Vero Beach officials expected to have an executed, written agreement with the Orlando Utilities Commission by last Friday stipulating that it would cost the city “only” $20 million to get out of their wholesale power deal, but as of Monday afternoon City Manager Jim O’Connor only had an agreement “in concept.”
On Aug. 10, OUC Vice President Jan Aspuru wrote to O’Connor, “OUC has reached agreement in concept with the City of Vero Beach on the terms of a Termination and Settlement Agreement for the existing Power Purchase Agreement.”
Up until last week, it looked like Vero and Orlando were headed into formal mediation over OUC’s demand that the city pay $50 million to exit the deal, which would leave OUC stuck with the power Vero would have purchased. It seems FPL applied a little grease to OUC’s squeaky wheel.
“OUC has agreed in concept on an energy sale agreement with Florida Power & Light, which will partially mitigate OUC’s damages from the termination of the Power Purchase Agreement with Vero Beach,” Aspuru said.
Aspuru said drafts of a “Termination and Settlement Agreement” and an agreement on the energy sale are now being worked-over by attorneys representing Vero and FPL. “OUC is satisfied with these agreements and is optimistic that these agreements will be acceptable to all parties,” he said.
This email to O’Connor came two days after FPL Regional Director of External Affairs Amy Brunjes announced to the Vero Beach City Council that a deal had been struck with OUC to keep the parties out of court and pave the way to close the sale of the entire Vero electric utility in the last quarter of 2018.
FPL has offered to purchase Vero’s utility and its 34,000 customers for $185 million. After the city pays off its utility-related debt and pays to exit all of its long-term power supply and co-op membership contracts, the taxpayers would be left with roughly $30 million in cash which could be used to pay down the city’s nearly $40 million in employee pension liabilities, used for other priorities, or invested with the interest used to offset some of the $5.6 million the city now siphons off its electric utility customers annually to subsidize its general fund.
“It will relieve the city of all of its obligations, its power contracts, once and for all and forever,” Brunjes said.
Brunjes brought an FPL team with her, including an attorney and an engineer, to explain the latest developments in the deal, including the fact that FPL would build a state-of-the-art substation on the southwest two acres of what’s known as the old postal annex property on the southwest corner of 17th Street and Indian River Boulevard, and that the substation would be complete probably around October 2019.
FPL officials said the new substation would increase reliability of Vero’s power system in the event of a storm, and that it would employ multiple redundancies to avoid power outages. The substation would go on the property tax rolls, generating annual income for the city.
Vero and FPL had planned to keep the substation on the northern part of the riverfront power plant property and to move critical switching equipment into the substation perimeter, a project that would have cast a shadow on whatever the city decides to build on the power plant property. O’Connor said the effort to dismantle the power plant has ceased until the switching equipment can be moved to the new FPL substation.
The day after the city council meeting, Brunjes spoke to a friendly crowd at the Indian River Taxpayers Association luncheon, saying, “We are very, very close to making this sale happen. We have made significant progress, more so than ever before.”
