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Vero’s electric rates again headed through the roof

STORY BY LISA ZAHNER, (Week of July 28, 2011)

Electric rates for barrier island residents who rely on Vero Electric are once again heading way up – probably by at least 15 per cent before the year is out.

At the projected rate of about $130 for 1,000 kilowatt hours or about $325 for the average beachside home using 2,500 kilowatt hours, that puts Vero at close to 40 per cent higher than Florida Power and Light.

Island residents with larger homes may see their monthly bills jump by more than $100.

City staff says the utility will run at a deficit to keep from passing all the increased power costs on to customers.

Ratepayers who were around in 2009, which went down in local history as the “summer of pain,” might recall this is exactly how Vero Electric wound up $14 million in the red before boosting rates to a level 58 per cent higher than FP&L.

Only 50 per cent of the soaring fuel costs Vero Electric was being hit with in 2009 were being passed along to customers until the dam broke and rates shot up and up in the hottest months of summer, fueling the frustration of residents and businesses alike.

The mayor at that time told people to open windows.

This year, the mayor seems to be just as much at a loss, offering no sage advice, just foreboding caveats about selling out the system to those evil profiteers over at FP&L.

Mayor Jay Kramer seems not to have noticed that the overwhelming majority of Vero voters – people who elected him along with three other new faces last November – want Vero out of the electric business, period.

Yes, taxpayers obviously want the council to strike the best deal it can for the taxpayers, but the message is still adios to Vero Electric – ASAP.

Kramer told us again last week that he still hopes to sell FP&L just the 61 per cent of the customers outside the city so Vero can continue operating its electric kingdom within the city walls.

Even after hearing about the rate increase -- and seeing the city’s own budget increase by $200,000 just as a result of projected higher electric costs -- Kramer still thinks a partial sale is the answer.

What if FP&L executives weren’t bluffing when they said they’re not at all interested in buying just part of Vero’s electric system?

“We’ll go to the Florida Public Service Commission and negotiate a change in the service territory; we’ll make FP&L take over the outside the city customers,” Kramer said.

And if Vero can’t keep rates down for city residents after that?

“Then we’ll just sell the rest of it off to FP&L later,” Kramer says.

With all due respect for his office, Kramer needs to take the former mayor’s advice to open a window to get some fresh air.

He’s spending too much time at City Hall with the staff. Lightheadedness could be an explanation for holding Vero taxpayers within the city limits hostage to an inefficient electric system anchored by the Big Blue power plant.

In 2009, the power provider, then the Florida Municipal Power Agency, was the scapegoat; now the Orlando Utilities Commission is the scapegoat. What’s even more troubling than history repeating itself is that Vero staffers can’t seem to get an answer out of OUC about what’s driving up the costs.

The upshot is that Vero’s 34,000 electric customers could collectively pay $10 million to $14 million more for the same power than they paid last year – and no one knows exactly why.

Does anyone care? Does OUC need to justify those increases to Vero in order for Vero to raise its rates? Nope. The Vero Beach City Council does not even have to vote to allow electric bills to rise by 3.5 per cent in July, 10 per cent more “soon” and another 5 per cent sometime this fall.

The utility’s Customer Service Manager John Lee did the analysis and made the decision.

Department heads also knew about plans for the electric rate increase before the Vero Beach City Council or ratepayers were told. City departments that use electric had already included a 10 per cent hike in utilities in the printed and bound budget books handed out on July 15, but the new rates were not announced until July 23.

Customer Service Manager Lee said the cost per megawatt hour of electricity the city buys from the Orlando Utilities Commission has spiked over the past few months.

In January 2010, the cost of wholesale power to Vero, according to Lee, was projected to be $37.99 per megawatt hour and the actual cost came in just under that at $37.59. This spring, that cost went up to $44.59 and is projected to stay at $44.01 through 2012.

"We weren't supposed to reach $44 until 2016," Lee said.

Despite requests to explain the increased costs, Lee said the OUC has still not given him any details about what's costing them so much more to produce or deliver the power.

In January, OUC reported that revenues were up slightly from projections, so no signs of financial distress. But Vero is being charged a good deal more than officials banked on for power.

But Vero’s new City Manager Jim O’Connor said he thinks he can tap into some of his old buddies at the Florida Municipal Power Agency or the Florida Municipal Electric Association – whose members should also be feeling the pain – to find out what’s happening at OUC.

“Yes, I’ll be able to find out, and I will be able to explain it in layman’s terms so everyone can understand,” O’Connor said just prior to his first full day on the job at City Hall.