MARK SCHUMANN

Following a 5-0 vote by the Vero Beach City Council to open discussions Florida Power & Light and Town of Indian River Shores on a so-called “partial” sale, City Manager Jim O’Connor this week wrote a letter to Town Manager Robert State and FPL Vice President Sam Forrest. “We look forward to meeting with you and representatives of the Town and FPL to hear what you have to propose,” O’Connor wrote.

Echoing essentially the same criteria for a partial sale as those articulated by Florida Pubic Service Commission staff last week, O’Connor made clear any sale of Vero Beach assets and Shores customers base of some 3400 meters must “keep the City, its citizens, and all of the City’s remaining customers, including those in unincorporated Indian River County whole.”

O’Connor added that keeping remaining customers “whole” would require insuring those still on the system would be “fully protected against any adverse rate impacts.” Quite simply, according to O’Connor, the City will not agree to a sale of its Shores customers that leads to higher rates for everyone else.

Because Vero Beach entered into long-term power supply contracts and assumed debt partly on behalf of its Shores customers, O’Connor explained any deal must “protect against unexpected, or contingent liabilities that might arise under the City’s power purchase agreements that were entered into to serve all our customers.”

Rate consultants and utility experts hired by the City have estimated carving off Vero Electric’s Shores customers for anything less than $42.5 million will lead to higher rates for every other customer on the system. That number is more than three times the $13 million FPL officials have said they can and will spend to serve he Shores.

How might the $29.5 million gap be bridged? Some have suggested one solution would be for Shores customers to agree to pay FPL a surcharge to cover the full $42.5 million cost of funding sale. If the rate differential between Vero Electric and FPL is anything like the 30 percent to 40 percent Shores leaders, the island weekly and Vero Beach City Councilwoman Pilar Turner claim it to be, servicing $8,676 in debt per household over ten year or so would still be a savings over Vero Electric’s electric rates.

However, if the Florida Municipal Electric Association’s statewide rate comparisons are accurate, then the current rate differential is more like 25 percent, excluding franchise fees. Adding uncertainty to the cost-benefit equation for Shores residents is FPL’s requested $1.337 billion rate increase that, if approved by the PSC, will, according to FPL, increase the average bill 13 percent.  At the same time, Vero Electric rates are coming down, and are expected to drop even further as the Florida Municipal Power Agency pays of some large bond issues over the next ten years.