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Big Blue: A 'dinosaur' that can no longer get spare parts

STORY BY LISA ZAHNER (Week of March 13, 2014)

Councilman Craig Fletcher has repeatedly called Vero’s Big Blue a “dinosaur,” and its latest technical travail would appear to back that up.

In 2012, the city’s electric utility ratepayers spent nearly $3 million on a major overhaul of Unit 5, the power plant’s newest generator.

Today, Unit 5 is offline, with no date certain – or cost certain – for its repair.

“We discovered some internal damage during a routine borescope examination that staff believes should be remedied by the contractor who did the overhaul back in late 2012,” said Director of Power Resources Tom Richards.

So, can’t a vendor just FedEx the city some parts to fix it? Not exactly.

The city’s newest unit is so many decades old that nobody makes spare parts any longer, and the only remaining option is to fix up the old parts the city paid nearly $3 million to replace two years ago.

“We do not have the materials on hand for the work, so we are waiting for the repair and refurbishment of our old parts,” Richards said. “Then the original contractor will return to begin the repairs.”

The good news – if you can call it that – is that the original overhaul came in under budget. “The original budget was $3.34 million for overhaul of Number 5.  The budget was later revised to $2.84 million after the bid was awarded. We spent $2.73 million,” Richards said.

How much it will cost to have Unit 5 cracked open again is unknown, as is the time frame. It could be weeks, or even months.

“All this takes time; we don’t have a firm schedule for the return of the parts yet,” Richards said. “Meanwhile our other generating units are available to run if needed.”

If a cold snap, plus congestion on the Florida Power and Light transmission lines that bring power to Vero from Orlando, prompts Richards to fire up the other units to avoid blackouts in Vero electric territory, he said that power generated by Unit 4 would cost around $65 per megawatt.

By comparison, the city pays Orlando Utilities Commission $43.62 per megawatt in variable energy costs for wholesale power – an apples to apples comparison. But the cost billed per megawatt by OUC is actually $71 because Vero pays the Orlando power provider hefty “fixed costs” for overhead on top of the energy it takes to produce the power.

A cost for Vero power comparable to that would take into account the millions expended annually to keep Big Blue staffed, operational and in regulatory compliance.

As director of power resources, Richards manages all aspects of the power plant and coordinates the delivery of electricity to Vero’s customers. Whenever queried by city officials or Vero Beach 32963 about utility operations, he’s proven to be knowledgeable about all aspects of the electric business.

Based upon the repeated statements of Vice Mayor Jay Kramer that Vero has “no one running its utility,” it might surprise some to find that Richards has nearly a half century of experience managing municipal electric utilities. City Manager Jim O’Connor has also headed up more than one city government that had its own electric utility.

It’s unclear which one of the “experts” Kramer often consults gave him the idea, but the Vice Mayor at the last City Council meeting argued that the city needs to bring in a private consulting company to manage Vero’s electric utility. Kramer did not elaborate on where that would leave the city’s 100-plus rank-and-file utility workers, let alone the current managers.

Before joining Vero electric in July 2012, Richards worked as Director of Electric and Gas Systems for Ft. Pierce Utilities Authority for 21 years and prior to that he served as Executive Director of Traverse City Light & Power and General Supervisor of Michigan-based Consumers Power Company. He is a licensed Professional Engineer and also holds three degrees from the Michigan State University – a bachelor of science in electrical engineering, a master’s degree in systems science with a focus on “power systems engineering and business” and an MBA in management.

For the past 30 years, Richards has also been called on by the municipal and private-sector utility industry in both Florida and the Midwest for help, as his resume states, “Consulting for electric and gas utilities on management, power supply, rates, planning and operational issues. Also available for energy issues for any governmental entity or business.”

Richards is a past chairman of the Florida Municipal Power Agency’s All-Requirements Project, which Vero is attempting to exit, and past chairman of the board of Florida Gas Utilities. For many years, he represented Ft. Pierce Utilities Authority within the FMPA organizational structure.

While employed by Ft. Pierce, Richards oversaw the 2008 decommissioning of the Ft. Pierce power plant – experience that will come in handy if Vero actually manages to close the sale to Florida Power and Light. Richards said the dismantling took 18 months because the contractor salvaged a great deal of the materials, but he said Vero could take Big Blue down and haul it away much quicker – even “blow it up with dynamite,” should that be the chosen route.

Kramer has repeated his assertion that no one is running the utility so many times that Mayor Dick Winger has even begun echoing that sentiment, but City Manager Jim O’Connor begs to differ. “It is my personal opinion, and since he works with me, Tom is a very qualified and competent professional and has brought considerable value to the City of Vero Beach,” O’Connor said.

Kramer asserts that the city and its utility staff have been hamstrung with regard to effectively managing the utility since Vero entered into negotiations with FPL to sell.

“Rest assured the City has not tied Tom’s or anyone else hands in the operations of the City departments except as you note the budget constraints,” O’Connor said, referring to the across-the-board budget and staffing cuts that have been imposed since the 2008 economic downturn.

A joint meeting of the Vero Finance and Utilities advisory commissions is set for 2 p.m. Wednesday, March 19 in council chambers at City Hall to consider proposals on the table, including the concept of refinancing the utility’s debt in pursuit of favorable interest rates.