Local business owners enthused about the proposed sale of Vero Electric’s Indian River Shores customers to Florida Power and Light may be in for an unpleasant surprise, if not a rude awakening.
In the short term, any partial sale is likely to lead to higher rates for the remaining customers of Vero Electric. City leaders pushing for the downsizing of Vero Electric, namely Harry Howle, Laura Moss and Lange Sykes, say the sale for the Shores is being pursued “in the context of a full sale.” Yet, they have so for offered no explanation for how a partial sale would in any way improve the prospects of eventually selling the remainder of the system.
If the sale of the full system proves undoable, then local businesses could be facing higher electric rates, not just short term, but for many years to come. Not only will local business face higher power costs, but so too will schools, governments, the hospital, churches, the Vero Beach Museum of Art, the Riverside Theatre and other non-profits. Worse, if the sale must be partially funded by a significant, long-term surcharge, that burden will fall entirely on the remaining customers of Vero Electric, including commercial customers, city and county government, the hospital and non-profits. Make no mistake about it, with only 2.7 percent of Vero Electric business customers located in Indian River Shores, and some 97 percent of the City’s commercial customers located outside the Shores, any shift if electric costs could be significant.
Though the Shores represents just 8.7 percent of the City’s total customer base, those customers use more power than the average resident. What does this mean? Quite simply, the Shores portion of Vero Electric contributes more than 8.7 percent of operating profits. The loss of these profits will inevitably lead to higher rates, and/or higher taxes for everyone else.
Current estimates are that Vero Electric’s total revenue from the Shores is approximately $8 million. In giving up those customers and that revenue, the City will save some $5 million in wholesale power costs. The utility will save another $1 million in other expenses, leaving a deficit of $2 million.
Claims made during the election that proceeds from a partial sale could be used to subsidize rates were simply untrue. In fact, bond covenants restrict the use of any sale proceeds to capital improvement projects and debt service. It is inevitable, then, that the loss of $2 million in utility profit will adversely impact local businesses.
If, instead of raising rates, the City accepts $2 million less in earnings on the utility, taxes, including those on businesses, will have to go up. The only other option would be to significantly cut municipal services. Many of those services, including and especially police protection, will be compromised.
Though many of Vero Electric’s commercial customers are located outside the City, the Indian River County Commission has so far failed to act to protect their interests. If the interests of the business community are to be protected, business leaders will have to stand up for themselves.
It is time for the community’s business leaders to understand that the proposed sale of Vero Electric’s Shores customers is a political move that makes no business sense. The logical path forward is not to carve up Vero Electric and hope for the best. Prudent leaders focused on doing what is right for all the customers of Vero Electric would instead first determine if and at what price the full system can be sold.