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Friday’s electric showdown seen a waste of time

STORY BY LISA ZAHNER (Week of April 23, 2015)

The showdown between the City of Vero Beach and Indian River Shores officials Friday just might be the culmination of a total waste of the two months since the Shores gave Vero more time to reduce electric rates, or conjure up a magic cure to resuscitate the dead utility sale to Florida Power and Light.

Shores Mayor Brian Barefoot said on Feb. 26, when the two-month truce was agreed upon, that – though he didn’t expect to avoid proceeding with the lawsuit that the Shores filed against Vero last July – he genuinely hoped the city would reduce rates in an effort to appease the Shores.

In a display bordering on naiveté, Shores officials even  suggested that Vero might, as a show of good faith, reduce its annual $5.6 million skim from the bills of all Vero electric customers, even those outside the city limits, into the general fund of the city of Vero Beach.

Here’s what happened (or didn’t happen) since:

• Transfers to the general fund did not go down.

• Rates did not go down one penny – though FPL announced another 3 percent reduction in its rates effective May 1.

• No one reported an epiphany revealing how to close the FPL sale.

• Results of a promised “optimization study” of how Vero’s electric utility might reduce rates are still four or five months away, City Manager Jim O’Connor told the Vero Beach Finance Commission on Monday.

• Negotiations to re-do Vero’s wholesale power contract with the Orlando Utilities Commission are complex, fluid and rife with market and regulatory risk. Renegotiating Vero’s OUC contract had been viewed as the city’s best bet for reducing rates.

In O’Connor’s words to the City Council last week, Vero has nothing to bring to the table on Friday. “We don’t have solutions to the issues and the problems that they (Indian River Shores) have presented,” he said.

The Shores brings nothing to the table but hope – hope that Vero will entertain some phantom offer from FPL to purchase the Shores customers and utility equipment from Vero. The problem with that notion is that Vero has absolutely no motivation to sell.

Still, the possibility of a sale of the Shores customers to FPL is what Barefoot and the Town’s attorney expect will dominate the discussion on Friday.

“I sincerely believe that a partial sale could serve as a cornerstone for a settlement of our pending lawsuit with the city, and would be mutually beneficial to all parties. Before stepping into the full fray of litigation, I intend to raise this issue at our next public mediation session,” Barefoot said. “It is an important discussion to have, and we will have it.”

Sources say Shores officials are putting a great deal of pressure on FPL’s number-crunchers to actually wave a dollar figure under Vero’s nose on Friday – something spokesperson Amy Brunjes seemed nowhere near ready to do when she spoke to the Shores Town Council last week.

Brunjes said FPL would have to evaluate the assets and do its “due diligence” before talking money.

The current “options review” period in the lawsuit is set to expire on May 15, so there is not a whole lot of time for due diligence.

But if some concrete offer – or the promise of a concrete offer in the coming weeks – actually transpires, Vero’s negotiating team might do anything to delay coming to grips with the lawsuit and agree to go back to the City Council, run the idea by the city staff, vet it via the advisory commissions and have its hired utility consultants analyze it, provided the lawsuit is kept on the shelf.

The only thing that might result from Friday’s meeting is that instead of getting a flat-out “No, and here are all the many reasons why” from Vero Beach, the Shores might get a formally written “No, and here are all the many reasons why” after more time has ticked away toward the Shores’ hoped-for escape from Vero electric in November 2016.

The Town’s 30-year electric franchise with Vero expires then, and Town officials need to have a plan – with or without Vero – to keep the 80 percent of their residents who currently rely on Vero electric in affordable, reliable electricity service.

The Shores’ argument in Circuit Court is its home-rule powers as a municipality give the town the right to kick Vero off its utility right of ways the day after that franchise expires.

If that’s the case, town officials should probably be prepared to actually kick Vero out.

Every day wasted not pursuing a court order one way or the other could be viewed as advantage Vero.

Vero’s worst-case scenario is that dozens of its current and former officials are dragged through a jury trial and the city loses. Ratepayers, including those in the Shores, pay the legal bills (yes, Shores residents get to pay the attorneys on both sides of this dispute).

The court and the Florida Public Service Commission would presumably oversee some arrangement to transfer the Shores’ part of the territory to another provider. Vero would have to receive some fair compensation in that transaction for the assets, and it would have to be equitable and in the public interest.

In other words, basically the same result as the “partial sale” Barefoot wants them to bite on right now, without making the Shores fight for it in court.

Then Vero would only have Indian River County left to deal with. County customers want out, too, and the county’s coffers to mount a legal battle are huge, as evidenced by the $2.7 million they’ve committed to fight All Aboard Florida.

Indian River County officials will be at Friday’s mediation session, too, as kind-of a third wheel. County residents share the Shores’ beef about high electric rates and unregulated monopoly, but they’re not yet parties to the Circuit Court lawsuit.

The county has its own appeal filed with the Florida Supreme Court, challenging a decision of the PSC that defended Vero’s right to a permanent service territory.

The parties are set to meet at 9 a.m. Friday with mediator Carlos Alvarez at the Indian River Shores Community Center in the Town Hall Complex. The meeting is open to the public. Then the Shores Town Council must decide whether or not to declare an impasse, and move to trial.