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Brief lull in the action on the Vero electric front

STORY BY LISA ZAHNER (Week of March 19, 2015)

The controversy over Vero electric has effectively taken a spring break while various parallel legal, regulatory and legislative actions continue to run their course.

The Indian River Board of County Commissioners voted to join the Indian River Shores Town Council in extending the “options review” period in the electric utility mediation until May 15, so not much is expected to happen before the parties meet the first week in May to review Vero’s efforts to reduce electric rates.

Vero has hired consultants to offer up hard data and ideas on how to do that. One of the reports Vero was anxiously awaiting was its rate study, and results of that published last week show no real new information.

Rates are sufficient to cover operating expenses and debt payments, and to ensure the city maintains a decent reserve. Vero’s average residential electric usage is about 1,035 kilowatt hours per month, and the upper 20 percent of residential users (more than 1,500 kilowatt hours per month) use nearly 50 percent of the power consumed by residential customers.

The city’s base rate and power adjustment rates could be re-jiggered a bit, the consultant says, but the result would be “revenue neutral” to the ratepayer.

The report that’s of more critical importance to customers concerned about rates, the “optimization study” – an exercise which promises to analyzed proposed cost-saving measures including the mothballing of Vero’s Big Blue power plant and the introduction of smart-meter technology – is still pending. So are attempts to re-negotiate the city’s wholesale power deal with the Orlando Utilities Commission, a move Vero has dubbed its best chance to get costs down.

City officials said last fall that they think they can cut the rate disparity between Vero and Florida Power and Light by about half, still leaving a roughly 15 percent difference in electric bills – nearly half of which would be Vero’s transfers into its general fund if the City Council does not end that practice.

Weighing the totality of the statements made by Shores officials since the Town filed its lawsuit in July against Vero, a 15 percent reduction in rates will not be enough to keep the Shores and Vero from battling it out in a jury trial.

Among the options floating around the Shores Town Hall is the winnowing of the Shores’ complaint against Vero.

Some Town officials want to cut to the chase, so to speak, and ask the court to issue a declaratory statement on whether or not the Shores Town Council has the right to exert home rule powers when it comes to choosing a power provider.

It has not yet been decided if the Town will pare down the lawsuit or go full-steam with the complaint that would require the dredging up of nearly a decade of Vero’s dirty laundry and deposing potentially dozens of current and former Vero city officials.

Shores officials have begun crafting a contingency plan in case the Town loses its lawsuit and cannot exit Vero’s electric territory. Via a complex do-it-yourself review of rates, the Shores contends that it can and will control what Vero might charge its residents.

On the regulatory front, the County on Monday filed paperwork with the Florida Supreme Court to appeal the Florida Public Service Commission’s two rulings voted on during the Feb. 3 hearings in Tallahassee. The PSC’s failure to take up Indian River County’s 14 questions on one docket, and the PSC’s ruling defending Vero’s right and responsibility to serve county ratepayers in its territory – regardless of whether or not a valid franchise agreement is in place – have been deemed by county as damaging to the County and its electric ratepayers.

As attorneys flesh out the case for having the court review the PSC’s decisions, the appeal will likely ask the Florida Supreme Court to weigh in on some due process issues, and on property rights issues related to the County’s rights to grant use of its rights of way via a utility franchise agreement.

The County also will likely argue that the PSC contradicted itself by stating that the PSC used the pending Shores’ lawsuit as one reason not to answer the County’s questions, but then went ahead and issued a broad defense of Vero’s territorial rights while the Town of Indian River Shores’ lawsuit was still pending.

In Tallahassee, Rep. Debbie Mayfield filed two bills that could better position customers of municipal electric providers to demand more accountability for the rates they charge. Government-owned electric utilities and co-ops are currently unregulated and are permitted to raise rates without going to the PSC to prove the rate hikes are equitable to all ratepayers and that they are warranted, despite prudent management practices.

House Bill 337 (filed Jan. 19) entitled, “Local Government Services” would prohibit a utility like Vero from encroaching beyond its municipal limits without the express consent of the outside customers. That bill has cleared one of the three required committees and is matched by a companion bill filed by Sen. Thad Altman. The Senate bill was scheduled to be heard by the first of three committees on Feb. 17 but now seems stalled at the committee level.

House Bill 773 (filed Feb. 16) entitled, “Municipal Power Regulation” would, if enacted, bring the Florida Municipal Power Agency under the PSC.  The FMPA ramped up lobbying efforts to kill that bill, approving an additional $100,000 to fund the nearly one dozen advocates in Tallahassee pushing municipal power issues. So far, the four committees tasked with considering HB 773 have not moved on it. There are seven weeks remaining in the 2015 legislative session for the bills to be heard and voted on by all committees, placed on the House and Senate schedules for floor votes and approved.

Underscoring the need for all of the above, FPL last week announced it was asking the PSC for the permission to reduce rates by about $3 per month for a customer using 1,000 kilowatt hours of power (the typical barrier island resident would save $5 to $8 per month). The savings it wants to pass along, FPL states, is due to sustained low natural gas fuel costs.

If approved, FPL customers in Orchid, northern Indian River Shores, south and west Vero, Sebastian, Fellsmere and in the unincorporated county would see rates go down on May 1.

"We're thrilled to be able to reduce rates while we continue to deliver clean power and outstanding service for our customers," said Eric Silagy, president and CEO of FPL. "The investments we've made in converting our old, oil-fired power plants to modern energy-efficient centers that run on clean natural gas continue to deliver benefits.”

Vero ratepayers shall have to wait and see if those cheap natural gas rates motivate the FMPA or OUC – who logically should also benefit from the same favorable market factors – to give Indian River County customers a small break on high summer electric bills.