Council gets agreement for electric sale to FPL
The long-awaited sales agreement between Florida Power & Light and the City of Vero Beach to sell the city’s electrical system was presented to council members individually on Monday with the net proceeds coming in $2 million short of what was once tentatively on the table.
FP&L officials chose to meet Monday one-on-one with council members to explain the discrepancies in the price and discuss other sale-related issues.
Upon learning of the one-on-one meetings, Councilman Jay Kramer on Friday asked city staff to notify the media that he was opening his segment with FP&L to the public. More than 20 people attended his session.
Previously, the deal itself had been thought to be worth about $179 million, with $115 million for the direct sale of the city’s electric system. Now, the direct sale figure is coming in at $111.5 million.
Power company officials explained to Kramer and members of the audience that the company needed to make adjustments to the figure in exchange for allowing the city to get out from under any future liability.
To make this adjustment a little less painful, FP&L decided to up the ante and pay the city an additional $500,000 a year over three years to lease the power plant property.
The power company previously had agreed to pay the city $1 million each year for the next three years to lease the property before it tears it down and decommissions the plant.
Supporters of the sale say city electric customers are paying millions of dollars more in rates each year than if they were getting their power from FP&L.
Sale proponent Glenn Heran estimates that the additional city electric cost 33,000 ratepayers approximately $40,000 per day from April 4, 2011, through Jan. 1, 2012, and $58,000 per day starting on Jan. 2, 2012.
For 2013, Heran estimates the difference in rates will be about $71,000 per day. The total rate differential for 2013 is estimated to be just shy of $26 million, Heran estimates.
Opponents of the sale argue that the city – which uses about $4 million in electric utility profits each year to keep its tax rate low – will be forced to cut services and or hike taxes if the deal passes.
The sales agreement – which runs close to 100 pages – and at least 300 pages of accompanying paperwork is about the size of a major city’s Yellow Pages book.
Council members are expected to vote on the sale in a month or so.
One point that could be contentious as the council gears up for a vote would be a plan to give close to five acres of prime real estate on the southwest corner of Indian River Boulevard and 17th Street to the power company so it can build a substation there once it decommissions the power plant.
Kramer and many sale foes at the meeting appeared flummoxed when City Manager Jim O’Conner explained the deal. Power officials said it will cost them about $7.8 million to relocate the substation, which is currently on the 17-acre riverfront site across Indian River and 17th Streets.
When Kramer asked O’Conner why the substation just doesn’t stay put, O'Conner said he’s been under the impression from the majority of the council that it wanted the riverfront land completely cleared of any utility structures.
The city is working on a referendum that could be held in March asking voters if they want to sell utility.