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Many questions, few answers on Vero power deal


After another four hours of attempting to demystify all the potential pitfalls in Vero’s proposed bulk power deal with Orlando Utilities, the city’s Finance and Utilities commissions recessed their meetings until 9:30 a.m. Friday with more questions than answers still on the table.

The agreement – which commits the city to pay just less than a billion dollars, spans eight years and would replace Vero’s 2008 deal with OUC – is being touted as Vero’s best chance of reducing electric rates, shortening its commitments to non-market-based pricing and shuttering Big Blue.

Each time a new iteration of the contract has been scrutinized, Vero’s negotiators have gone back to OUC and gotten small concessions, cheaper prices, more favorable terms, clearer wordings or even the elimination of a whole problematic section from the contract.

The advisory committees, feeling empowered on Monday by this ability to get things changes, sent attorney Robert Scheffel “Schef” Wright back yet again to seek some answers and further hone the agreement.

Finance Committee Chair Peter Gorry suggested that the negotiating team gather all the information the joint commission had requested and resume the process on Friday to see if all the concerns could be ironed out to the members’ satisfaction.

“If I’m the only one who doesn’t understand all the moving parts, I apologize. But I don’t think I am,” said Utilities Commission member and local CPA Scott Stradley.  City Hall had sent them changes to the latest version of the contract just before Monday morning’s session.

One key area that continues to create heartburn is a clause actually inserted by Wright, expanding the force majeure provisions in the contract from simply covering acts of God to also addressing legal or regulatory changes thrust upon Vero electric by federal and state agencies, by court decisions or by new laws enacted by the Florida Legislature or Congress.

“It’s asking us to defend the fundamental economic bargain to which we’ve agreed,” Wright said.

But numerous members of the commissions bristled, including Gorry who raised the possibility that Vero could be forced to fight some sweeping change imposed by a government bureaucracy. Bob Auwaerter, Indian River Shores’ representative on the Utilities Commission, agreed.

“I feel like if we have to go up against something that is industry-wide, I feel like we’re going to be Don Quixote going after the windmill,” Auwaerter said.

Both the Finance and Utilities commission members fear that this clause, which would require Vero to fight tooth and nail against any unfavorable laws, rulings, orders or changes, could result in millions of dollars in legal bills, and years mired in appeals, potentially even escalating to the U.S. Supreme Court.

“I think that’s the biggest problem, that we don’t know what it might be,” said Utilities Commission member Laura Moss, who is also running for City Council.

Moss pointed out that the document assumes that Vero would be “on the same side” of a dispute as OUC, and that the clause puts an undue burden on Vero ratepayers, when the city’s business partner in this deal is a much larger and more powerful entity. “Their (OUC’s) resources are much greater than ours,” Moss said.

Wright was directed to ask OUC officials to limit the clause, removing the part about federal actions and paring it down to judicial actions in state court to which Vero is a party. Should such a decision eliminate Vero’s ability to serve customers outside the city limits, Wright said, that would be a “catastrophic” outcome for Vero.

The volunteer commission members also want OUC to split the costs of all this legal wrangling down the middle, 50-50. Wright said he would go back and make the “big ask” of all the things the commissions want.

The commissions also insisted on a better understanding of the value of Vero’s gas transportation contracts that it would permanently transfer to OUC as part of Vero’s concessions in the deal. Vero’s rate consultant Bill Herrington had estimated the value of these contracts at roughly $10 million.

Mayor Dick Winger, City Manager Jim O’Connor and Wright have all declared that the process of vetting the OUC deal would be done publicly, under Florida’s Sunshine laws and that all documents would be open for public review. But on Monday, a request by Auwaerter to view the actual Excel spreadsheet consultants used in the cost-benefit analysis of the trade-offs in the OUC deal was met with a demand for secrecy.

Herrington had compiled the spreadsheet, Wright said, and he was not willing to go public with the formulas he used to place valuations on all the give-and-take items in the contract. “The work content of those spreadsheets is Mr. Herrington’s proprietary information based upon his work in Florida and he doesn’t want that out there,” Wright said.

“Even if we (Vero) paid for it?” Auwaerter asked.

Commission or council members who want to see what’s behind the numbers in the spreadsheet will be required to sign a non-disclosure agreement saying that they won’t use the information outside the proceedings of the OUC contract consideration,  and that they won’t disclose the information to anyone who hasn’t signed a non-disclosure agreement.

“I want to see the formulas. I don’t want to be a forensic accountant,” Auwaerter said, adding that he’d already tried to compute what was behind the numbers in the static document he’d been given, to no avail.

Regardless of what city officials discover in those formulas, Wright told them the deal up for consideration is as good as it’s going to get.

Cost savings in the price of bulk power, Wright said, could amount to upwards of 20 percent, but that would be muted by other factors in the city’s energy mix, as only a portion of Vero’s power comes from OUC. Even after Big Blue is shuttered, which is scheduled for Dec. 1, Vero still must pay whatever the Florida Municipal Power Agency chooses to pass along in wholesale power costs.

“The guts of the economics is the best and final offer,” he said of the current deal.

After the commissions get another crack at the contract on Friday, the Vero Beach City Council was scheduled to consider voting on the deal Monday morning.