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Vero not in strong position to complain about FMPA

STORY BY LISA ZAHNER (Week of February 12, 2015)

The Indian River Shores Town Council last week urged Vero Beach to hold the Florida Municipal Power Agency accountable for the tens of millions of dollars local ratepayers have been socked with annually for investments gone bad, and the County Commission was set to consider a similar declaration on Tuesday.

It would seem to make sense to follow the nearly half-billion in losses passed down to Florida's electric customers back to its source, the FMPA. But there is one major problem: Vero Beach had a full, voting member on the FMPA Board when every single one of these risky and imprudent decisions came up for consideration.

The city had full knowledge that the FMPA was utterly clueless, long before the revelations in last month's state Auditor General’s report of the FMPA.

The proof of that knowledge is in the $3 million Vero ratepayers paid to Boston consultant Sue Hersey, and her attorneys from Dewey and LeBeouf, over four years to work out a deal to stop buying wholesale power from the FMPA's All-Requirements Project.

It was this exit from buying wholesale power from the FMPA's All-Requirements Project that led to the signing of the 20-year, $2 billion Orlando Utilities Commission contract (with its $50 million penalty clause), which will hang over Vero’s 33,000 long-suffering ratepayers until 2029 unless some major re-write can be negotiated.

But still, even after Vero hired Hersey and her legal eagles to seek relief from the FMPA nearly 10 years ago, the Vero Beach City Council lackadaisically sent a succession of its utility directors to represent the city on the FMPA Board. The Tom White- and Sabin Abell-led councils didn't see the need to personally travel to Orlando every month to see firsthand how the wheels were flying off the FMPA bus.

This was despite tens of millions in losses and penalties being passed down to their constituents each year. The City Council members buried their heads in the sand, and promised that the new OUC deal would deliver low, Florida Power and Light rates to Vero (spoiler alert: the promises didn't come true).

Those utility directors representing Vero on the FMPA Board seemingly never protested the risky fuel hedging, the lavish travel budgets, the exorbitant salaries and benefits, or the constant re-financing of debt to fund capital expenses on electric generating plants from which the FMPA members have rights to buy power.

Despite the gross mismanagement of the FMPA and the pain being passed down to Vero ratepayers, it was not until 2011 that the Vero Beach City Council ushered into office by Operation Clean Sweep sent  an elected official – and not a city utility staffer – to represent Vero on the FMPA board.

Councilwoman Pilar Turner complained until she was nearly blue in the face about the ridiculous budgets and investment policies of the FMPA that she learned about during the 72 meetings she attended. Utility activists Glenn Heran, Steve Faherty, Charlie Wilson and even former mayor and county commission chair Caroline Ginn rose to the podium countless times over the years asserting that the FMPA was nothing short of evil – or at least a bad actor.

Vero Beach 32963 has written dozens of stories over the past six years outlining the FMPA's horrendous debt, its bad fuel hedges, its ill-conceived interest-rate swaps, its fiasco of a budget and its well-funded shadow lobbying machine used to promote and protect the whole operation.

Yet, a few weeks ago, after the Auditor General's draft findings came out revealing out-of-control spending, risky hedging and a lack of internal controls, Turner's fellow council members responded as if they had just woken from a long coma.

Sadly, as good as the resolution passed by the Shores and under consideration by the County might sound to the ear of the infuriated ratepayer, Vero likely has no standing to demand any reparations from the FMPA. Its own attorney has made it very clear that Vero would get nowhere suing the FMPA because Vero is, in a very real sense, the FMPA.

The City of Vero Beach – and its city managers, utility directors, finance directors and elected officials from the past 30-plus years – have been full co-conspirators in the sins of the FMPA. The powers that be at Vero Beach City Hall – either by participating in the ruse, or by not exercising their fiduciary responsibility to protect the rate-paying public – were there all along.

Of all the FMPA complexities that Councilman Randy Old admits he doesn't understand, he hit the proverbial nail on the head last month when Old said: "We're part of the people who set it (the FMPA) up so we couldn't get out, so we're part of the problem."

It makes good sense for Vero and other member cities to call for heads to roll at the FMPA, and for a clear change in direction in management and investment policies. But for the Shores and the County to  join with Vero in an effort to make the FMPA accountable is just a distraction and a stall tactic.

Vero Beach was there all along, and Vero is ultimately responsible for the inefficiencies and losses and debt service it has cheerfully passed along to its 33,000 ratepayers – all the while skimming off millions each year for the city’s own general fund.

If leaders on the Shores and the County elected boards, in a politically correct effort to foster community spirit and harmony with their Vero neighbors, take their eye off the ball and band together with Vero in some futile crusade against the FMPA, it will only prolong the suffering of their constituent ratepayers.

Vero is apparently forever stuck in the FMPA family. The City of Vero Beach is the victim of the perpetual co-op that its own city fathers created.

Short of the FMPA declaring Chapter 7 bankruptcy, liquidating the generation assets and voiding the FMPA's punitive contracts with its member cities to allow for a sale of Vero electric to FPL, getting out from under Vero Electric seems the best option for Shores and county customers.

Finding a legislative, regulatory or judicial way to free the Shores and County customers from Vero's electric system – messy, nasty and costly as that surely will be – may be the only hope of achieving a sane solution for at least 20,000 ratepayers.

That may be the only way the city of Vero Beach can be held accountable for being in the room when every single bad move of the FMPA was made, and doing nothing to try to stop it.