Negotiations for sale of ‘Big Blue’ begin – finally
The Vero Beach City Council unanimously agreed to commence negotiations for the much discussed sale of ‘Big Blue’ to Florida Power and Light (FP&L) after rebuffing the effort of city staff and consultants to rewrite the letter of intent.
The negotiations officially began following Mayor Jay Kramer’s signature Friday of a modified letter of intent submitted by FP&L.The three modifications required by the city were:
• Insertion of the words “and the City of Vero Beach” in a sentence outlining FP&L’s right to do due diligence, thus asserting Vero’s equal right to do its own due diligence
• Addition of the catch-all phrase, “The City of Vero Beach reserves the right to accept, reject and negotiate any of the terms included or excluded in this” letter of intent.
• Changing a sentence citing a purchase price of “up to $100 million” and replacing that phrase with the words “a mutually agreed upon price.”
“We look forward to starting negotiations,” said FP&L External Affairs Manager Amy Brunjes.
FP&L says it came up with its offer of $100 million by doing “a high-level analysis of the distribution, transmission and generation assets of the City of Vero Beach’s electric system.”
In turn FP&L said it has “determined that a purchase price of $100 million would fairly compensate the city for its electric system, allow the city to pay off its current debt associated with the electric system and allow the customers in Vero Beach to enjoy the same low electric rate that FP&L customers currently receive while not negatively impacting FP&L’s existing customers throughout our service territory.”
FP&L says that and a whole lot more on its new website – www.fpl.com/verobeach – where the utility began its general public lobbying effort.
As many weeks have turned into many months and now years, some specific (and certainly not all) concerns about a sale to FP&L include:
• How much is the city responsible for in penalties it may have to pay to get out of its current contract with the Orlando Utility Commission? Figures ranging from $50 to $20 million have been tossed around.
• What about the environmental issues involving dismantlement of the power plant? And who will have bottom-line responsibility for that area and its immediate environs?
• What happens to current Vero Electric employees?
• What are the city’s obligations to buy power under agreements with other utilities when Vero Electric was part of Florida Municipal Power Authority?
• And the big, basic question: How would the sale affect property taxes?
The property tax question is the straw that stirs this utility drink.
Many politicians want to keep the millions of dollars in electric revenue flowing into the city because they help to keep property taxes low – and some would argue unrealistically so.
Others contend a sale would not mean a huge property tax hike – the Glenn Heran and Steve Faherty utility activist argument.
“We hope that the signing of the (letter of intent) will enable the city and FP&L to proceed quickly with an agreed upon sale for the benefit of all electric ratepayers,” Faherty said.
Also favoring sale are individuals and businesses – many outside the city, and many of those on the barrier island – that are paying the city’s much higher electric rates, thus subsidizing city services without benefit of those services.
Even as negotiations begin, and assuming the many practical and political roadblocks are overcome by the city and FP&L, there are others who must also agree to the sale: the Florida Public Service Commission, the Federal Energy Regulatory Commission, Florida Municipal Power Agency, the Federal Trade Commission and U.S. Department of Justice would all need to approve various aspects of any deal before a sale could take place.
This process will take several months and during this time FP&L will likely continue tinkering with its new website which includes questions and answers that likely will be expanded in the weeks to come.
One current example:
Q: How will the customers in Indian River County and Indian River Shores be affected?
A: The City of Vero Beach electric utility currently serves customers in unincorporated Indian River County and Indian River Shores through a franchise agreement. If the transaction is approved, FP&L would begin serving customers in these areas as well.