Even as FPL says it is interested in Vero Beach’s aging power plant, or at least, the 33,000 electricity customers it serves, the city may be stuck in an iron-clad contract with the Orlando Utilities Commission at least until 2017. Or not. The contract’s validity remains uncertain, even after fi ve hours of testimony Monday in a special meeting sought by new Council member Charlie Wilson to hash out how to move forward with the electric utility dilemma.
The options seem pretty limited for the immediate future. The consultants and attorneys got the old Council to sign the city onto a contract with the soonest exit opportunity — accompanied by at least $20 million and up to $50 million in penalties – in 2017.
Mayor Kevin Sawnick called the OUC contract a done deal and said we would have to wait to see what happens, but no matter what, it was good to get things out in the open.
“Asking questions is always good and if we’ve made decisions in the past that people weren’t happy with, then we can learn from them, to dot our i’s and cross our t’s next time,” Sawnick said.
Wilson took it further. He asked the OUC representative whether they could revisit the penalty, and she said the city would need to request that in writing. Wilson’s hope is that by reducing the early-out penalty, the city could begin laying the groundwork to sell the electric utility or possibly to assign its power contract, and at least have the possibility of getting out of the power business open to it without a crushing $50 million penalty.
Former Electric Utility Director R.B. Sloan, who was brought in to answer questions, defended the existence of the penalty, no matter who asked for it.
“Our intent was to write a solid contract,” he said. “The idea is to make both parties perform what they say they’re going to do and to do that you need to make it a number that will get their attention.”
Wilson claims the insertion of the penalty was a deliberate way to make sure that the city retained ownership of the power plant, control over its revenues and jurisdiction over the 100-plus jobs that depend on the City of Vero Beach Utilities.
If the city was able to unload the electric system — which Finance Director Steve Maillet asserts takes up an inordinate amount of staff time in various departments — Wilson said the city might have to cut its staff, but that there would also be time and resources freed up to accomplish other things.
“Once we’ve dealt with these divisive utility issues and provided relief to our customers who have so suffered over the summer, we can get back to being the wonderful city full of friendly neighbors,” Wilson said.
Vice Mayor Sabe Abell discounted Wilson’s arguments that the process by which Vero Beach arrived at a contract with Orlando Utilities was part of a plot to preserve city territory and big government.
He said the entire process was fully vetted and City Council members were informed by staff of all the details, every step along the way. He chided Wilson for poking so hard into how and why things were done.
“To me, it’s almost a no-brainer,” Abell said. “And Charlie, for your information, this stuff has been talked about and the information is out there. There are answers here to any questions you may have and they can be backed up with documents.”
Earlier in the day, FPL’s statement that it would have looked into purchasing the Vero Beach utility made a splash, not for the fact it was interested but because Monday was the fi rst time anyone had asked them.
“We want to be of help to you wherever we can,” said Amy Brunjes of FPL’s Treasure Coast division. “We have some 55,000 customers in Indian River County and it’s an important county to us.”
Brunjes and an attorney accompanying her said that if the city expressed a genuine desire to sell the electric utility, FPL would bring in a team to “conduct a comprehensive evaluation to assess the value” of the city’s power system at no cost to the city, but “we would need the full cooperation of the city and the city staff.”
New Council member Brian Heady assured the FPL offi cials that, should such negotiations be entered in earnest, any city staffer not participating fully would “fi nd themselves among the unemployed 15 percent we have in the county.”
So, why didn’t the city just sell the electric utility to FPL when the City Council made the decision back in 2005 to get out of the FMPA contract? That is one of the burning questions Wilson and Heady wanted answered.
Vero Beach city leaders, it now appears, put preservation of jobs and revenue above the interests of residents and ratepayers when they traveled down the road to entering into the 20-year, $2 billion contract with the Orlando Utilities Commission, said critics of the negotiations.
Lack of curiosity, or ulterior motives?
The City Council, led by Mayor Sawnick and prodded by Council members Wilson and Heady, have bitten off huge chunk by trying to unearth all the events that have brought us to the shape we’re in today with the electric utility.
Monday’s special meeting felt like a Senate hearing with all the “experts” seated at a table in front, and various “witnesses” providing testimony.
Flash back to 2006 for a moment. With FPL territory abutting Vero Beach Electric Utility customers to the north, south and west, and the city coming out of its experience with FMPA with serious electric hangover, it would seem to be a natural solution to just sell the whole shebang to FPL.
Natural, that is, to everyone but the 2006 Vero Beach City Council, which voted to enter into another long-term, murky power arrangement with an unregulated utility.
Only Bob Solari, who served on the City Council from 2005 to 2007 and later went on to win a seat on the Board of County Commissioners, voted against the proposed plan to provide power, because, he said, he “didn’t like what was going on at that point.”
Consultant Sue Hersey said there were six options on the table for the council to choose among, and that each one had a price tag just to study it. Option 6 was selling the entire electric utility and the price tag was $300,000 for Hersey to delve into that option.
“Was there any data compiled on Option 6 to sell the utility so the Council had the advantages and disadvantages of Option 6?” asked Heady. “Did the Council have any idea what the value of these assets were?”
Hersey replied, “I don’t think I made a guess,” and informed Heady that the Council did not authorize her to study that option.
City Attorney Charlie Vitunac explained why the city did not include examining the “sell” option in Hersey’s scope of work.
“Miss Hersey made a presentation with prices associated so we would go into it with our eyes open and the City Council after looking at the proposal decided that no one here is really interested in selling the power plant,” he said. “And no one wanted to spend $300,000 to pursue an option that no one was interested in doing.”
Hersey gave the sitting Council members at the time the pros and cons of each one of the options. Among the “pros” listed under the option of selling the power plant, Hersey pointed out that the sale would:
• Provide large, one-time cash fl ow to the City of Vero Beach
• Ability to reduce costs to customers
• Reduce operating costs
• Possible franchise fee
On the “cons” side, Hersey listed:
• Loss of annual contribution to general fund
• Longer reaction time after storms, power outages
• Possible loss of jobs for city workers
• Shared City of Vero Beach information technology system would need to be separated
Even after seeing the potential benefi ts to the city and to customers, City Manager Jim Gabbard asserted that there was still no impetus from the City Council to commission the study.
“There was really no interest on the City Council and, knowing how much it would cost to study the options, it was premature because there was no interest in selling,we didn’t want to go that route and spend that kind of money if there was no interest in selling.”
Then Council Member Solari remembers things a little bit differently. Solari said he distinctly remembers asking Hersey if the city could fi nd out the value of the power plant.
“She told me that the only way to fi nd out how the power plant was worth was to put it on the market,” Solari said. “In any industry, you don’t have to put an asset on the market to get a value.”
Wilson said he feels that the information was kept from the City Council on purpose, to preserve the jobs of city workers and to ensure that the city’s cash cow would continue to provide the estimated $8 million in steady income to the General Fund for the foreseeable future.
“I think we suffer from selective disclosure,” he said. “I’m sure there was no interest because the comparative good was never disclosed to the City Council.”