Editor’s note: The City of Vero Beach Utilites and Finance Commissions will meet Aug. 30 to review the terms of the proposed sale of Vero Electric to Florida Power and Light. City Hall watchers expect the Council to approve the terms of the proposed sale when it next meets in September. As Vero Beach prepares to hand over its municipally owned utility for net proceeds of little more than existing cash reserves, the following article on public utilities is worth considering. This article exploring the benefits of public ownership of utilities was first published in 2013 by truth-out.org.
According to the most recent bills comparisons published by the Florida Municipal Electric Association, FPL’s rate for 1000 kilowatt hours per month is $106.05, allowing for a six percent franchise fee. Vero Electric’s rate is $116.08. Based on current rates, then, Vero Beach residents could expect to save approximately 9 percent on their electric bill, if the deal were to close now. However, FPL will be making a number of rate hikes over the coming years, all of them already approved by the Florida Public Service Commission. Whatever saving Vero Beach residents will see on their electric bills will be somewhat offset by cuts in services and/or tax increases, as the City deals with the loss of $7 million no transferred annually from the Electric Fund to the General Fund.
For a start: It’s often forgotten—or simply not known—that there are more than two thousand publicly owned electric utilities now operating, day by day, week by week, throughout the United States (many in the conservative South). Indeed, 25 percent of US electricity is supplied by locally owned public utilities and co-ops.
Moreover, most of these now conventional “socialist” operations have a demonstrated capacity to provide electricity at lower cost to the consumer, not to mention cheaper and more accessible broadband. (Nationally, on average, customers of private utilities pay 14 percent more than customers of public utilities.)
One obvious reason: Public utilities and co-ops simply don’t pay the same exorbitant executive salaries common in the private sector. They get pretty much the same work done for far less. General managers of the largest class of publicly owned power companies earned an average salary of roughly $260,000 in 2011. Average compensation for CEOs of large investor-owned utilities was $6 million—almost twenty-five times as much.
Also, of course, public utilities and co-op producers don’t have to pay private shareholders any dividends. And they return a portion of their revenues to the city or county to help supplement local budgets, easing the pressure on taxpayers. A recent study found an average transfer of 5.2 percent of revenues to municipalities—compared with average tax payments by private-investor-owned utilities of 3.9 percent.