COMMENTARY

“Fullu aware that Vero Beach transfers 6 percent of its electric revenue to the general fund as a return on investment, Shores leaders agreed to pay Vero Electric’s rates, plus a 10 percent surcharge. The surcharge has since been dropped, leaving Shores residents paying the same rates as Vero Electric’s customers within the City.”

MARK SCHUMANN

Listening to Indian River Shores Mayor Brian Barefoot complain recently before the Florida Public Service Commission, I began to wonder if Democratic presidential candidate Bernie Sanders is wrong about the top one percent. To hear Barefoot tell it, Vero Beach is balancing its budget on the backs of downtrodden Shores residents.

In mass, Barefoot’s constituents seem to have convinced themselves they are disadvantaged. Given the tenaciousness with which they cling to victimhood, embracing the notion that one has been wronged must sure feel good.

So, here’s to Mayor Barefoot, champion of the oppressed. He speaks for those who, because they are charged electric rates well below rates approved by the PSC for several investor-owned utilities, must choose between paying bills from John’s Island Management Company for exorbitantly priced re-use water, or remaining current with their country club dues.

To listen to Barefoot, you get the sense Shores residents are having a tough time making ends meet – and all because Vero Electric, like every other investor-owned and municipally owned utility in Florida, is earning a return on investment. However, unlike investor-owned Florida Power & Light, which earns an 11 percent return on investment that is used to enrich stockholders, Vero Beach and other municipal utilities use their earning, typically 6 percent. Those earnings are used to help pay for municipal services like police protection, public works and recreation.

In the case of Vero Beach, earnings from the electric utility also enable the City to afford to subsidize $1-a-year leases to the Riverside Theatre and the Vero Beach Museum of Art, two local amenities enjoyed by many of Mayor Barefoot’s constituents.

Mayor Barefoot’s assertion that Shores residents are victims of economic injustice is disconnected from present reality, and from history. In 1968, needing to offer prospective buyers a means of recharging their golf carts and of powering their homes and country club, Shores’ developers and their elected representatives asked Vero Beach to serve the emerging island enclave with utilities.

Fully aware that Vero Beach transfers 6 percent of its electric revenue to the general fund as a return on investment, Shores leaders agreed to pay Vero Electric’s rates, plus a 10 percent surcharge. The surcharge has since been dropped, leaving Shores residents paying the same rates as Vero Electric’s customers within the City.

Parity, though, isn’t good enough for Barefoot and his struggling constituents. They now seek to force Vero Beach to sell its Shores customers base to Florida Power & Light at a price that will leave the remaining customers of Vero Electric paying higher rates. So, maybe Sanders is right about at least some in the top one percent. Maybe they only looking out for themselves.

With another Vero Beach municipal election just 8 months away, Barefoot and company may already be planning how to re-elect Pilar Turner and to secure at the same time one more seat on the Vero Beach City Council. With Turner, Harry Howle, and a third Council member sympathetic to the Shores’ cause, “oppressed” Shores residents will get their way. In the process, the people of Vero Beach, as well as the the customers of Vero Electric, will get the shaft.

Make no mistake about it. The next Vero Beach municipal election will have significant and long-lasting consequences. Now is not a day too soon for those who care about fairness, and who want their city to remain viable and strong, to stand up for Vero Beach, and to speak out against the absurd accusations being leveled by Barefoot and his fellow Shores residents. Enough is enough!

Editor’s note: The Florida Public Service Commission, which regulates investor owned utilities, calculates allowable rates based upon return from equity of 10 to 11 percent. Vero Electric has a 6 percent return of $5.4 million on $90 million in revenues. That amounts to only a 4 to 5 percent return on equity of  $123 million. Investor owned utility rates of return are based on revenues less all expenses – operations, debt and taxes set against equity. Pretax returns may well be 17 percent. Thus, investor owned utilities in Florida have PSC-approved residential rates of over $132 per 1000 kilowatt hours per month, because that is the rate needed to ensure them a return on equity of 10 to 11 percent. Were Vero Electric to be regulated by the PSC, rates per 1000 kWh per month hypothetically would be in the $124 range, or higher, instead of $119.