Municipal power co-op's demands said 'ridiculous'
The light at the end of the tunnel for a fast-track sale of Vero electric to Florida Power & Light – and prospects for lower electric utility rates – appeared to get a little dimmer last week as the Florida municipal power co-op was reported to have hardened its stance on letting Vero Beach out of the alliance.
Sources close to the negotiations told Vero Beach 32963 that the terms being demanded by the Florida Municipal Power Agency are “ridiculous” and not only outside the bounds of what FPL is willing to pay, but also beyond what the Florida Public Service Commission might allow in terms of protecting FPL’s current customer base from an overly negative financial impact.
Nothing official is being said by either FPL or the city. Sources say FPL does not want to present the bad news until there is some good news – perhaps a proposed solution – to offer as well. That could take time.
Meanwhile Vero is no closer to being free from being tied to a power co-op which auditors said last week has no equity in its projects, is leveraged to the max and has what little reserves it can muster invested in questionable school district bonds in California and Illinois.
A statement by FMPA CEO Nick Guarriello published in the daily as a guest column held out little hope that the power co-op is even remotely interested in cutting through red tape to let Vero exit from its entanglement with the organization of municipal utilities.
Guarriello’s expression of the FMPA’s stance laid out a veritable gauntlet of legal and regulatory obstacles the city would need to surmount to extricate Vero from the co-op and its power contracts. Those contracts are largely to blame for the city’s high electric rates as the FMPA acts as a costly middleman.
Neither FPL nor city officials were given advance notice that the tough-talking guest column by Guarriello would run in the daily paper. O’Connor, after reading Guarriello’s statement, was not shocked by its tone or substance.
“I believe all parties have stated it is complex deal and this is just another step in the process,” City Manager Jim O’Connor said. “Most Council members I believe understand.”
Since joining the City of Vero Beach in 2011, O’Connor has proven his mettle as both a negotiator and a crisis manager, and he’ll need to do both those jobs exceedingly well over the coming months to keep the City Council on course as the sale of Vero electric to FPL drags on.
So far, the council, led by Mayor Dick Winger, has been able to stave off an increasingly agitated Vice Mayor Jay Kramer and his un-vetted schemes to alter the way the city manages its electric utility. The council a week ago repealed a portion of the Oct. 1 rate increase, a few-buck-a-month gesture that hardly seems likely to mollify an increasingly anxious 34,000 customers.
Winger had earlier said he was willing to wait until after an expected February vote by the FMPA on the fast-track sale proposal, but that if no progress was made by then, something would have to be done. Now, the earliest that vote could come is March.
With the three-year anniversary coming up since FPL formally expressed its intent to buy the utility, pressure is mounting to get the sale done or get rates down – or both. Nearly 20,000 customers outside the city limits in the Shores, South Beach and mainland county have also been patiently waiting while their fate is determined by the success or failure of the Vero electric sale.
That patience is wearing thin, as evidenced by a bold – some would say desperate – move by the Indian River Shores Town Council last week (see related story, page 10).
Kramer wants to shut down the power plant, hire consultants to tell the city how to maximize efficiency and even pursue a partial sale of the 61 percent of electric customers outside the city. These things, he claims, will get electric rates down.
Kramer doesn’t explain how that can be true – how Vero can shed two thirds of its revenue and charge the remaining third of its customers lower rates – but the mounting political pressure to get rates down could steer the council to drastic action as the November election nears.
Among the factions still dreaming the city will keep its electric utility intact is the city’s largest labor union, Teamsters Local 769, which represents more than 200 city workers and most of the non-management electric utility staff.
Teamsters Business Agent Steve Myers said he has spent no time or energy contemplating Kramer’s vision of a partial sale or his proposal to shut down Big Blue because, he said, “that’s not in the sale and purchase agreement with FPL.”
Would the union members be in favor of a partial sale? “It’s like saying do you want your leg amputated at the knee or do you want your leg amputated at the thigh. It’s not much of a choice,” Myers said.