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Vero Electric sale suffers major setback: Requests for review could take months


The projected Oct. 1 closing of the sale of Vero Electric to Florida Power & Light ran into a last-minute roadblock Monday when an organization representing large commercial users of electricity asked the Public Service Commission to reconsider allowing FPL to pass on the $185 million cost to its existing customers.

The Florida Industrial Power Users Group contended it would be unfair for FPL to add into the bills of existing customers the $116.2 million premium FPL agreed to pay Vero over and above the $69 million the PSC staff said the city’s electric utility was actually worth.

The FIPUG’s position is that if FPL wants to pay Vero $185 million, the $116.2 million premium should come either from FPL shareholders or from a surcharge on the bills of its new Vero electric customers.

Regardless of how this issue is resolved, the petition by FIPUG – which includes some of FPL’s biggest customers and has a long history of taking FPL to task before the PSC, the Florida Legislature and the Florida Supreme Court – will almost certainly delay the closing of the sale beyond Oct. 1, and quite possibly beyond the Nov. 6 Vero City Council election.

Beyond the fact that it will cost Vero Electric customers $55,000 a day for each day the sale remains in limbo past Oct. 1, the delay will also force changes in Vero’s city budget for the coming fiscal year, which has been predicated on no longer owning an electric utility.  It also lends itself to the possibility of more mischief if opponents of the sale recapture control of the City Council in November.

The decade-long effort to get the City of Vero Beach out of the electric business and sell the utility to Florida Power & Light had seemed to be on the verge of success until last Friday.

Monday at 5 p.m. was the deadline for parties substantially affected by the Florida PSC’s Proposed Agency Action (PAA) to file a formal protest before the July 2 ruling detailing the June 5 vote in favor of the sale of the PSC would become final.

Two weeks passed without a peep from any objectors, but then two Vero residents and an Indian River Shores attorney, under the guise of the Civic Association of Indian River County, filed a protest claiming that the taxpaying residents of Vero Beach did not truly get a say in the sale, due to alleged deception on behalf of city officials, the influence of Political Action Committees largely funding by FPL, and the effect of mailings and advertising by FPL touting the expected benefits of the sale.

Former Vero councilwoman Lynne Larkin lodged the protest on behalf of former Vero councilman Ken Daige and former city attorney Charles Vitunac – both longtime opponents of the electric sale.

Those following the proceedings were giving Larkin’s objection slim odds of surviving to the next level, which would be referral to a judge within the Florida Division of Administrative Hearings, commonly referred to as DOAH, a clearinghouse for certain disputes that arise from the actions of agencies like the PSC. FPL expressed hope their challenge would be “resolved in the near future.”

The Civic Association claims to have 900 members who would be impacted by the Vero electric sale, but it seemed doubtful the PSC would see the group as credible enough to launch a hearing process (see editorial, page 30). So pro-sale city officials such as Mayor Harry Howle, though frustrated at the last-minute monkey wrench tossed in by longtime naysayers, still had hopes the objection might simply be tossed out.

But FPL spokesperson Sarah Gatewood noted that any objection was likely to consume time.

“In terms of closing, yes, this is expected to cause a delay but at this time we don’t know how long,” she said.  “We hope to start saving Vero Beach customers money as soon as possible and will continue to keep the community informed as we learn more.”

Then late Monday afternoon, as officials in Vero, Indian River County and Indian River Shores held their breath waiting for the 5 p.m. deadline to pass, a much more serious protest was filed.

FIPUG, represented by a Tallahassee law firm with long history of fighting FPL, objected to the $116 million above and beyond the value of the Vero electric system that FPL offered to pay as part of the $185 million purchase price.

That $116 million will cover most of Vero’s costs incurred from exiting two long-term power entanglements the city had gotten into over the years with the Florida Municipal Power Agency ($108 million) and the Orlando Utilities Commission ($20 million).

FIPUG argued that FPL’s large commercial customers will bear a disproportionate burden of that tab should FPL be permitted to absorb the capital outlay, as the PSC voted 3-2 to allow.

“FIPUG respectfully submits that FPL shareholders or COVB ratepayers rather than FPL’s ratepayers should fund this acquisition adjustment premium,” the filing states.  “Put simply, the Commission should not burden FIPUG members and other FPL ratepayers with a rate increase to pay for the premium FPL intends to pay the COVB for its electric system.”

FIPUG attorney Jon Moyle spoke at the June hearing of the PSC when the matter was taken up, and page 44 of the hearing transcripts state that Moyle was testifying at the behest of Chairman Art Graham, who led the opposition to approving FPL’s request to allow the $116 million premium on the grounds that the sale constitutes “extraordinary circumstances” and that it resolves long-standing disputes in the courts and before the PSC between Vero and its neighbors, Indian River Shores and Indian River County.

City Manager Jim O’Connor on Monday, after hearing of this second blow to the much-lauded PSC approval, was somewhat resigned to the fact that what comes next could take much longer than anyone hoped.

“From what I’ve heard, the typical time it takes the PSC to decide what to do about these objections is 30 days,” O’Connor said.

That gets us to September.  At that point, the PSC would either reject the protests, or refer them to the Division of Administrative Hearings for a hearing.

DOAH Deputy Clerk Terri Dikko, who handles new case assignment, said once a matter is referred to the agency, it is docketed the same day, within an hour or two. Then, one of the agency’s nearly three dozen judges is assigned to the case.

The judge will send out an initial notice to the parties, Dikko said, describing the process and asking the parties questions, including how long they will need to prepare for the hearing, and where geographically they would prefer the hearing be held, as DOAH has courts all over Florida.

When asked what the turnaround time would be for responses to those initial notices, Dikko researched several notices sent out in unrelated cases on file with the agency and said 50 to 70 days seemed to be typical.

That gets us to mid-to-late October.

Then how long until the case gets heard? “That depends upon the schedule of the judge. There are also rush cases and non-rush cases,” Dikko said.

Thirty days plus processing time, plus 50 to 70 days just for the parties’ attorneys to file an initial response to the Division of Administrative Hearings, would take ratepayers close to the November City Council election.

O’Connor said he hoped, should the case be referred for hearing, that the city could get a rush case, since the operating budget post-Oct. 1 has been set based upon not owning an electric utility, as it was expected to be sold by then.

None of the payroll, benefits and expenses of maintaining the system, running repair trucks and providing customer service are included in Vero’s upcoming budget.