PSC: Vero got ‘extraordinary’ price for utility

The Florida Public Service Commission finally issued its long-awaited Proposed Agency Action order last week. The document’s conclusion codifies the Commission’s 3-2 vote approving the sale of Vero Electric to Florida Power & Light, but the dissenting opinion of PSC Chairman Art Graham runs thick through 16 pages of tortured explanations.

Typically, when the PSC staff recommends an action and commissioners align with that recommendation, the detailed order formalizing and justifying the vote is relatively streamlined. It says, here’s what we did and why.

But this time around, with Graham and Commissioner Donald Polmann staunchly opposed to FPL absorbing $116 million in costs that consultants said were in excess of the nuts-and-bolts value of the Vero electric system and its 34,000 customers, the PAA order clearly reflects both the prevailing and the dissenting points of view.

City Manager Jim O’Connor, a 40-year veteran of local government and now a seven-year warrior in the effort to sell Vero electric, calls the vote and the order a win – even if it’s not a  pretty one. “I look at the bottom line,” O’Connor said Monday. “We are good to go with the PSC endorsement and no, nothing surprises me in this process.”

The order is only proposed – not final – until the end of a 21-day review period, utilities attorney Bruce May told Shores Town Manager Robbie Stabe and Mayor Tom Slater last week in an email that stated: “As we’ve discussed, this is a ‘proposed’ non-final order and can be protested by a substantially interested person by filing a petition with the PSC by the close of business on Monday, July 23, 2018 (the ‘Deadline’). If no such petition is filed by the Deadline, the PAA order will become final.”

The order says litigation between Vero and the Shores, and numerous petitions filed by Indian River County and the Shores against Vero, amount to “extraordinary circumstances” that justify FPL’s existing 4.9 million customers absorbing the $116 million built into the $185 million purchase price for the Vero system.

The extra cash is necessary for Vero to untangle itself from the Florida Municipal Power Agency at a cost of $108 million, and from its wholesale power contracts with Orlando Utilities that carry an exit penalty of $20 million. Release from those contracts is needed to close the sale and get Vero out of the electric business. A sale is needed to end the tinderbox of disputes among Vero and her neighbors, the customers outside the city limits.

“Approximately 60 to 65 percent of COVB’s customers reside outside the City’s municipal borders. For many years, these customers have been frustrated by their inability to have a voice in the operation of the City’s electric utility or in rate-setting decisions,” the order states.

“This dissatisfaction has resulted in years of controversy, repeated efforts to address issues through legislation, multiple filings with us (the PSC) and litigation between the Town of Indian River Shores and Indian River County.”

The Shores sued for breach of contract for unreasonable rates, among other counts, and the county petitioned to remove itself from Vero’s service territory when Vero’s electric franchise agreement expired in 2017. All those efforts were either thwarted or deflected from court to court and agency to agency like the political hot potato the issue had become.

The PSC staff made it clear in its order that high rates alone are not a sufficient reason to demand a different electric utility provider, and that the $116 million accounting adjustment approved by the PSC in this case has “no precedential value,” meaning the decision addresses only the unique facts of the Vero case.

After reviewing the PSC document, Slater said on behalf of the Shores, “The Town is very pleased with the Commission’s majority vote ruling on the proposed order. I continue to follow the matter closely and eagerly await the finalization of the PSC Order and the final sale. When completed, it will be a positive benefit for the Town and all others involved.”

The Shores looks forward to a unified electric system after the anticipated Oct. 1 closing, when all its residents will be FPL customers. Due to the annexation more than a decade ago of the portion of the town north of Old Winter Beach Road, about 80 percent of the Shores is on Vero electric, paying about 37 percent higher rates than FPL customers, while about 20 percent of Shores residents already pay FPL rates, which are some of the lowest in the state.

Indian River County, too, is a territory divided, with residents in the Moorings and on the South Barrier Island, as well as some central county residents, businesses and the State Road 60 corridor paying Vero rates, while Sebastian, Fellsmere, Wabasso and South Vero customers are already on the FPL system.

The sale, plus a petition to redraw FPL’s service territory, will unify the entire county under FPL. County Attorney Dylan Reingold on Monday said he was aware the PAA had finally been published, but that he had yet to analyze it or to formally brief the County Commission by memo.

FPL Spokesperson Sarah Gatewood said FPL is working to set up open house events soon for FPL to welcome its soon-to-be customers and provide information about all of FPL’s energy-saving programs and services that Vero customers will be eligible for once the sale is complete.

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