Contrary to election-season speculation by former mayor Dick Winger that the sky is falling at City Hall because the Vero Electric sale has been delayed, local governments will not go off the fiscal cliff on Oct. 1 while the Florida Public Service Commission decides whether the $185 million deal can close under current contract terms.
City Manager Jim O’Connor and Finance Director Cindy Lawson prepared a budget analysis extending operations of Vero Electric until at least Dec. 31, and the impact to the city budget and property taxes is nonexistent. The maximum tax rate of $2.52 per $1,000 in taxable property value still stands.
The cash infusion that was expected from the sale proceeds and franchise fees on Florida Power & Light bills will be covered by the normal transfers from the electric utility into the general fund. The additional $54,132 in expenses to be incurred for warehouse staff servicing the electric utility will be paid directly out of electric utility revenues.
Vero’s water-sewer utility, a large user of power, will incur $62,000 worth of unbudgeted electric bills, but that will be more than offset by savings from being able to continue sharing the cost of the utility customer service staff for three months.
The Indian River County School District, despite having multiple large facilities in Vero electric territory, for some unknown reason budgeted to pay increased power rates this coming year, so there will be no negative impact on the schools’ budget.
Indian River County did budget based upon the expected FPL rates, and County Administrator Jason Brown said the delay will necessitate some amending of budget line items, but that the net result is basically a wash, “We should be able to absorb the change within the budget that was developed.”
“The budget included a decrease of a little less than $400,000 in electric expenses. However, we also budgeted a reduction in franchise fee revenues of over $500,000 since customers will be paying the fee based on lower electric rates,” Brown said. “So, the revenue reduction counteracted the electric savings for us.”
Vero electric ratepayers – residents and businesses alike – will be the biggest losers every day the sale has not closed, with the 28 percent rate disparity adding an estimated $55,000 per day to their bills.
“Essentially, we weren’t planning for a net gain for County operations. The sale was always about savings for our citizens, businesses and taxpayers,” Brown said, clarifying that the county will get a revenue boost the following year when all the assets purchased by FPL go onto the tax rolls.
Indian River County Utilities and the county Solid Waste Disposal District have most of their high-power-usage facilities on the FPL system already, but Utilities Director Vincent Burke said he’s having to tweak his numbers a bit.
“We do however have 88 lift stations and a couple storage tanks served by the City of Vero Beach as well as our operations center off 41st Street,” Burke said. “We will need to revise our Oct. 1 estimates for fiscal year 2018-19 with respect to these COVB-served locations.”
Local officials from Vero and Indian River Shores have stated that Indian River Medical Center will stand to gain by a budget reduction of about $700,000 annually once FPL rates are in effect, but requests to hospital officials to verify those numbers – and to find out whether the hospital budgeted based upon an anticipated Oct. 1 closing date – went unanswered.
The PSC will take up multiple challenges to the approval of the Vero Beach electric sale to FPL on Oct. 9 and 10 in Tallahassee.
