, the land is worth just a fraction of what Solari and his fellow council members paid for it, and the debt service continues to be a drag on the city’s finances.

Mistakes were made, including by Solari, and when it comes to pointing fingers at those who have made poor decisions costing taxpayers and ratepayers money, there is enough blame to go around. Take for example, Duke Energy’s looses at its Crystal River nuclear plant, all resulting from an attempt to cut corners on maintenance.  The cost to Duke Energy’s customers? Two-BILLION dollars!

Still, the fact remains the FMPA has suffered heavy losses from hedging practices the State Auditor General believes were riskier than those of similar joint action agencies in other states. As the Auditor General’s report reveals, though, hedging the price of fuel is a common practice in the utility industry. Going forward, the FMPA board must tighten its controls. If the FMPA board fails to act decisively, the agency may remain the center of a growing storm.