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South Beach electric customers lose bid to be freed from Vero

STORY BY LISA ZAHNER (Week of February 5, 2015)

TALLAHASSEE – Electric customers who live on the South barrier island and on the mainland in unincorporated parts of Indian River County lost their bid to be freed from Vero’s high electric rates by the Florida Public Service Commission Tuesday, largely because they had some seriously well-funded special interests stacked against them.

Lining up in support of Vero Beach’s request for affirmation of its permanent territorial rights extending way beyond city limits were not only their municipal power friends, the Florida Municipal Electric Association and the Florida Electric Cooperatives Association, but also Duke Energy Florida and Tampa Electric Co. All the votes against the county ratepayers and in support of Vero and “Big Power” were unanimous.

Vero never had so many supporters in high places as the unholy alliance that formed after the 20,000 customers outside the city sought a way out of Vero’s electric territory when the county franchise agreement expires in March 2017.

“They have told the world they’re going to kick us out,” Vero’s attorney Robert Scheffel “Schef” Wright told the PSC.

The county’s legal team made its case only to be shot down. The argument that ratepayers outside the city limits should have some say in choosing a utility provider upon expiration of a 30-year franchise agreement might make sense to the average ratepayer, but not to the five members of the PSC.

Commissioner Bob Solari said the county will not stop fighting until it gets low Florida Power and Light rates for its citizens. “We all understood the possibility that the PSC would rule against us today, but this will not in any way hinder or slow us down in our attempt to get the right thing done for the citizens of Indian River County,“ Solari said. “Our focus will now go to the Shores lawsuit and to the legislative paths that will get us to our desired destination.”

The ruling boils down to this logic: The PSC has exclusive and superior authority to grant electric territories, and that authority supersedes any rights of any county, city, commission or other government agency. Vero Beach’s territory was granted legally by the PSC. Therefore, Vero’s territory shall remain unchanged until or unless the PSC changes it.

“What I would hope is from this moment forward we can all start to work together,” said Mayor Dick Winger after walking out of the PSC chambers. “I think we can get the rates down in pretty good order. I would hope that. Our strategy is we would hope they would start working with us so we can get the rates down. Anything that slows us down is not helpful.”

The ruling was no great surprise to anyone who read the PSC staff recommendation published two weeks ago. The staff laid out in no uncertain terms the opinion that the PSC reigns supreme when it comes to handing out territorial rights.

Where does the ruling leave county customers? For now, it leaves them stuck paying high Vero electric rates and footing the bill for part of Vero’s general fund expenses. In the long term, the county hopes to change Florida state law to give counties the same rights a sovereign entity like the Town of Indian River Shores is claiming in its pending circuit court lawsuit against the City of Vero Beach.

The Shores lawsuit makes the argument that the Town, as provided by Florida law, has the right to decide who can provide utility service in the Town and who can use the Town’s rights of way to provide that service. The Shores says it entered into a franchise agreement with Vero in good faith, with the Town giving Vero permission to serve the Town’s customers for 30 years and Vero promising to provide reliable service at reasonable rates.

The Shores claims Vero has breached that contract, not only by charging unreasonable rates, but by ceding much of its power to make business decisions for Vero electric to its co-op wholesale provider, the Florida Municipal Power Agency.

Based on that premise, the Shores wants Vero out of its Town and off its rights of way in November 2016 when its franchise agreement with Vero expires. Vero claims its territorial rights trump the Town’s rights as a sovereign municipality. That, in short, is what the impending court battle is about.

According to the head of the Shores’ legal team, Bruce May of the firm Holland and Knight, the ruling of the PSC affirming Vero’s right to its service territory outside the city limits has no bearing on the Shores’ court case, because he still believes Florida law gives the Town powers that supersede the PSC’s authority over territories.

The lawsuit is on hold, in an “options review period,” until at least March 2 while Vero looks for ways to get its rates down via a $175,000 rate study, and the County and the Shores talk to other electric providers – namely FPL – about serving their customers should the court, or the Florida Legislature, or both, side with electric customers outside the city limits.