Vero electric sale is endorsed by taxpayers group
With the referendum of the sale of the Vero Beach Electric Utility less than three weeks away and absentee ballots already in mailboxes for the March 12 vote, a five-person panel convened last week to discuss the deal on the table and to answer questions.
The meeting, hosted by the Taxpayers Association of Indian River County, was open to the public and attended by about 25 people.
On the panel for the city were Mayor Craig Fletcher, City Manager Jim O’Connor and Utility Commission Chairman Scott Stradley. Representing Florida Power and Light were External Affairs Director Amy Brunjes and Business Development Manager Ryan Fair.
Both Fair and Brunjes have been described as close partners with the city, and both have been involved in the sale since FPL was first invited to open talks about a potential purchase of the utility in December 2009.
Taxpayers President Glenn Heran, an outspoken sale advocate, introduced the panel. He announced that the Taxpayers Association board, which is made up of half city residents and half county or Indian River Shores residents, had unanimously voted to recommend the approval of the purchase and sale agreement for the utility.
“We get FPL rates and that’s going to save us a tremendous amount of money,” Heran said. “Plus it gives us the opportunity to right-size bloated government.”
Brunjes described how she became involved in the issue as concerned members of the community began clamoring for FPL to buy the Vero Beach Electric Utility. “We’re at the end here and we’re about to bring it in for a landing – one way or another,” she said.
She listed groups that formally support the sale, including the Vero Beach Utility Commission, the Vero Beach Finance Commission, the Indian River Board of County Commissioners and the Indian River County Chamber of Commerce. Brunjes noted that the Indian River Shores Town Council had also passed a resolution backing the sale, as Shores residents are set to save between $2 million and $3 million per year in lower electric rates.
The Vero Beach City Council was set to vote on the purchase and sale agreement Tuesday evening and it was expected that at least Fletcher, Vice Mayor Pilar Turner and Councilwoman Tracy Carroll would vote to approve the pact.
Vero Beach resident Mark Mucher reminded those present that the referendum outcome should not be taken for granted. “The small, vocal minority, if they get out the vote, they’ll win,” he said.
With nothing else on the ballot, it’s unclear what the turnout will be for the referendum.
As of Feb. 15, a total of 385 of the 989 absentee ballots mailed to Vero Beach voters had been returned, said Supervisor of Elections Leslie Swan.
Fair reminded the audience of the economic benefit the community would get in lower electric rates once FPL flipped the switch after the sale. At current rates, customers would pay an estimated $23 million less per year for electricity than they do now.
“What do you do when you have more money in your pocket? Most people spend it,” Fair said.
Calling the sale an “economic development opportunity,” Fair said businesses would invest the money and would hire workers, fueling the local economy.
Stradley addressed some of the other sale benefits, pointing out that not only the city government, but also the county government and the school district would collectively save millions of dollars in electric bills and that money would not need to be raised through taxes.
Utility activist and South Beach resident Dr. Stephen Faherty added that the Moorings Club and St. Edward’s School would each save approximately $40,000 per year on FPL rates.
Fletcher, after giving FPL kudos for its role in helping broker a complex deal involving the city, the Orlando Utilities Commission (OUC) and the Florida Municipal Power Agency, emphasized the dire consequences of not selling the electric utility.
“What happens if there is not a sale? It’s a double-edged sword,” Fletcher said. “We have a $38 million unfunded pension plan and power plant that’s a half a century old. If we don’t sell, we run out the (OUC) contract and then the power plant will be 75 years old.”
Fletcher has said repeatedly that the power plant would become more and more costly to maintain and that replacing the generating units would be not only cost-prohibitive but senseless. Even so, the city is required to keep three of the five units operational under the OUC contract and by regulatory guidelines.
“We just spent $4.6 million on a piece of equipment that only runs 10 percent of the time,” Fletcher said of the plant’s most economical generating unit.
As part of the sale, more than 100 electric utility employees will come off the city’s pension plan and FPL will provide $14 million to cover the unfunded pension liability for those employees.
Earlier this month, city pension plan advisor Rocky Joyner told the city that it could use that $14 million, combined with other proceeds from the sale, to close out the existing defined-benefit pension plan and start fresh with a defined-contribution plan, similar to a 401(k) in the private sector.
After the sale, that would save the city about $3 million per year in pension contributions. “That money that we will save by selling is enough incentive to get the job done,” Fletcher said.
But there are still a few people out there – and at least one on the city council in Jay Kramer – who think Vero should draw back into the city limits and keep its electric utility, allowing the Indian River Shores, South Beach and mainland county customers to go with FPL.
A retired aeronautical engineer who worked on defense and space contracts, Fletcher said he’s “read every bloody word of the contract three times” and he sees this deal as the only rational course for the city.
“Not selling is not an option and pulling back is just not an option, it’s insanity,” Fletcher said.
When O’Connor was asked what die-hard sale opponents are afraid of, he said, “The answer is change. We’re going through a major change in the dynamic and the way we operate. It’s a change in course and there are going to be some winners and some losers.
“I think there is a fundamental love of the City of Vero Beach in all five council members,” he said, adding there are different opinions about the essential functions of government.
As the budget is addressed, O’Connor said, the city will be forced to decide what is essential and, to determine how to pay for it. Those looking for concrete answers today to what exactly the city government will look like post sale are asking for impossible answers, he said.
“It’s very difficult to see what the vision is going to be five years out,” he said. “To me, that’s five elections and things could change. We as a city government will conform to the reins put upon us.”