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Vero puts a new poison pill in latest OUC deal


While Vero Beach may have its former city attorney Charles Vitunac to thank for the $50 million penalty provision in the Orlando Utilities Commission contract, it will have this year’s outside utilities counsel, Robert Scheffel “Schef” Wright, to thank for the poison pill in the current amended OUC bulk power agreement.

If this November’s election, or even next November’s election, produces a new council majority that wants to find an amicable, negotiated settlement to some of Vero’s current legal woes, the “red-line version” of the amended OUC bulk power agreement currently on the table requires Vero to “go to the mattresses” anyway.

And we owe all of it to Schef, or whomever instructed him to put it there.

Wright told the City Council there would be a provision in the new OUC contract expanding the scope of the “force majeure” clause, which previously only gave Vero an out in the event of an act of God such as a hurricane or flood.

But in the amended agreement, Wright has red-lined an expansion of that force majeure clause that guarantees his own job security by requiring Vero Beach to exhaust every avenue of legal, regulatory or legislative remedy to any “change in law” which negatively impacts Vero or exposes Vero electric to a “substantial economic burden or hardship.”

In the meantime, while Vero racks up millions in legal fees fighting a multi-front war in any court, or with any legislative body or regulatory agency that may try to assault the city’s self-declared right to a permanent territory, monopoly power and unregulated utility rates, the city must keep up its end of the “take or pay” provision in the amended OUC contract.

Should Vero ultimately fail, after taking these appeals or challenges to the nth degree, and the parties do not reach an agreement within 60 days on how to settle up, OUC can walk away from the contract without penalty, leaving Vero Beach swinging in the breeze, and in the open power market.

An excerpt from Section 15.11.2 of the proposed agreement, from pages 24-25:

“To the extent that Vero Beach is exposed to a substantial economic burden or hardship as a result of any such Change in Law, Vero Beach commits to use best efforts to contest and reverse any such Change in Law, including challenging the validity of any such Change in Law, whether such Change in Law is a statutory act, judicial decision, administrative order, or other governmental act or directive, and further including seeking maximum recovery of any amounts that may be deemed to be stranded costs, and further including pursuing all meritorious appeals of any decision that is adverse to Vero Beach. 

“If such challenges to a Change in Law by Vero Beach are ultimately unsuccessful, then Parties shall promptly commence discussions in which they shall attempt in good faith to agree upon modifications to this First Amended Agreement that the Parties agree will restore the fundamental economic bargain of this First Amended Agreement or otherwise be mutually acceptable to the Parties. 

“If the Parties are unable, within 60 days following the beginning of such discussions, to agree upon modifications to this First Amended Agreement that would restore the fundamental economic bargain agreed to by the Parties herein or otherwise be mutually acceptable to both Parties, then Vero Beach may reduce the minimum capacity purchase described in Section 15.11.3 of this First Amended Agreement to a level sufficient to serve its maximum load, including provision for reserve margin, and if such reduced level is unacceptable to OUC, then OUC may terminate this First Amended Agreement.”

Under this agreement, could Vero reduce its minimum take of power from OUC if the Shores successfully extricates itself from Vero’s system by court order?

Would the City Council be in violation of the OUC contract should a three-vote majority wish to take Florida Power and Light’s $13 million offer to purchase the Shores customers and, in effect, dismiss the Shores lawsuit?

The new, red-line version of the contract is scheduled to be vetted by a joint session of Vero’s Utilities and Finance commissions at 9 a.m. Monday, and then to be considered by the City Council at 6 p.m. Tuesday.

City officials have backed away from the urgency of approving the contract by Oct. 1, but three challengers – Brian Heady, Harry Howle and Laura Moss – are now nipping at the heels of Mayor Dick Winger and Councilwoman Amelia Graves.

If this contract prevents Vero from amicably settling any of its disputes with its Shores or County customers, it’s a sure bet that will be an important incentive for some to push this deal through before the November election.