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Old guard crushed as big Vero majority opts to exit power business

STORY BY LISA ZAHNER, (Week of March 14, 2013)
Photo: An aerial view of the Vero Beach power plant and substation.

In a resounding ratification of multiple elections and the recent City Council vote approving sale of the Vero Beach electric utility to Florida Power & Light, residents voted Tuesday by almost a 2-to-1 margin to get out of the electric business. Of the 3,643 votes cast by absentee ballot and in person Tuesday, a full 2,339 votes or 63.75 percent fell on the “yes” side, with only 1,330 votes or 36.24 percent dissenting. Turnout was more than 1,000 votes greater than the 2,500 or so expected. About 10,500 people are registered to vote in the City of Vero Beach.

The referendum affirms a February vote by the Vero Beach City Council to approve the voluminous purchase and sale agreement with Florida Power & Light. The $179 million deal would provide $111.9 million in cash – enough to pay off the utility’s debt, to pay $20 million in penalties to exit the Orlando Utilities Commission wholesale power contract and to pay OUC another $34 million to take possession of the city’s power entitlements through the Florida Municipal Power Agency.

The remainder of the proceeds, combined with the tens of millions in utility reserves, could be used by Vero to pay off an estimated $35 million in unfunded pension liabilities, saving the city more than $3 million per year.

Scott Stradley, a local CPA and chairman of the Vero Beach Utilities Commission, said the overwhelming factor for him when considering whether or not to recommend approval of the deal to the city council was the immense economic benefit for the community in the estimated $23 million per year that will be saved in electric bills. FPL rates are the lowest in Florida. Vero’s rates are currently about 38 percent higher than FPL.

“The $23 million in found money has the potential to create 250 jobs and that’s almost half another Piper Aircraft,” Stradley said. “As we’re coming out of the great recession, we need this shot in the arm.”

Under the agreement, FPL has agreed to offer nearly 100 of the city’s electric utility employees jobs for two years. Employees will have the option of whether to retire, if eligible, to accept employment with FPL or to terminate their employment with the city when the sale closes.

Several political committees got involved in the race.  Citizens for a Brighter Future urged a “yes” vote and Voices for Vero Beach tried to stop the landslide with a fear campaign centered around the threat of lost city services.

CPA and utility activist Glenn Heran, who formed and operated Citizens for a Brighter Future, said:  “What’s significant about this victory is that it’s the second city in the space of six months that has rejected inefficient, government-run utilities – South Daytona being the other. It’s clear that the public is coming to the realization that city councils have no business running electric utilities.”

Supporters of the sale gathered at the riverfront home of Councilwoman Pilar Turner and her husband Al Turner cheered “63.74 percent!” when the final vote tally came through. Soon after, the pop of champagne corks could be heard as a core group of people who worked on the sale for more than three years celebrated.

“To have the recognition of the validity of this cause has been huge, and to have great people who are educated and respected, to have their support validates that this is really the move to secure the financial future of the city,” Turner said. “I love the City of Vero Beach, so that’s what I want to do.”

Among those present at the party was former Councilman Charlie Wilson, who first made the motion to invite FPL to come and talk to the city about purchasing the utility.

Wilson joked that Tuesday was not election day, but “groundhog day,” referencing the Bill Murray movie where the main character’s day kept repeating itself. “We’ve done this before,” Wilson said, harkening back to the November 2011 referendum approving lease of the power plant property as part of a sale.  It was also approved by a huge margin.

The “yes” vote was the latest and perhaps the most challenging of the hurdles the sale to FPL must surmount before Vero Beach can turn over the keys of the Big Blue power plant to an investor-owned utility.

“I’m very glad that the propaganda spread by the opposition was not accepted by the intelligent population of Vero Beach, said city voter Paul Teresi. Teresi, who is past president of the Taxpayers Association of Indian River County, volunteered by waving signs and making get out the vote phone calls to supporters.

FPL plans to make $30 million in transmission upgrades to the system, which, when signed off on by state and federal regulators, will permit the dismantling of the city’s aging power plant, often called “the dinosaur” by Mayor Craig Fletcher.

Fletcher, Turner and Vice Mayor Tracy Carroll were the three council members who voted in favor of the sale. Councilmen Jay Kramer and Dick Winger voted against the sale. Kramer has pushed for a partial sale of only the outside 61 percent of the customers, and Winger has complained that the city is not getting a “fair price” for its asset.

Over the next few years, the primary task of the current and future city council members and top city staff will be to devise a detailed plan to operate the city without that approximately $5.6 million it skims annually from the electric utility.

City Manager Jim O’Connor has said that it is time for residents to take a hard look at their values and what they believe are the essential functions of government.

A closing on the utility could take place as soon as early 2014, or if regulatory and legal matters become more complex, as far out as 2016.