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Little current role in Vero electric sale for elected officials

STORY BY LISA ZAHNER, (Week of May 10, 2012)

The sale of the Vero Beach Electric utility is for the moment effectively out of the hands of the Vero City Council, and squarely in the hands of teams of attorneys working for the city, Florida Power and Light, the Orlando Utilities Commission and the Florida Municipal Power Agency.

That’s a lot of billable hours – roughly $318,000 worth so far, just in invoices from Vero’s transactional attorneys at the firm of Edwards Wildman Palmer – plus an untold amount of expensive city staff time at the highest levels.

On Sept. 30, the period of exclusive negotiations with FPL will expire and that will mean a serious gut check for the Vero Beach City Council.

“Everybody is really pulling together because September is the deadline for us to decide, is it a go or a no-go,” said Mayor Pilar Turner said. “I’m hoping by September we have a strategy and a posture of how to get us out of the FMPA.”

Through its membership in the power agency, Vero years ago signed on to buy electricity and to pay for part of the operation of several power plants through the date when those plants are eventually decommissioned.

Experts say decommissioning the last of these plants could be another 50 years away if the plants are well-maintained. And Vero’s commitments are financed through long-term debt which also binds Vero to its sister cities in the FMPA cooperative.

Three council seats, those currently held by Turner, Vice Mayor Craig Fletcher and former Mayor Jay Kramer, are up for re-election in November. If the city is still grasping for direction and details on the deal by election day, the incumbents may be facing a frustrated electorate.

Turner agreed that the fact the deal does not seem to be moving more rapidly is frustrating. Right now, she said she views the council’s role as “to stay the course, just to keep it moving and to still be committed to getting us out” of the burdensome, long-term contracts with Orlando and the statewide power-buying cooperative, she said.

“As I’ve said before, the most important thing we can do for economic development is to sell to FPL,” Turner said.

Turner also serves on the power agency board so at least she stays more abreast of what’s happening on that crucial end of the deal. But she’s just one vote in Vero’s favor among dozens of city managers and utility directors who depend upon the continuation of municipal electric utilities for their livelihood.

City Manager Jim O’Connor said he also does his best to keep city officials up to date on the various negotiations.

“I want the City Council to feel very comfortable that they have access to all segments of the discussion,” he said last week. “Craig Fletcher was in here this morning and we went over that whole purchase agreement. I think everybody in town has got a copy of it.”

He said there’s enough frustration to go around about things like the fact that it took three months to
nail down the 196 definitions in the contract, but that those definitions are a crucial common language that need to be established to avoid conflicts and confusion.

With regard to the timing and the progress, or lack of it, O’Connor said FPL executives would also like some resolution sooner than later. “I’m sensing frustration from everyone,” he said. “The frustration is one of those that you don’t have daily reports.”

Utilities Commission member and former Vero Councilman Brian Heady has bashed the city for taking up gobs of time and spending huge sums of money doing what he considers to be circumventing the two questions that control the fate of the deal.

“The entry-level questions that we need to ask if we’re serious about selling the electric utility are the exit from Orlando Utilities Commission and the exit from the Florida Municipal Power Agency,” Heady said at recent public meetings.

 Heady said Vero needs  solid dollar figures for how much Orlando expects in compensation to let Vero out 17 or so years early from a 20-year, $2 billion power contract.

He said the city also needs to know how much it will cost to extricate itself from a seemingly endless commitment to remain part of the FMPA power cooperative which owns parts of the Stanton coal plants and the St. Lucie nuclear plant. Finding out if that exit from the power authority is even legally possible, regardless of the cost, is another lynchpin of the deal.

“And if they don’t give us something in writing, we need to send them something in writing telling them what our understanding is,” Heady said.

Former Councilman Charlie Wilson, who spearheaded the effort to bring FPL to the negotiating table, said the sale is turning out to be more difficult than he initially thought nearly three years ago.

Councilman Dick Winger said this spring that as time wears on, the odds of negotiating a successful deal are dropping as talks become more complex and more questions seem to be raised than answered.

O’Connor cited two main reasons why it is taking so long to fill in the dozens of blanks in the agreement document, which is riddled with assumptions and uncertainties.

First, he said, whole meetings focus around one miniscule aspect of the deal – he called them “incremental issues” – and then the people who attend those meetings are not the final decision makers.

Each entity has a governing board of some sort which will vote the deal up or down. Second, there’s a long chain of command, both legal and administrative at every angle of this deal, and a lot of parties have their fingers in it.

“These things have to touch so many hands,” O’Connor said.

A letter asking or responding to a question might need to be reviewed and approved by no less than six people from Vero, FPL and Edwards Wildman Palmer before it goes out to the recipient.

 City Attorney Wayne Coment is always one of those people.

O’Connor said Coment serves to make sure the Florida public records law is adhered to as the paperwork is circulated, and that no aspect of the proposed agreement violates the city charter. “Wayne has made it very clear that his attitude and his position is that once it hits his desk, he is an agent of the city and that’s a public document,” he said.

After the Orlando deal was inked in 2007 and details – including the $50 million penalty clause – were finally made public, former City Attorney Charlie Vitunac claimed it was not his job to keep an eye on the process, or on the Boston consultant and attorneys hired to draw up the papers and negotiate for Vero.

O’Connor said that is not the case with the FPL deal.  “Whenever we have our conference calls, Wayne sits with me,” he said.

Two other key players are transactional attorneys John Igoe and Rick Miller.

O’Connor said the two complement each other for the city’s benefit and said the firm has tried to control costs, farming out research to less expensive attorneys with various specialties whenever possible.

Heady has criticized the attorneys – whom he personally found and recommended to the city – for not shoving enough of the work onto associates, but both O’Connor and Turner noted that the firm has come in under budget so far for most of the work completed.

“I have confidence in the transactional attorneys,” O’Connor said.