Fromang said to describe $20 million power penalty as poison pill
Loose lips sink ships, and according to a Vero Beach businessman, former Councilwoman Debra Fromang’s cocktail-party chatter could provide a key lead to finally solving the mystery of how a $20 million penalty got into the city’s 2008 power contract with the Orlando Utilities Commission.
Barrier island resident James Lester, a North Carolina Christmas tree farmer and real estate developer who spends seven months of the year in Vero, had only met Fromang once before engaging her in conversation at a cocktail party in 2010.
Despite the fact that he was merely an acquaintance, he said Fromang apparently had no qualms about telling him that city officials put the penalty in the contract on purpose to prevent the sale of the electric utility to Florida Power & Light.
Fromang said she remembers the party and remembers a conversation with Lester. “I talked to him about Christmas trees and about problems with the economy. I’m sure we talked about the electric – I talk about the electric with everybody.” But with regard to revealing the origins of the OUC contract penalty, Fromang said,“I simply don’t recall.”
Now that the Vero Beach City Council has, by consensus, requested help from the Florida Department of Law Enforcement’s investigators to look into the OUC contract, ratepayers may finally get some answers – under oath.
Lester gave a written statement to Vero Beach 32963 by e-mail:
“On Sat. Dec. 11, 2010, a long-time friend invited my wife and I to attend a small party and watch the Christmas boat parade in Ft. Pierce. The party was at a condo on the inlet and was attended by folks from both Vero Beach and Ft. Pierce,” Lester wrote.
“The usual cocktail small talk ensued, but I found myself in a lengthy one-on-one conversation with Debra Fromang. I knew she had been on the city commission (sic), and consequently, I asked her about various pertinent subjects I had read about in the paper, some of which, occurred during her tenure on the city commission.
“While we were discussing the OUC contract and the ensuing $20 million withdrawal penalty, I asked her why a sum that large would have been included in the contract. Her answer to me was that the penalty was not the idea of the OUC, but rather their idea. They wanted it included to ensure the contract would remain in force in the event of a change of direction by future commissioners,” Lester continued.
Fromang’s response was, “that just doesn’t make sense.” She asserts that there was no pressure on the city to consider a sale to FPL in 2007-2008 when the OUC power supply contract was being negotiated. That call to sell, she said, came later in 2009, after already high rates skyrocketed.
Critics have called the $20 million penalty the “poison pill” injected into the deal by those who wanted to make sure Vero Beach held tight to Big Blue, the 113 well-paid electric utility employees and the $5.6 million in annual transfers into the city’s general fund.
Former Councilman Charlie Wilson said last week that he would testify under oath that he was told by OUC officials that they did not ask for the penalty.
Vice Mayor Tracy Carroll echoed Wilson’s sentiment, saying that her research had revealed that OUC was not the originator of the penalty. Wilson said OUC has “clean hands” in the matter, but Lester’s statement is the first real link to a Vero official who may know how the penalty originated.
“I personally think Debra seems like a nice person, but I was startled by the conversation and discussed it with my wife on the way home that night,” he stated.
Being a seasonal resident with business interests that take him back to North Carolina five months of the year, Lester is not laying the groundwork to run for office. Though he said he and his wife donated $200 to Councilwoman Pilar Turner’s first election campaign in 2010, and that they live in her Central Beach neighborhood, Lester said he has not worked on Turner’s or any other local political campaign.
He did get hot enough under the collar to pen a single letter to the editor to the daily paper in February 2011 in response to what he described as the “ongoing musings” of former Councilwoman Lynne Larkin, a defender of Vero’s old guard.
But Lester assured Vero Beach 32963 that he has nothing against Fromang – or other city officials past or present, for that matter. He said he has never had business or real estate dealings with Fromang or with her husband David, a medical doctor who ran for city council in 2010.
Lester said he is not a politically active, just an informed and concerned citizen who is not very pleased about being on the hook for $20 million to extricate the city from the OUC contract.
“I have no personal vendetta against any of the parties involved in committing the City of Vero Beach to the OUC contract; however, I do have an issue with putting 20 million taxpayer dollars at risk. I only bring this to your attention now because no one seems to remember who instigated the penalty clause ... I call that convenient memory. It seems too many bureaucrats these days are cavalier with our tax dollars,” Lester concluded his email to Vero Beach 32963.
Many have speculated that the idea for the penalty originated with the protectionist city staff or with the consultants from Boston, or even with the Florida Municipal Electric Association lobbyists. Fromang said she does not recall any conversations with staff or consultants that focused on preventing the sale of the electric utility by inserting a large default penalty.
Fromang said the allegation of a poison pill to keep Vero in the electric business has been proven wrong by the city’s actions in going forward with the sale to FPL despite the penalty. “Obviously that’s not true because they are intending to default,” she said.
The penalties in the contract were put there to protect both parties, Fromang said, asserting that such penalties, even very large ones, are standard.
Prior to the March 12 referendum, Fromang stood behind the podium with a handful of former elected officials who spoke against the sale to FPL. Among them were her colleagues Sabe Abell, Bill Fish and Ken Daige who also voted for the OUC deal. Fromang would not say directly that she is against the sale, but she said of the utility, “I don’t want to hand it over, just give it away.”
Lester came forward prior to, not in response to, the Vero Beach City Council’s decision last Tuesday night to ask the FDLE to investigate matters surrounding the OUC contract. He did not take the statements made to Vero Beach 32963 lightly. Instead, he mulled over his statement very carefully and thoughtfully and even consulted with his family attorney first.
If necessary, Lester said he is willing to tell what he heard Fromang say under oath. Should there be a full-fledged state investigation of the OUC contract, Lester said he would feel it is his civic duty to cooperate.
"If I got deposed it would be my duty, I would have to say what I heard, but I have no dog in this hunt" Lester said in a telephone conversation.