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End in sight for battle to get Vero out of electric business

Photo: Transactional attorney Nat Doliner of the Carlton Fields law firm reviews sale documents with Councilman Lange Sykes.

Nearly eight years after Florida Power & Light executives first opened discussions with the Vero Beach City Council about taking over Vero Electric, the city’s 34,000 customers finally appear to be on the precipice of rate relief, with the conclusion to an arduous battle to get Vero out of the electric business in sight.

The City Council, after three hours of discussion Tuesday, voted 4-1 to sell the city’s electric utility to Florida Power and Light for $185 million plus other consideration.

Before the vote, council members had reviewed more than 300 pages of documents outlining not only the basic terms of the sale in FPL’s revised letter of intent, but also tying up all the legal, financial and technical loose ends – the multitude of things that need to happen before the handoff.

The $185 million deal is expected to leave Vero with a $36 million windfall.

Mayor Laura Moss, Vice Mayor Harry Howle and Councilmen Lange Sykes and Tony Young all voted in favor of the terms that had been hammered out over the past few months and memorialized by transactional attorney Nat Doliner of the Carlton Fields law firm.

Councilman Dick Winger, consistent with his voting history throughout his tenure, was the lone vote against the sale.

Howle brought Doliner to the table when the majority of the council lost confidence in its former attorney, Robert Scheffel “Schef” Wright, citing Doliner’s key role in the purchase of the Sebring electric transmission system by Florida Power Corporation.

“He’s the only guy who has done this before,” Howle said at the time.

More importantly, Doliner arrived laden with no baggage of being allied with the Florida Municipal Electric Agency co-op or its members who still need to let Vero out so the FPL deal can close. But he’s had the cooperation of FMPA officials so far, under the leadership of the agency’s new CEO Jacob Williams. The elected bodies of 19 member cities still need to unanimously approve Vero’s final exit, in exchange for $108 million cash to the FMPA.

Howle said he was very pleased with the outcome of Doliner’s work product after only seven months on the job. “This contract is like a dozen roses on a random Tuesday afternoon. FPL is an outstanding partner, I appreciate their resolve and loyalty,” Howle said on the eve of the historic vote.

In addition to sorting out the minutiae of disposing of a $100 million-per-year utility enterprise, the documents produced and delivered to the city last week lay out terms for all the required leases, easements, and even the streetlight arrangements.

There’s a 30-year franchise agreement, a document changing FPL’s service territory and a document by which Vero would cancel its wholesale power contract with the Orlando Utilities Commission. Also wrapped into the packet is a 52-page stop-gap measure of sorts, a contract to sell only the Indian River Shores portion of  Vero’s system to FPL for $30 million should something go awry and the full sale not close by January 2019 or thereabouts.

All of those agreements were voted on at Tuesday’s meeting.

The council voted 5-0 to exit the city’s bulk power contract with the Orlando Utilities Commission, a necessary step to facilitate the anticipated hand-off to FPL in October 2018 or soon thereafter.

Exiting the OUC contract nearly stopped progress on the sale due to a dispute over whether the city owed a $20 million penalty or a $50 million penalty,  but FPL executed a separate deal with OUC for $25 million worth of wholesale power to help induce Orlando to accept the lower penalty figure.

Prior to the vote, the Council heard presentations by five members of the city’s Finance Commission, and two members of the Utilities Commission including Chairman Bob Auwaerter, who also serves as a councilman for the Town of Indian River Shores.  The Shores has about 8.5 percent of Vero’s ratepayers and but provides close to 10 percent of the electric utility’s annual revenues.

Auwaerter, a retired industry analyst who for decades studied market factors, companies, mergers and acquisitions for Vanguard funds, has closely looked at all facets of what FPL is offering, based not only upon the risk to Vero of continuing to operate an aging utility in an increasingly volatile market, but also on FPL’s projected revenues over the 30-year franchise period.

His conclusion: “Vero Beach is getting a good to very good price,” Auwaerter said.

“You hear the press over-use the phrases ‘historical opportunity’ and ‘once in a generation’ to describe mundane news events. However, in this case, both of those terms apply to the vote you five people will be taking,” Auwaerter told the council.

Most of the council members huddled up with Doliner individually on Monday to go over the documents and clear up any questions they had before Tuesday’s meeting.

Councilman Sykes emerged from his session with Doliner saying he got all his questions and concerns answered and explained, and got assurances that the documents are legally sound.

“Where there were opportunities to negotiate on the city’s behalf, that was done, and where there had to be compromises that had to be made, that was done,” Sykes said. “I’m very confident in Nat Doliner’s ability and willingness to advocate for the city’s best interest. All the parties involved are putting their best foot forward.”

Sykes said he recognized that there are still some important approvals pending but that it was “very important for this deal to move forward.”

Though Moss, since her election last fall, has attracted a great deal of criticism for her very direct and sometimes brash style of getting things done, she led the city to this moment.

Moss admits that her tenure has been quite a ride, being catapulted from chairwoman of the Utilities Commission to mayor and the city’s FMPA representative in less than two weeks’ time, and for a time, Vero’s chief negotiator in the electric sale.

She said she was told that the mayor has no power, that the position is merely ceremonial, but she feels the office of mayor is what you make it and she viewed her marching orders from the citizens were to complete the sale to FPL.

“I will not stop until this is done,” Moss said Monday, adding that she’s been put in an unprecedented position at the right time, with the right partners, to make the sale happen. “My power comes from the people, they recharge my batteries.”

Critics of the deal, and those opposed to selling the electric utility in general, complained that the council was ramming it through without adequate vetting, and without a thorough analysis of how the city’s finances would shake out after nearly $6 million in annual transfers from the electric utility to the general fund are gone.

In the politics of a contentious election season, former council member and once-again candidate Jay Kramer has accused the pro-sale majority of having their votes bought and paid for by FPL, because FPL has generously funded political action committees to support candidates who favor the sale.

Even under the best-case scenario, the deal still needs to be approved by several regulatory agencies, as well as the FMPA and its member cities. FPL has set a goal of closing the mammoth deal sometime between October and   December of 2018.