Vero council raises electric rates in morning session

VERO BEACH — During the first few hours of what promised to be a very long meeting, the Vero Beach City Council voted 5-0 to increase electric base rates effective Jan. 1 and to apply the same base rate to customers in and outside the city limits, effectively eliminating the the controversial 10 percent “out of city surcharge” that county and Indian River Shores residents now pay.

After Jan. 1, residential customers using 1,000 kWh of power will pay $135.10 per month instead of the current $170.50, a projected savings of about 20 percent from current bills. This rate will still be about 27 to 35 percent higher than Florida Power and Light customers using the same amount of electricity, who pay between $105 and $110 for 1,000 kWh. City of Vero Beach Electric rates are currently — with this spring and summer’s increases — about 56 percent higher than FPL. The reductions expected will take customers back, approximately, to the rates they experienced in early 2009.

 

Councilman Tom White expressed his concern that a 20 percent reduction is a far cry from the goals that were laid out several years ago when the city took on the task of extricating itself from the Florida Municipal Power Agency and its All Requirements Project, which has cost the city hundreds of millions of dollars over the past few years.

“We were told the savings would be more like 30 percent,” White said.

Originally against voting for a rate increase, Councilman Brian Heady urged his fellow council members not to forget about all the other important issues on the table regarding utilities, but to take the first step — relying on the promise by the city that power costs will go down substantially under the new deal with Orlando Utilities Commission after the switchover on Jan. 1.

“For this council member, my $400 bill will be doing down $80 and you can spin that any way you want,” Heady said.

The new rate structure includes a 74 cent increase in the base customer charge for electric ratepayers and it also breaks the bill down into different line items, to hopefully better account for what charges are going toward operations, the power system and toward power cost adjustments.

“For the first time since 1991, we’re going to have a clear picture of what’s happening in our system,” said John Lee, acting director of the electric utility and long-time customer service manager for the city’s utility.

The current bills divide charges into a base rate — which includes approximately $30 toward the cost of generating power — then usage and then a catch-all category, which over the past year has included payments on bad hedges for fuel costs and penalties for transmission and distribution errors. This category of power cost adjustment has often exceeded customers’ charge for actual usage of electricity.

Under the new plan, city officials predict that customers will get a better deal on power costs, but that remains to be seen.

The 74 cent per customer increase will generate approximately $250,000 per year to cover the utility’s expenses, which include operations, salaries, benefits and transfers into the city’s general fund to support city staff and services.

“These rates were designed so that costs would be covered,” Lee said.

An amendment tying the increase in base rates to a reduction of the city operating budget — as proposed by Councilman Charlie Wilson — failed due to the lack of a second.

“I would like to suggest that we pass this resolution with an amendment, that it go hand in hand with the requirement that we reduce our expenses by that same amount, $250,000, but that we offset that that with required reduced expenses,” said Wilson, who has stated he feels that he was elected to infuse efficiency into the city’s government.

The Wilson amendment would have required the council to reduce the $5.9 million annual transfer into the general fund by the same $250,000 so the money netted by the increase could go directly toward repair and renewal of the city’s power system and not into the city’s general coffers.The $5.9 million transfer, combined with another $2.1 million which is transferred in administrative fees to offset costs to the city of owning the utility, has been widely criticized by ratepayers, especially out-of-city customers to the utility system.

Vice Mayor Sabin Abell explained to one county resident why she must contribute toward the city’s general fund but she doesn’t share in the property tax reduction enjoyed by residents of the city.

Other items to come on the agenda under Councilman Wilson and Councilman Heady’s items are requests for the city to open up negotiations with FPL about selling the electric utility and requesting that the Orlando Utilities Commission reconsider the $50 million early-out penalty included in the pending electric contract, which has a “turnover date” of Jan. 1.

Vice Mayor Abell and Councilman Tom White attempted to have these items removed from discussion altogether by having them placed under the jurisdiction of the city’s Utility Advisory Commission. This would have taken the discussion — and the harsh questions expected this  — out of the setting of a council meeting. It would have also delayed the matters until after the turnover date of Jan. 1 and after the court decides a lawsuit filed against Councilman Charlie Wilson, who may be removed from office on Wednesday.

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