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Pace of developments quickens in Vero electric saga

STORY BY LISA ZAHNER (Week of December 25, 2014)

After nearly two years of little action, developments in the Vero electric saga are now rolling in fast and furious. The Town of Indian River Shores and the City of Vero Beach had barely agreed last Wednesday to suspend further legal hostilities, and extend their current legal standoff until March 2, when Vero Beach fired a surprising new salvo.

Less than two hours after all-day negotiations between the Shores and Vero with Tallahassee mediator Carlos Alvarez broke up at the Vero Beach Community Center, Vero’s attorney Robert Scheffel “Schef” Wright announced to the Vero City Council that the city would file a petition with the Florida Public Service Commission asking for a declaration at its March 2 meeting that Vero’s service territory is permanent and trumps any franchise agreement.

Vero’s petition was subsequently filed Friday afternoon.

“The city needs the Commission’s affirmative declarations as to the city’s continuing right and obligation to serve in its Commission-approved service territory in order to continue planning and providing electric service in the most efficient and cost-effective way possible,” Wright wrote in the petition.

Indian River County also has a pending petition with the PSC asking state regulators to clarify what the county’s rights and responsibilities are once its franchise with Vero expires in March 2017.

The county is not a party to the Indian River Shores vs. Vero legal action, but county officials have been sitting in on the conflict-resolution sessions since August because they share some common complaints with the Shores over high rates and a lack of representation in the management of Vero electric.

At Wednesday’s mediation session, the Shores asked the county if it would also put its PSC matter on hold until March 2 instead of having it heard as scheduled on Feb. 3. 

County Attorney Dylan Reingold said no.

Last week’s mediation session did not result in a settlement, but only an agreement to continue the standoff until March, during which time Vero officials will continue trying to figure out how they can reduce rates to deflect the Shores’ charges of mismanagement, while Shores officials presumably begin courting Florida Power and Light and possibly other electric providers to serve the Town after its 30-year franchise with Vero expires in November 2016.

On Thursday morning during the Shores Town Council meeting, Shores Mayor Brian Barefoot said Vero’s surprise move to file its own PSC petition could be viewed as not only duplicitous, but also “a collateral attack on the Town’s lawsuit against the City.”

Barefoot later said the city’s attorney “subsequently assured us that the City’s petition would be narrowly drawn only to issues pertaining to the County, and would not pertain to the Town or otherwise collaterally attack the issues in Town’s abated lawsuit against the City.”

But over the weekend, the Shores and its legal team were scrutinizing the 32-page Vero Beach petition to the PSC “to make sure the City is as good as its word,” Barefoot said.

“If, after thorough review, it’s clear that the City has honored its word, we of course will honor our commitment to the mediator to make a good-faith effort to find a solution that is in the best interests of all parties.

“If it’s not clear whether the City’s PSC filing implicates our lawsuit then we’ll take appropriate steps to attain clarification. If it’s clear that the City hasn’t honored its word, then unfortunately we’ll have no choice but to advise the mediator and press forward with our lawsuit.”

The Shores’ civil suit against Vero Beach has been assigned to Judge Cynthia Cox, and special counsel Bruce May has made it clear that the Town would request a jury trial. Mediator Alvarez told all the parties at the table last week that, regardless of the verdict, the case would likely go to an appellate court, and that “there’s a high level of uncertainty in what the judges or even an appellate court will do.

“If you’re not scared of the court system, you need to be,” Alvarez said. “It’s a matter of last resort.”

If the Town loses, Shores customers are stuck with high Vero rates, plus potentially millions in legal bills to pay. 

But Vero has much more to lose.  Vero faces having its current and former council members, utility managers, consultants and attorneys subpoenaed and hauled up to the witness stand to defend the city against allegations of mismanagement and subverting state law.

And if the city loses the case, it also faces the potential loss of the Shores customers, which amount to nearly 9 percent of the utility’s income, or more than $8 million per year. O’Connor has estimated that the remaining customers’ rates would need to go up 30 percent to make up for the lost revenue.

“Sometimes the worst-case is so scary that you’re willing to be more flexible,” Alvarez said.