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County to vote on joining Shores electric lawsuit

STORY BY LISA ZAHNER (Week of August 7, 2014)

South barrier island residents may get some good news from the Florida Public Service Commission by October on whether or not the board will hear Indian River County’s request to ditch Vero Electric once its franchise agreement expires in March 2017.

In the meantime, the county might pile onto Vero’s legal woes by joining a lawsuit filed by the Town of Indian River Shores.

The Board of County Commissioners is on break until Aug. 19, at which time County Attorney Dylan Reingold will ask commissioners if they want to join the Shores’ suit, which accuses Vero of charging unreasonable rates and mismanaging its electric utility.

At 9 a.m. on Aug. 21 in the Shores Community Center, the parties to the circuit court suit, plus any other interested entities, will convene the first mandatory conflict resolution meeting in hopes of settling the dispute between Vero and its ratepayers outside the city limits.

The meetings are required by the state when a public entity like the Shores sues another public entity, the goal being to resolve the matter in public, without lengthy court proceedings, to save taxpayer dollars. Should the county wish to join the suit, including county officials in the sessions would streamline the process.

“At this stage I have written a letter to the Town stating that the County was electing to participate in the conflict resolution process, subject to ratification by the Board at its meeting scheduled for August 19, 2014. Thus at this point, I will be waiting on direction from the Board as to the County’s role, if any, in the August 21st meeting,” Reingold said. “I will prepare as if I will be attending.” 

The meeting would have been on the 30th day after filing the suit, Aug. 18. But both Shores and county officials confirmed that the county requested the three extra days to give commissioners the Aug. 19 opportunity to consider becoming a party to the suit prior to the first public session.

Shores Town Attorney Chester Clem said the Aug. 21 meeting is primarily intended to “identify the issues and set the ground rules.” The next conflict resolution meeting would be at the 50-day mark, as set by statute. If no settlement is achieved, parties will go to formal mediation at the 81-day mark.

“As with any litigation, there will be motions filed. Other attorneys will appear and depositions can be scheduled,” Clem said.

All of this will occur as the clock ticks on the 90 days the PSC has to decide whether it will take up the county’s complaint filed with the state regulatory commission. An appointed commissioner will coordinate staff and commission efforts as a pre-hearing officer.

The PSC will schedule a public “agenda conference” during which it will make a determination regarding the PSC’s authority and willingness to issue the declaratory statement that the county is asking for. Twelve days before that agenda conference, the PSC staff will issue its recommendation. Members of the public or interested parties can file comments supporting or opposing the complaint with the PSC or become “intervenors” in the process.

Vero officials, even members of the city’s Utilities Commission, who could potentially be deposed as the court tries to sort through whether or not Vero is culpable of charging unreasonable rates and mismanaging its utility, have been told by City Attorney Wayne Coment, “Don’t talk about it.”

Still, the two pending legal actions have been a favorite topic of comments from the public podium.

Both the County’s and the Shores’ cases have been brewing for some time, mainly since the sweltering Summer of 2009 when Vero electric rates soared to 58 percent higher than Florida Power & Light.

Two years ago, the County gave Vero notice that it would not be renewing the 1987 franchise agreement, but the belief was that the sale of Vero Electric to FPL would be completed by then. Shores officials say the Shores’ franchise agreement contains no such five-year notice requirement, so they haven’t missed a deadline.

Just as the Shores has told Vero it needs to cease operations within the Town when its franchise expires in November 2016, the County is also seeking a smooth transition once Vero vacates county right-of ways and is no longer authorized to provide electric service to county residents outside the city limits.

"In order to properly plan for the seamless continuation of electric service to those county customers, including offices and departments of the Board, located within the Franchise area, the Board is in need of a declaration from the PSC regarding the effect of the expiration of the Franchise on a number of critical matters affecting the substantial interests of the Board," the complaint states.

Options the County has asked the PSC to weigh in on include the County taking possession of the utility equipment, selling that equipment as well as the right to serve to FPL, or defining a limited transition time during which Vero continues to serve while FPL constructs the infrastructure needed to take over serving customers on the mainland and on the south barrier island.

Vero has about 18,500 county-resident utility customers spanning a territory from the Indian River Mall to parts of Grand Harbor to south of the Moorings.

The PSC has jurisdiction not over how Vero operates its utility, but over Vero's service territory. That territory, which currently includes about 34,000 customers, would need to be redrawn and any resulting vulnerabilities in the power grid would need to be addressed upon the expiration of the franchise agreement.

Many of the points made in the 52-page complaint filed by attorney Floyd Self of Gonzalez Saggio and Harlan echo that of the Shores lawsuit filed in circuit court on Friday. Among the parallels are an allegation that Vero officials deliberately lowballed the city's customer count to avoid regulation under a state statute referred to as the "Mayfield Bill" requiring a referendum to set up a utility authority to run Vero Electric.

That bill would have given customers in the County and the Shores a voice in the governance and rate-making policy of Vero Electric. City officials, fearing that a representative utility authority might vote to sell the utility to FPL, declared a customer count under the 30,000 threshold so the city wouldn't have to abide by the new law.

The city's own financial statements and other official documents had previously listed customer counts at between 33,000 and 34,000.

Those following the issue might remember a 2009 complaint filed by utility activists Dr. Stephen Faherty, a Moorings resident, and CPA Glenn Heran.

In light of the county filing its updated complaint backed by a Tallahassee utilities law firm on behalf of the outside customers, Faherty and Heran, facing a September deadline to reactivate their action and hire a legal team to mount the case, dismissed their own complaint last week.