At its meeting to be held in Tallahassee tomorrow, the Florida Public Service Commission will consider the proposed sale of Vero Electric to Florida Power and Light.
In promoting the deal to Vero Beach voters, advocates of the sale promised Vero Beach residents they would soon “enjoy” FPL’s lower rates. Tens of thousands of dollars of political advertising, much of it paid for by FPL, made just such promises.
The final terms of the deal are now known, and it appears those campaign promises were untrue.
As of April, FPL’s rate for 1000 kWh of residential power was $96.98, compared to $122.95 for Vero Electric. However, the PSC is poised to approve proposed terms for the sale of Vero Electric that will allow FPL to assess a “positive acquisition adjustment” on the customers of Vero Electric to help pay for the deal.
If the proposed terms are approved by the PSC, residents of Vero Beach will be paying $116.2, plus a franchise fee of six percent, for a total of $123.17. This rate is, in fact, more than City of Vero Beach residents are now paying as customers of their municipally owned utility.
Further, the impending sale of the utility means the City will loose million of dollar now transferred from the utility to the City’s General Fund to help pay for municipal services, such as police protection and parks and recreation.
In anticipation of the sale, several City Council members – Harry Howle, Lange Sykes and Val Zudans – are pushing to sell off and/or lease City assets. As Councilwoman Laura Moss put it last week, they are “on a mission to monetize.”
One such move is a push by Zudans to lease the Riverhouse in MacWilliam Park to a brewery. To get around City Charter provisions that protect the land from sale or lease for commercial use, Zudans is proposing to give the brewery a long-term “concession,” rather than a lease.
The City is now also considering turning its profitable water and sewer utility to the County, and turning over solid waste collection services to an outside contractor. The City is now also looking to turn over Marina operations to an outside contractor.
Excerpt from PSC staff analysis of FPL’s proposed acquisition of Vero Electric (emphasis added):
FPL states in its petition that in order to implement the PSA, it is requesting that the Commission: (1) grant FPL approval to charge its approved rates and charges to the COVB customers; (2) approve the establishment and base rate recovery of a positive acquisition adjustment of approximately $116.2 million with respect to the City’s electric utility system acquired by FPL; and (3) approve recovery of costs associated with the short-term PPA with OUC. An acquisition adjustment is the difference between the purchase price paid to acquire a utility asset or group of assets and the depreciated original cost, or net book value, of those assets. A positive acquisition adjustment exists when the purchase price is greater than the net book value. With respect to the OUC PPA, FPL requests that the Commission: (1) approve recovery of the energy portion of charges through FPL’s Fuel and Purchased Power Cost Recovery Clause; and (2) approve recovery of the capacity charges component through the Capacity Cost Recovery Clause.