FPL Letter of Intent
“FP&L’s $30 million offer for a Partial Sale is low, and should it be accepted, over time, the city will have to raise rates for every remaining ratepayer to absorb the loss of the Shores customers.”
RICHARD WINGER/VERO BEACH CITY COUNCILMAN
It is Very Good that Florida Power and Light has presented a new Letter of Intent to purchase Vero Beach’s entire Electric Utility. They outlined costs and terms, which signal the start of negotiations prior to a contract being signed.
Negotiations, simply put, occur when each participant has something to gain and something to lose. A successful negotiation concludes when each party benefits to the maximum extent possible.
The financial offer for the system is considerably lower than the last contract signed 3 years ago. And, it does not take into consideration the millions spent since that time to upgrade the system, close the plant, etc. My responsibility to the people of Vero Beach and the ratepayers of the Utility requires my attention to such detail. It is a starting point in negotiations.
Moving towards the full sale, through myriad details, is something I have worked on for years and I sincerely want it to be completed this time.
FP&L last submitted a Letter of Intent on August 2012. It led to a contract for sale in March 2014. That contract could not be executed because of contractual obligations, upheld by law, with other agencies to produce, transmit and distribute electricity. That contract expired December 31, 2016.
Those obligations exist because Vero Beach is a member city in the Florida Municipal Power Authority. There are 19 other member cities which must, unanimously, approve an exit. This obligation blocked the sale previously, but there is a new level of optimism that approval can finally be accomplished.
The Bad news is that if this exit is again blocked, the Letter of Intent provides for a negotiation shift to the Partial Sale, whereby Indian River Shores seeks their exit from Vero Beach Electric Utility and have their customer base purchased by FP&L.
Then, we are back to the Ugly we had last year.
FP&L’s $30 million offer for a Partial Sale is low, and should it be accepted, over time, the city will have to raise rates for every remaining ratepayer to absorb the loss of the Shores customers.
It is Bad because the Shores cost much less to service than the remaining system. A Partial Sale will only devalue the cost of the entire Vero Beach Electric Utility, making it less desirable to a potential purchaser and doing nothing to help Vero Beach exit the electric business and it does nothing to reduce rates for those who remain. I have made an alternate proposal, which would save everyone time and money and give the Shores what they want. Here is the link and my presentation is 42 minutes into the meeting: http://verobeachfl.swagit.com/play/05162017-692
But there is a Very Ugly side of the Full Sale. And that is, how will the City be financed with the loss of transfer of profit to the General Fund? That might mean a tax increase for City properties and/or a significant financial reorganization of the City structure and every service:
.Police protection throughout our neighborhoods,
.Lifeguards at our beaches
.Twice weekly garbage pick-up,
.Parks and Recreation for our children, families and visitors, etc.
The time is now to make this a successful negotiation, and to end the political rhetoric and the hostilities. But, now is the time to understand how the City will be funded with either of these sales.
A Full Sale will bring back the Good and, be Very Good, only if the consequences are understood and planned for. The Ugly is there will be severe consequences if no financial/organization planning is done to protect Vero Beach.