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Power plant not villain in soaring rates

While most residents regard the big blue Vero Beach power plant, with generators that go back to the early 1960s, as a museum piece, the surprising news is it actually produced electricity in 2008 at a 20 percent lower cost per kilowatt hour than what the City of Vero Beach paid the Florida Municipal Power Agency for the electricity it bought and then resold to residential utility customers.

The bad news is the power plant didn’t produce a great deal of electricity. If Vero Beach Utilities customers had been forced to rely solely on the municipal plant, the amount of power it generated in 2008 would have kept the lights on in 4,500 local homes – leaving approximately 24,000 residential and commercial dwellings in the dark.

While the plant could have produced significantly more power if its generators were run at maximum capacity, it could at best fill the needs of fewer than half the utility’s 33,329 electric customers, and on a day when demand was at a peak, it would not be able to meet the needs of even a third of current customers.

But the startling fact that this aging facility, nearing its 50th anniversary, produced power last year for an average cost of 6.8 cents per kilowatt hour – compared to the 8.4 cents the city paid for the power it purchased — illustrates anew that the electric rate crisis which has slammed Vero Beach has little to do with power plant operations, and more to do with the City Council and contract negotiations.

While the current City Council blames the ill-advised contract under which the city buys electricity from the Florida Municipal Power Agency on a predecessor, and insists significant savings will occur when Vero bids farewell to the FMPA next January 1, key details of the new 20-year contract that this City Council approved to buy power from the Orlando Utilities Commission have not been made public.

The city has now posted a “redacted” contract on its website, but blacked-out all of the numbers. Mayor Sabin Abell says the OUC insisted prices, penalties and contract terms not be disclosed for competitive reasons. So on what basis, other than faith, are residents staggering under this summer’s record electric bills expected to believe the new contract is better if details are a secret?

The big unanswered question, however, is why the City of Vero Beach should remain in the electric utility business – other than to milk money off electric bills to put millions into the city’s general fund — when the Utility Department largely acts as a middleman, buying most of its electricity from outside suppliers, and reselling it at a retail price as much as 50 per cent higher than Florida Power and Light.

Skimming money from electric bills to support the general fund was not what got the City of Vero Beach into the electric power business in the first place. The city took over the first power plant built by the Vero Utilities Company in the early 1920s, when the private owners were unable to keep pace with growing customer demand.

The first power generating unit in the current 19.6-acre power plant facility located on the northeast corner of 17th Street and Indian River Boulevard was put into commercial service in 1961. Since then, four more have been added: unit 2 in 1964, unit 3 in 1970, unit 4 in 1976 and unit 5 in 1992.

Even unit 1, while a bit of an antique, still is capable of generating power. The 12.5 MW unit is the least efficient of the five at the power plant, but was run for 81 hours in 2008 producing 467 MWh of electricity – at a very uneconomic 11 cents per kilowatt hour.

Unit 3, which went into operation in 1970, is a larger unit but it too is not very efficient. The 34 MW unit was run for 176 hours in 2008 producing 3,548 MWh of electricity at an allocated cost of 9.2 cents per kilowatt hour.

Unit 4, the largest unit in the plant which was placed in operation in 1976, produces electricity at a slightly lower cost than what Vero Beach paid for electricity last year through the FMPA. The 56 MW unit was run for 465 hours in 2008 producing 13,658 MWh or electricity at a cost of 8.1 cents per kilowatt hour – slightly less than the FMPA’s 8.4 cents.

The best thing the power plant has going, however, is the combination of unit 2, a 16.5 MW unit put into service in 1964, and the plant’s newest unit, the 38 MW unit 5 which went into operation in 1992.

“Units 2 and 5 work together, we take the excess heat from unit 5 and retrieve the heat to run unit 2 and the price of producing power that way is more efficient,” said R.B. Sloan, director of electric utilities.

Units 5 and 2 operated for 936 hours in 2008 generating a total of 37,128 MWh of electricity at a cost of 6.1 cents per KWh.

Remarkably, nobody in the Utilities Department seems able to say when the power plant ceased to be able to meet Vero’s needs. Even more remarkable, the Utilities Department is not able to chronicle the explosive growth of the customer base outside city limits.

Customer Service Supervisor John Lee says the Utilities Department never tracked customer numbers by whether they lived inside or outside of the City. “We only started running reports and tracking in the City and out of the City just the past couple of years when people started questioning it.” The split now is about 61 percent outside the City and only 39 percent within city limits.

But regardless of when the growth occurred, the amount of power the city has needed to buy from outside suppliers has grown every year.

“Our power plant kicks in when one of two scenarios occur,” said Sloan. “The first scenario is when it’s the most costefficient unit available, cheaper than all the other power suppliers. The second of the scenarios is when it is needed to support the system due to a system emergency or due to congestion in the transmission system or the power grid.”

Looking to the future, the power plant’s least efficient units – 1,3, and 4 – seem likely to be mothballed at some point.

But combined cycle units 2 and 5 may remain a dependable source of backup or emergency generating capacity for years to come.