Vero electric sale suddenly seems a real possibility
After three years of dormancy, mostly under a "can't do" Vero Beach City Council, a plan for the city to buy its way out of a statewide power co-op's stranglehold is suddenly very much in play.
Florida Municipal Power Agency told Vero officials it will cost $108 million to exit the co-op's contracts so Vero electric can be sold to Florida Power & Light.
FMPA members and staff were set to discuss the exit cost Thursday during the group's Orlando board meeting, but the announcement of a dollar amount came in the midst of a record-breaking eight-and-a-half-hour Vero council meeting last Tuesday, giving city officials the immediate chance to weigh in.
Initial reactions were positive, with the council praising Mayor Laura Moss for making inroads with the FMPA's new CEO, Jacob Williams. Williams had vowed to make the issue of Vero’s exit a priority, but also cautioned that no matter what his staff proposed, any deal would need to be approved by all of Vero's partner cities that co-own FMPA assets and liabilities.
Councilman Dick Winger most enthusiastically expressed the sentiment of the council, saying he thinks the $108 million is "definitely do-able," considering that FPL's initial offer topped $170 million with all considerations tallied.
The FMPA published a detailed fact sheet that showed Vero's proportional ownership in the co-op and included projections indicating that the 51 megawatts Vero would buy from the Stanton 1 and 2 coal plants and the St. Lucie nuclear plant would, when averaged, remain way above market cost for a dozen years.
A portion of Vero's exit costs, $76 million, would help defray that loss – the difference between what the electricity is worth on the open market and what Vero is obligated to pay for it – plus contingency risk that would be absorbed by the other member cities.
The other $32 million would cut Vero's ties with the FMPA's All Requirements power generation project. Vero stopped buying power from the ARP nearly a decade ago, but the city is still a co-owner.
After the FMPA discusses the plan this week, Williams is expected to appear at Tuesday evening's City Council meeting to answer questions. FPL officials have been invited to participate, as well. City Manager Jim O'Connor confirmed that the investor-owned utility is still interested in acquiring the whole of Vero's nearly 33,000 electric customers.
The FMPA estimates that it would take 12 months or longer to execute the complex plan for carving Vero out of the co-op.
Simultaneously, the FMPA released a hopeful statement regarding the partial sale of the Indian River Shores portion of Vero's system to FPL for $30 million. Williams told city officials the FMPA bondholders would need to formally say that Vero selling off its customers in the Shores would not place at risk Vero's utility revenues pledged as collateral on FMPA bonds.
"We have not received any indication that the sale of Indian River Shores customers is at odds with Vero's obligations. We will continue these discussions and work with Vero Beach as the city moves forward to negotiate a definitive sale contract," Williams said.
Vero voted to hire attorney Nathaniel Doliner and his team from the Carlton Fields law firm to handle the Shores sale transaction, with hopes that Doliner could also negotiate the full sale to FPL.
The City Council fired its previous Tallahassee-based attorney, Robert Scheffel "Schef" Wright, who had failed to push the sale forward. During the 32 months Wright was the city's lead utilities attorney, FPL's offer withered on the vine and was allowed to expire on Dec. 31. Wright was viewed by the council as having loyalties to the FMPA and its member cities, and not negotiating hard enough to close the deal.