Power co-op sets terms for not holding up Vero electric sale
The power co-op that stands in the way of closing the sale of Vero electric to Florida Power and Light has, after nearly four months, finally provided a verbal response to FPL’s August proposal for moving forward.
The big question, the answer to which apparently will remain unknown while FPL “evaluates” the response, is whether the Florida Municipal Power Association’s demands are even in the ballpark of what FPL and the City of Vero Beach are prepared to accept.
“FPL is evaluating the response we received from FMPA on the solution that we proposed to allow Vero Beach to exit its contractual obligations,” said FPL spokesperson Sarah Gatewood. “We will follow up with FMPA, the city, and the community once we have completed our evaluation.”
FPL President Eric Silagy on August 20 offered to sweeten the deal for the FMPA with untold millions in cash, options to power from FPL’s planned Turkey Point nuclear expansion, and transmission rights to Georgia.
All of these concessions were designed to persuade the FMPA to cancel Vero’s obligations and issue new contracts by which the Orlando Utilities Commission would take over Vero’s membership stake in the co-op. Under those contracts, OUC would agree to purchase back from FMPA a set amount of power each month.
But even if FPL and the FMPA are close to agreement on this part of the deal, the other unknown is whether the power co-op has changed its position on the transfer to OUC of Vero Beach’s contingent liability for a share of FMPA bond obligations.
Vero Beach would like to see OUC simply assume that liability, and on the face of it, Orlando would seem an even more substantial guarantor of these bond obligations than far smaller Vero Beach.
But FMPA’s attorneys have been seeking “credit enhancements” that pledge Vero Beach municipal revenue as collateral in case OUC defaults.
Vero’s 10 percent utility tax, which according to Vero Finance Director Cindy Lawson currently brings in $1.69 million from electric bills, and the possibility of a 6 percent franchise fee that Vero could charge on future FPL electric bills together might provide $2.5 million per year that FMPA would like to see pledged as back-up collateral.
When this came up earlier this year, Council Member Pilar Turner said she wouldn’t have any qualms about agreeing to pledge those revenues, since the chances of OUC defaulting are extremely remote.
But whether or not a three-vote majority in favor of committing city revenues as collateral exists after the recent Vero election remains to be seen.
City Manager Jim O’Connor confirmed Monday that the pledging of city revenues as credit enhancements to the FMPA is still part of the deal that’s on the table. And he, like Turner, said he doesn’t see a problem with it.
But, he said, “I do not plan to present this to Council until we have reached some form of agreement.”