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Feds approve electric sale; refute objectors

STORY BY LISA ZAHNER (Week of October 17, 2013)

In the first of many regulatory approvals needed for the sale of Vero electric to Florida Power and Light, the Federal Energy Regulatory Commission not only ruled that the transaction is indeed in the public interest, but called objections raised by local attorney Lynne Larkin baseless, misplaced and “purely speculative.”

“We find that the combination of generation resulting from this proposed transaction will not affect horizontal competition,” FERC stated in its Sept. 30 ruling. This is important because the proposed 1976 sale of the utility to FPL was nixed in 1979 due to federal concerns about competition in the marketplace.

“Where FPL acknowledges it ‘has a very high market share,’ there is no evidence that the proposed transaction would increase market concentration,” the ruling states.

Taking into account the Vero Beach “load obligation” FPL would be taking on, FERC explained that the transaction would reduce FPL’s total economic capacity. “FPL’s base case analysis shows that the proposed transaction will even slightly reduce FPL’s market power.”

Larkin, acting on behalf of the Indian River Civic Association, had asserted that Vero entered into the sale by a flawed or faulty process, but FERC disagreed on this point as well.

“Regarding challenges to the process Vero Beach used to enter into the transaction and the role certain individuals took in that process, we find these challenges are misplaced,” the ruling states. “Protesters have not shown that these issues have any bearing on the factors that the commission uses to evaluate.”

Larkin argued that FPL has exerted too much influence over the sale process.

“With regard to allegations that FPL has inappropriately used its position to facilitate the proposed transaction, (she) provides no specific evidence to refute or contradict the testimony and exhibits FPL provides demonstrating that the transaction does not raise any competitive concerns,” according to the ruling.

Another objection raised by Larkin and Councilman Jay Kramer was that the city did not actively seek bids from other potential buyers.

“As to concerns about the lack of a request for proposal or other form of competitive bidding process, the commission’s analysis does not require an RFP or any other particular form of competitive bidding process to dispose of or acquire facilities,” the ruling states. “Moreover, Vero Beach’s testimony shows that it solicited interest from a number of potential buyers, and only FPL expressed interest.”

In fact, the city paid GAI Consultants tens of thousands of dollars to develop and distribute lengthy packets of information about the proposed sale and identify and approach power providers that might be interested.

With regard to those who complain that Vero is not getting a fair price for the electric utility, FERC stated, “We find FPL has sufficiently addressed concerns over the reasonableness of the purchase price. (The) concern that the transaction could drive down market prices across the nation is purely speculative and beyond the scope of our analysis.”

Larkin had also said FPL’s application was incomplete and FERC rejected that claim as well.

FPL must also submit final sale terms to the Florida Public Service Commission for approval. After some movement on Aug. 20 when FPL President Eric Silagy proposed a solution to resolve a stalemate between the City of Vero Beach and the Florida Municipal Power Agency, the deal again seems stalled. The FMPA has discussed hiring a consultant to review Silagy’s proposal and has told Vero Beach 32963 that the organization is committed to devote significant time and energy to the matter.