County seeks proof from Vero Beach of electric utility’s viability

VERO BEACH — A traveling presentation of the financial benefits of getting Vero Beach out of the electric business has quietly prompted county officials to issue its first salvo to city leaders: Show us the numbers, or we’re pulling our customers.

The interactive financial model being presented by Steve Faherty and Glenn Heran shows the county as a whole is losing somewhere between $23 million and $30 million per year as a result of residents paying higher bills and in lost property taxes from Florida Power and Light.

It also concludes that even in a worst-case-scenario of Vero Beach having to pay a penalty to the Orlando Utilities Commission to exit the current contract early, customers still would be better off.

Looking at a third straight year of double-digit budget cuts across the board, the Board of County Commissioners is now listening. Last week, the Indian River Shores Town Council got a taste of Heran’s financial analysis and its members also are eager to see the city’s financial basis for keeping the aging utility.

Both the county and the town have begun looking into what it would take to wrest their territories back from Vero Beach via the Florida Public Service Commission – which is the only way to extricate their customers.

So far, Vero Beach officials are responding with assertions that they are on the right path toward getting electric rates down.

City Manager Jim Gabbard, in response to County Commission Chairman Peter O’Bryan’s invitation to unpack Heran’s model and the city’s own figures in a workshop, sent O’Bryan rate comparisons showing that Vero Beach isn’t as bad as some of Florida’s other 33 municipal utilities, all of which have rates significantly higher than FP&L.

The city has so far declined to bring hard numbers to the discussion.

Councilman Brian Heady attempted to prod the city into scheduling an electric workshop with the county, but his motion died for lack of a second.

Acting Electric Utility Director John Lee discounted the relevance of Heran’s model, saying he’d rather debate with “real numbers” if and when FP&L makes an offer to purchase the city’s power operation.

Councilman Tom White worries the city would need to transport consultant Sue Hersey from Boston and former Electric Utility Director R.B. Sloan from his new job in Virginia to compile a model – at an unknown cost to taxpayers — to match the one devised by Heran, a local CPA, who has done all his work as a volunteer.

Known as Heran’s Model, the multi-page, spreadsheet with more than 100 embedded formulas shows that not only the City of Vero Beach, but also Indian River County, would be better off selling or even giving away the electric utility.

Heran, an accountant, has presented the model to fellow accountants, finance experts, top county staff, homeowner associations and citizen groups. So far, many questions have been raised, but no one has yet to dispute his findings.

The City of Vero Beach has appealed to city residents’ pride of ownership, to their fears about being in the dark after a hurricane, and to worries of higher property taxes that they say would result from lost electric revenue. But, to date, the city has not made the hard appeal with numbers as have Heran and Faherty.

Statements made by City Manager Gabbard about the electric system being worth $200 million to $300 million, with $100 million just in underground utility lines, were, according to a memo issued later from Gabbard, not based on any “written documents,” but on estimates by former city staff.

Statements made by retiring Finance Director Steve Maillet that city taxpayers would be “better off” if the city retreated into its borders to serve only city residents were based on no financial data, research or study.

“We look forward to the city producing a comparable analysis, which they should have already done in order to be able to justify keeping the electric utility,” Faherty said.

Heran received a warm reception last week before the Indian River Shores Town Council, where he and Faherty brought the road show to the leaders of a town whose residents represent about 11 percent of city electric customers. Indian River Shores officials asked Heran the same question about Vero Beach’s opportunity to dig into the model.

“Before the three-minute rule was lifted, I would go up there to the podium and try to present what I could of the model but you had five council members — five of them — just sitting up there and looking at me, not saying a word, just hoping I would finish and sit down,” Heran said.

“Then I did an abbreviated version of the model once after Brian (Heady) and Charlie (Wilson) were elected, but it was still rushed. It felt very rushed; they didn’t see the whole model. They have not seen it to the extent that the county has,” he said.

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