Rate difference between Vero Electric and FPL now down to 6.4%

 

The Indian River County Commission assesses a 6% franchise fee on the electric bills of county residents who are customers of Vero Electric and of FPL. Similarly, if and when they become customers of FPL, residents and businesses within the city will also pay a 6% franchise fee, yielding an effective FPL rate of $108.69, compared to Vero Beach’s current rate of $116.08. The difference between the two rates is 6.4%, not 20% as some continue to claim.

MARK SCHUMANN

According to Florida Power and Light, the company’s typical residential customers using 1,000 kilowatt hours per month is now paying $102.54.  Vero Electric’s rate for the same level of use is $116.08. One might conclude a move from Vero Electric to FPL will save the average Vero Beach residential power customer 11.7%.

However, anyone following the story of the proposed power sale knows Vero Beach’s rate includes a 6% transfer to the City’s general fund. Further, anyone seeking to report the story truthfully will account for the fact that the City will begin assessing a 6% franchise fee on FPL’s new Vero Beach customers. In short, accounting for an inevitable 6% franchise fee, Vero Beach residents would today be paying an average of $108.69 per 1000 kilowatt hours, if they were customers of FPL. That amounts to a rate differential of just 6.4%.

When the power sale was first sold to the public, the rate differential between Vero Electric and FPL was closer to 30%.  Further, the public was told the sale would net the City some $180 million dollars, and would not require cuts in services or increases in taxes.

Today, the rate differential between the two utilities is down to 6.4%, and it is obvious the sale of Vero Electric will lead to tax increases and cuts in services. More likely, the sale will leave the City unable to develop a balanced budget.

In spite of these undeniable facts, the Press Journal continues claim the rate differential between Vero Electric and FPL is 20%.  Further, the newspaper has yet offer any enterprise reporting on the likely impact of the sale on taxes and services. Assuming the newspaper’s staff is not intentionally misleading its readers, but is simply misinformed, I wrote the following letter today to reporter Colleen Wixon, local columnist Larry Reisman, editor Adam Neal and editorial page editor Eve Samples.

Colleen, Larry, Adam, Eve,

A TCPalm.com editorial published April 27, 2017 reads: “Moss is right. But as much as a sale might be in ratepayers’ best interests — the city’s rates for 1,000 kilowatt hours remained 20 percent more than FPL’s in February.”

The link imbedded in the editorial takes the readers to the bill comparison page on the FMEA website. The rates quoted there for Vero Electric and FPL for 1000 kilowatt hours per month are $116.08 and $96.54. The difference between those two raters is 17%, not 20%. More importantly, and I know you realize this, following a sale of Vero Electric to FPL, City residents will be paying an additional 6% franchise fee. Adjusting FPL’s rate of $96.54 by 6% yields a rate of $102.33. The more meaningful comparison is between the rate Vero Electric customers are paying now and what they would be paying today, if they were customers of FPL. Based on February’s rates, that differential is 11.8%, not 20%.

March’s FMEA bill comparison shows FPL rate increasing to $99.98. Vero Beach’s rate remains $116.08, for a difference of 14%. Accounting for the inevitable franchise fee, Vero Beach customers would be paying $105.98 as customers of FPL. That rate yields a differential of 8.7%.

In addition to the FMEA bill comparison, another legitimate source of information regarding FPL is the company’s own published rate information. https://www.fpl.com/rates/pdf/residential-explanation.pdf  At least as of today, FPL is reporting that its “typical” 1,000 kWh residential customer is paying $102.54. Not accounting for a 6% franchise fee, that leaves the rate differential between Vero Electric and FPL at 11.7%. I hope you will agree there is a significant difference between 11.7% and 20%. Add in the 6% franchise fee, and Vero Beach residents would, today, be paying $108.69 as customers of Vero Electric. At that rate, the differential between the two utilities is 6.4%.

Just as importantly, trends matter. Vero Electric’s rates continue to come down, just as FPL’s rates are steadily rising. And, as you know, the Florida Legislature is preparing to allow FPL to increase rates still further by passing on to its customers any losses suffered in its fracking ventures. The differential between Vero Electric and FPL seems likely to narrow still further.

For all any of us know, a majority of Vero Beach residents and taxpayers my very well continue to support the sale, even in the rates differential is as little as 1%. The point, though, is to report these numbers accurately so that your readers have the information they need to make informed, no misinformed, decisions.

Sincerely,

Mark Schumann

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