NEWS ANALYSIS

MARK SCHUMANN

As she had promised she would, State Rep. Debbie Mayfield recently introduced legislation that, if passed, will subject the rates of Florida’s municipal electric utilities to approval by the Public Service Commission. At the same time, the bill would authorize Florida’s Public Counsel to represent the interests of municipal electric customers in rate cases before the PSC.

Mayfield’s bill would also require Florida’s municipally owned electric utilities to submit to the PSC annual financial statements and annual valuations of their generating assets.

In addition, Mayfield is seeking to require that all members of the board of directors of the Florida Municipal Power Agency be elected representative from the agency’s member cities.

Proponents of Mayfield’s bill contend the customers of Florida’s municipal electric utilities need the same rate-setting protection afforded customers of investor-owned utilities, such as Florida Power & Light.

At its meeting next Tuesday, the Vero Beach City Council is to consider a proposal by Councilwoman Pilar Turner to support Mayfield’s bill.

Currently, rates for the state’s investor-owned utilities must be approved by the PSC. Rates for public utilities, such as Vero Electric, are set by each municipality’s elected city council.

Representatives of municipal utilities argue against PSC regulation on two grounds. First, they say, through their right to vote in municipal elections, the customers of public utilities have a vote and a voice in the running of their utilities.

Only a few of the state’s municipal electric utilities serve customers outside their city limits. Vero Beach is one of those few, with more than 60 percent of its customers located outside the city. This imbalance in Vero Electric’s customer base has led to charges of “taxation without representation.”

Vero Beach officials contend the six percent in operating revenue transferred from Vero Electric to the City’s general fund is not a tax but a return on investment. Investor-owned utilities, they point out, are granted by the PSC rates of return of 11 percent or more.

Opponents of Mayfield’s bill are likely to argue their communities are being dragged into Vero Beach’s local issues. The solution, they will say, is not to pass new legislation that creates for them another level of expensive regulation, but to require Vero Beach to hold a referendum on forming an independent utility authority, a utility authority in which all customers would have equal representation.

A law is already on the books requiring such a referendum, but City leaders have artfully dodged it, claiming the bill does not apply to Vero Beach. The bill was written by Mayfield’s late husband, Stan, when he was serving in the Florida House.  It was Stan Mayfield’s intention that the bill he wrote requiring a referendum on forming an independent utility authority would apply specifically and exclusively to Vero Beach.

In seeking to resolve litigation with the Town of Indian River Shores, City officials recently proposed Vero Electric’s rates be submitted to the PSC for review and approval. Absent a referendum on forming a utility authority, PSC review of Vero Electric’s rates might be a local solution that would leave other cities to make their own choices.

Mayfield also wants to see an FMPA board made up exclusively of elected officials. Councilman Randy Old, who represents Vero Beach on the FMPA board, has already said he thinks this is a bad idea. In the past, Old has argued that each member city of the FMPA should have the right to decide who can best represent its interests on the board.

Ironically, Mayfield has generally positioned herself as an advocate of limited government and of local control. It is also ironic that much of the pressure to hedge on fuel prices, a practice that led to significant losses for the FMPA, came, not from staff, but from members of the board who were elected officials.

Local media and utility activists have so successfully cast the FMPA as the source of all of Vero Beach problems that it seems likely the City Council will, for political reasons more than for practical ones, endorse Mayfield’s proposals.

But Vero Beach is just one of two-dozen cities targeted by Mayfield’s bill. Most, if not all of the other municipalities in her sites are likely to object to being told who can represent them on the FMPA board. They are also likely to oppose rate regulation by the PSC on the grounds it would be redundant and would result in unnecessary expenses that would lead to higher rates.