An open letter to Shores Town Councilman Richard Haverland

COMMENTARY

“As I suggested some months ago, you and other Shores leaders have all along had the options of being a part of the solution, or a part of the problem. To date, you have chosen to make matters worse, for you residents, for the residents of Vero Beach, and for the larger community.”

MARK SCHUMANN

Richard Haverland
Richard Haverland
Robert Auwaerter
Robert Auwaerter

Indian River Shores Town Councilman Richard Haverland sent me an email this morning in which he wrote, “Lots of ‘facts and figures’ have been thrown around. I asked that a rate comparison be made available so that at least I would have a better understanding.”

Given the outrageous lies being spread by a political action committee funded by Florida Power & Light and Shores residents, to say that “lots of facts and figures are being thrown around,” is a profound understatement.

Haverland’s email included a copy of an email sent to him from Bob Auwaerter, the Shores’ representative of Vero Beach’s Utilities Commission. Auwaerter wrote, “As you can see, VB’s rates continue to compare very poorly by any measure.”

Auwater’s email included an attached spreadsheet comparing Vero Electric’s rates to Fort Pierce Utilities and to the Orlando Utilities Commission. (See below) Auwaerter also wrote, “Lawson (Vero Beach Finance Director Cindy Lawson) claimed that Fort Pierce has previously put money into reserves to stabilize the electric rate, and without this move, their rates would be higher.  I am skeptical of this, but there will be a joint Finance-Utilites Commission meeting in November to look at rates in conjunction with VB’s rate consultant.”

Haverland had the Shores Town Clerk forward Auwaerter’s email to the island weekly and to the Press Journal. While I appreciate his also sharing the information with me, it does confirm that the Shores is carrying out a coordinated public relations assault on Vero Beach. More importantly, Haverland’s and Auwaerter’s observations underscore the fact that they continue to believe the only reasonable rates are those charged by FPL, never mind that the Florida Public Service Commission has approved higher rates for the state’s remaining four investor owned utilities, and never mind that three of those for-profit utilities charge rates higher than Vero Electric.

Whatever Vero Electric’s rates may be, and however they may compare with other utilities around the state, the fact remains that the proposed sale of the City’s electric utility to FPL is stalled due to insurmountable contract issues, not because of anything the Vero Beach City Council has done or not done.  Further, whatever Vero Beach’s rates may be, a sale of the City’s Shores customers to FPL must be a price that does not lead to higher rates for the remaining customers.

I wrote the following reply to Haverland, and let him know I would be posting it as an open letter to him on InsideVero.

Mr. Haverland,

As they say, figures lie and liars figure; and I for one would expect nothing from Bob Auwaerter short of a selective use of the fact, if not a deliberate distortion of the truth.  

A little history:  A number of years ago, Vero Beach spent more than $250,000 challenging the Florida Municipal Power Agency over the terms of the City’s membership in the All Requirements Project.  After loosing an arbitrated decision, Vero Beach finally reduced its power draw from the ARP to zero. To replace that power, Vero Beach in 2009 cut a deal with the Orlando Utilities Commission, and in doing so went from the frying pan into the fire, so to speak. The ARP is more heavily dependent on power generated with natural gas, and as you know, the price of natural gas was at a historic high in 2008 and 2009. Now natural gas prices are at near historic lows. Further driving up Vero Beach’s costs from the FMPA in 2008 and 2009 was the cost of covering FMPA’s fuel hedging losses. (Never mind that FPL during the same time period lost more than $4,000,000,000 (BILLION!) also hedging fuel prices.)

Membership in the FMPA’s ARP was not necessarily a mistake, but the terms of Vero Beach’s participation turned out not to be fair to the City and its ratepayers. Without question, the FMPA could have been more reasonable with Vero Beach by agreeing to renegotiate the terms of Vero Beach’s participation in the ARP.  Not doing so was, in my view, a serious mistake; and I would not be surprised to hear FMPA leaders agree with that assessment. Rather than playing hardball with Vero Beach, the FMPA might have done as the OUC recently did, and unilaterally agreed to more reasonable terms. Unable to get a fair deal from the FMPA on its ARP membership, Vero Beach reduced is ARP draw to zero, and at the same time negotiated what turned out to be an equally bad deal with the OUC.  The fundamental problem in all of these power deals, it seems to me, is that they are too long and are dependence on a single fuel source, be it coal or natural gas. 

Interestingly, Mr. Auwaerter cites as a comparison the rates of Fort Pierce Electric. Fort Pierce, of course, is a member of the FMPA’s ARP project, and is thus benefiting from the currently low price of natural gas.  If Vero Beach were not committed to buying power from the OUC, The City would be free to buy less expensive power from the FMPA’s ARP.  Vero Beach would still be obligated to the Stanton I and Stanton II projects, and those coal-fired plants remain a problem for Vero Beach.

Having said all of that, it is also true that Vero Electric’s rates is below rates approved by the Florida Public Service Commission for three of the state’s investor-owned utilities.  It is also true that Vero Beach’s rates are close to those charged by Duke Energy, the state’s second largest investor utility.  As an aside to whatever point you and Mr. Auwaerter are trying to make, I would suggest to you that it is absurd to go before the PSC and argue that Vero Electric’s rates, which are lower than rates already approved by the PSC, are unreasonable.  By any objective standard, Vero Electric’s rates are not unreasonable. They just are not as low as you would want them to be.

Finally, I find it interesting that you are not equally concerned with the astronomically high price John’s Island residents must pay for reuse water.  Why the fixation on electric rates, when, in fact, the situation is getting better, despite what Mr. Auwaerter might claim? Why the willingness to spend nearly $1 million in Shores taxpayer money on a lawsuit that, you will see, is sure to fail?  Why the willingness on the part of Shores residents to join with FPL in poisoning Vero Beach’s municipal election? Why the denial of the fact the Florida Power and Light has kept its rates artificially low while it tries to move on municipal utilities like Vero Beach? Why the silence about FPL’s request for a $1.3 billion rate increase?

In the current election, Tony Young will likely win. Incumbent Vice Mayor Randy Old will also likely win. Beyond that, who knows? Either Laura Moss or Norman Wells may wind up replacing Pilar Turner as Harry Howle’s ally in what can accurately be described as a Frick and Frack sideshow. Next year, the Florida Supreme Court will almost surely rule against the Shores, and then where will you be? With no further recourse in the courts, and nothing more than two marginally competent puppets representing you on the Vero Beach City Council, you will have no option but to accept that Vero Beach leaders are doing what they can to lower rates, or continue as you are now, stuck in complaint mode. As I suggested some months ago, you and other Shores leaders have all along had the options of being a part of the solution, or a part of the problem. To date, you have chosen to make matters worse, for you residents, for the residents of Vero Beach, and for the larger community.

Sincerely,

Mark Schumann

Auwaerter’s rate comparison:

Cost for 1000 KwH
Date Vero Beach Fort Pierce Orlando Median Utility*
Jan-13 $128.43 $123.84 $109.43 $118.85
Jun-13 $128.43 $121.84 $109.43 $119.55
Dec-13 $130.93 $120.84 $109.43 $119.70
Jun-14 $123.93 $122.84 $109.43 $117.31
Dec-14 $123.93 $117.84 $109.43 $120.38
Jun-15 $123.93 $116.84 $109.43 $116.84
Nov-15 $119.58 $111.84 $109.43 $113.06
Dec-15 $119.58 $111.84 $109.43 $114.55
Jan-16 $119.58 $110.84 $109.43 $114.44
Feb-16 $119.58 $109.84 $109.43 $114.44
Mar-16 $119.58 $108.84 $109.43 $110.18
Apr-16 $119.58 $107.84 $109.43 $109.43
May-16 $119.58 $107.84 $109.43 $114.23
Jun-16 $117.58 $107.84 $109.43 $115.21
Jul-16 $117.58 $107.84 $106.00 $110.18
Aug-16 $117.58 $107.84 $106.00 $110.18

Comment - Please use your first and last name. Comments of up to 350 words are welcome.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s