COMMENTARY

“If a homeowner pays $150,000 in property insurance premiums over 30 years, and has no major claims during that time, has that person ‘lost’ $150,000?  Most homeowners do not think of their property insurance premiums as a loss. The same can be said for fuel hedging.”

MARK SCHUMANN

To be sure, the Florida Municipal Power Agency owes electric customers in its member cities answers to questions about interest rate swaps, natural gas hedging losses and an investment in Public Gas Partners that, at present, has not turned out well.  Those answers, approved by the FMPA board today, are to be delivered to the State Auditor General’s office by Friday.

In addition to explanations about what the agency has done and will do to avoid such costly mistakes in the future, the board needs to seriously consider a review and critical assessment of the FMPA’s management and structure of governance. As Vero Beach City Councilman Randy Old said at today’s FMPA board meeting, the agency’s response to the Auditor General’s report does not go far enough.

For example, can a business as complicated as the FMPA be effectively governed year in and year out by a 31-member board of directors, some of whom are elected officials who come and go at the whim of voters? And, should the FMPA employ outside guidance in its hedging of fuel costs?

All of these questions are legitimate ones to be raised by representative of Vero Beach, or by any other FMPA member city.  What seems less than legitimate are the pronouncements of righteous indignation on the part of Indian River County Administrator Joe Baird and at least two members of the County Commission – Bob Solari and Tim Zorc.  After all, they have made their share of mistakes.

Solari’s fingerprints are all over an earlier Vero Beach City Council’s decision to commitment $10 million in taxpayer money to buy the old Dodgertown golf course. Today the land is worth less than half of what Solari and his fellow council members thought it was worth when the inked the deal.  Solari continues to defend the decision. So much for batting 1000.

And then there’s Commissioner Tim Zorc’s personal bankruptcy, resulting from real estate investment deals that did not turn out as he had expected. You’d think Zorc’s own personal experience would lead to some measure of humility.  Not so. The last time I saw, Zorc was driving a Mercedes.

Solari and Zorc both supported the County’s failed effort to seek Florida Public Service Commission approval to force Vero Beach to abandon its out-of-city customers when the franchise agreement between the City and County expires in 2017.  County leaders got their hats handed to them, and lost a lot of public money in the process. Now the County is spending more money on lobbyists and a public relations specialists.  When the dust settles on these ill-advised exploits, will Solari and Zorc be willing to admit the were wrong?  Not likely!

Just today Zorc and Solari voted to commit $2.7 million in taxpayer money to fight All Aboard Florida.  When the first high speed train blasts through town, will Zorc and Solari have any apologies to offer the taxpayer of Indian River County?  No. They will say the risk of loosing $2.7 in a legal fight was worth the potential reward.

That is not a rational Zorc and Solari will accept when it comes to the FMPA’s fuel hedging, done back in the 2000s, when oil was at $100 a barrel and natural gas prices shot up from $4, to $13 and then sank to $2. While the fuel hedging “loss” of $240 million is a big number, put in perspective, it is six percent of the amount the FMPA spent for fuel over the 12 years reviewed by the State Auditor General.

And, does the $240 million truly represent a “loss.” After all, the objective of a utility’s fuel hedging isn’t to win or lose, but to stabilize its single biggest expense. To call it a loss would be like seeing insurance premiums as a loss. If a homeowner pays $150,000 in property insurance premiums over 30 years, and has no major claims during that time, has that person “lost” $150,000?  Most homeowners do not think of their property insurance premiums as a loss. The same can be said for fuel hedging.

Solari and Zorc have no patience for this reasoning, because it does not serve their objective of helping Florida Power & Light begin gobbling up municipal utilities, starting with Vero Electric.

Finally, watching County Administrator Joe Baird address the Vero Beach City Council last week, I could not help but think about the hand he had in the County’s decision to build a water and sewer system this is currently so underutilized the County has tried to correct its mistake by poaching customers from Vero Beach’s system.

Yes, there have been enough mistakes made to go around. Unfortunately, there is also no shortage of hypocrisy.