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Frustrated over Vero electric impasse, Shores seeks new ways to lower rates

STORY BY LISA ZAHNER (Week of April 3, 2014)

Indian River Shores officials appear to be coalescing around the idea that after five frustrating years of little movement toward a sale of Vero electric to Florida Power and Light, it may be time to shift their focus to other ways of helping Shores’ residents obtain lower rates.

Councilman Dick Haverland was the first to turn the discussion in this direction at last week’s town council meeting, but he was not alone.

“Not being a party to any of these negotiations, it’s 100 percent clear to me that this deal isn’t going to happen,” Haverland said, adding that if there was a legislative remedy to be pursued, the Shores should go for it.

“The counterparty is clearly not interested in the transaction,” he said, referring to the Florida Municipal Power Association co-op which would need to agree to release Vero from the organization to facilitate a closing. FPL’s most recent offer of $52 million to the FMPA has met with renewed resistance and multiple objections to the terms.

“We have virtually no hope of getting where we want to be unless we make it happen,” Haverland said.

FPL External Affairs Director Amy Brunjes urged the Shores council to help put pressure on the Vero City Council to wholeheartedly support the sale, and the town did send a letter to the city.  But it was the sense of the group that Vero is well aware that Shores customers want a sale and the lower FPL rates.

“With all due respect to you, Amy, and to FPL, we can’t sit here any longer. I think we need to start taking some active steps,” Councilman Tom Slater said.

Brunjes said it is FPL’s position that a closing can still happen in early 2015 “if everybody wants to get to yes.”

“The issue is not the City Council,” Mayor Brian Barefoot said. “The problem is the FMPA.”

Barefoot stated the obvious reason for FMPA not wanting to give an inch. If Vero manages to get out of the FMPA, he said, other cities facing punishingly high rates will want to out too.

“We could sit here and talk about this until the cows come home, but it seems to me we’ve got another 30 days, after which we need to consider our options,” Barefoot said, and those options may very well point to the Town forging “our own path.”

Councilman Tom Cadden, who has been the town’s point person on utilities for more than five years, agreed. “It’s gonna take a miracle to get this thing done. You’ve got a group against you now that controls that City Council,” Cadden said in reference to some of the anti-sale elements who are considered trusted advisors by Mayor Dick Winger and other council members.

The Shores council directed Cadden and key staff to meet with an attorney who specializes in utilities and who practices before the Florida Public Service Commission to determine what the Town’s options might be to carve the town residents out of the Vero system and let them determine their own fate.

Cadden had originally proposed consulting an engineer. “I can have him here next month,” Cadden said. But members of the council suggested that the challenge is a complex legal one, not necessarily a matter of poles and lines. Four years ago, the town formed a relationship with an attorney who specializes in utilities and regulatory issues, so Cadden said he could rekindle that connection.

During the meeting, several ideas came up, including the possibility of the Shores negotiating to purchase its transmission and distribution assets from the City of Vero Beach and then broker its own franchise agreement with Florida Power and Light to operate that portion of the system that would then be owned by the Shores.

“What if we bought the equipment from the City of Vero Beach? Then we could get electric from anybody we want,” Cadden said.

“It’s complicated, but it’s do-able,” he added later in the meeting.

This idea would be different from the concept of a partial sale of the system to FPL that’s been tossed around for several years. Cadden said the town, as another municipal entity, could seek to purchase the infrastructure needed to serve its own residents. The big question there would be how much money Vero would try to squeeze out of the Shores in exchange for that infrastructure and for the loss of revenue from Shores residents, who represent about 11 percent of Vero electric’s customer base.

“Would they sell it?” asked Vice Mayor Jerry Weick, who said after the meeting that, though he has always been concerned about rates, his priority would be to get the Shores out from under the crushing, costly contracts with the FMPA and OUC – contracts that cause rate hikes over which the city has no control.

Retired attorney and utility executive Bill Grealis, the town’s representative on the Vero Utilities Commission, was out of state the day of the town council meeting and had not spoken with Cadden yet to catch up on what transpired, but said on Monday, “My recommendation to the Indian River Shores council is that they need to hire a Florida attorney to evaluate their options and make sure they don’t have conflicts. I would leave the determination of who is the best choice to the town council.”

In other developments, on the eve of Winger’s scheduled meeting this week with FMPA, FPL backed out of a planned presentation before Vero’s utility commission and was not planning to address the city council on Tuesday. Grealis said he regretted FPL was not there to add to the discussion.

“We told the commission that we wanted to postpone until we could present the most comprehensive proposal, since they were going to look deeper at rates,” said FPL spokesperson Sarah Gatewood on Monday. “In addition, at FMPA’s suggestion we are going to talk to OUC in an effort to move things forward, which could potentially lead to changes. We will be back at a future meeting to talk with the Utilities Commission.”

Representatives from FMPA had also been invited to the Utilities Commission meeting, in hopes of opening a more transparent and less adversarial dialogue among all the parties, but the FMPA declined.