COMMENTARY

“FPL’s practice of excluding franchise fees in its heavily advertised rates enables to company to continue claiming to have the lowest rates in the state. Factor in the franchise fee, and FPL’s claim becomes, well, a white lie.”

MARK SCHUMANN

As Palm Beach Post staff writer Susan Salisbury reported this week, comparing Florida Power & Light’s quoted rate of $94.30 for 1,000 kilowatt hours to the rates of municipal utilities is truly like comparing apples to oranges.

Locally, FPL spokespersons and some in the press prefer to directly compare FPL’s advertised rate of $94.30 to Vero Electric’s rate of $119.58.  In these comparisons, FPL’s public relations specialists, and their allies in the press, are careful to avoid any discussion of franchise fees.  For example, customers of FPL in Indian River County, except those in Indian River Shores, pays an additional 6 percent in franchise fees, bringing their total FPL bill for 1000 kilowatt hours to $99.96. Those franchise fees are assessed by the Indian River County Commission.

Asked why FPL does not factor franchise fees into its rates, company spokeswoman Sarah Greenwood told Salisbury, “We don’t add them on. Not all municipalities even have a franchise fee and it does vary. Some also add on utility taxes and other things. It is not an apples to apples comparison.”

How Greenwood could make that statement with a straight face is beyond me. She knows electric customers don’t pay quoted rates. They pay bills. For nearly all FPL customers in Indian River County those bills include a six percent franchise fee. Likewise, if FPL were to acquire Vero Electric, a prospect which seems increasingly unlikely, customers within the city limits would, like their county neighbors, pay an additional six percent in franchise fees.

FPL’s practice of excluding franchise fees in its heavily advertised rates enables the company to continue claiming to have the lowest rates in the state. Factor in the franchise fee, and FPL’s claim becomes, well, a white lie. As Salisbury reported this week, allowing for the franchise fee, Clewiston, Havana, Quincy and Starke all had lower 1,000 kilowatt-hour residential bills than FPL. Once FPL pushes through is $1.325 billion rates increase, still more of Florida’s municipally owned electric utilities will have lower rates than FPL.

Locally, Vero Electric’s customers within the city limits are not assessed a franchise fee, but their rate of $119.58 per 1000 kilowatt hours does include a 6 percent transfer from Vero Electric to the City’s general fund.  That money goes to help pay for municipal services, such a police protection, recreation, life guards and street cleaning.

So, how does all this bear on the argument continuing to be made by Indian River Shores Brian Barefoot and others, who argue that Vero Electric’s rates are exorbitant? Comparing FPL’s rate, including a franchise fee, to Vero Electric’s rate, yields a difference of 16 percent. To put it in the simplest terms, customers of Vero Electric within the city and in Indian River Shores would pay 16 percent less as customers of FPL. You have to wonder, then, why utility activists, Shores officials and pundits like Press Journal columnist Larry Reisman continue to attempt to create the impression the rate differential between Vero Electric and FPL is some 25 percent.

An important development yet to be reported by the Press Journal is the news that FPL three weeks ago announced its intentions to seeks a $1.325 billion rate hike over the next four years. If approved by the PSC, FPL’s request for further enrichment will lead to an increase of approximately $14 on the average residential bill. At $113.96, FPL’s rate will be just 5 percent below Vero Electric’s rate for 1000 kilowatt hours. Factor in the $26 million surcharge FPL proposes to assess Vero Electric’s customers to help pay for its proposed acquisition, and there would be virtually no benefit in switching to FPL.

Sure, Councilwoman Pilar Turner will argue that Vero Electric’s rate will also rise, but that would only necessarily true if she were allowed to have her way. Over her objections, recent City Council’s have taken steps to reduce rates. Most significantly, they renegotiated the City’s wholesale power agreement with the Orlando Utilities Commission – despite opposition from Turner.

Try as the might to stretch, twist, distort, or ignore the truth, it is becoming increasingly clear that the presumed advantages of selling Vero Electric to FPL are fading fast. Surely before the year is out, the wheels will have come off the Shores’ lawsuit and the County’s appeal to the Supreme Court. Mayfield’s utility legislation, even if it passes, will do nothing to overcome the legal obstacles to a sale of Vero Electric. When the dust settles on all these wasted efforts, local leaders will have little choice but sit down and work together. That day cannot come soon enough.