VERO BEACH — The deal attorney John Igoe presented Aug. 16 to the Vero Beach City Council would sell the electric utility to Florida Power and Light, get the city out of a 20-year power contract with Orlando Utilities Commission (OUC) and transfer the city’s long-term obligations to buy from a Florida power cooperative to FPL for three years and ultimately to OUC.
To strike that delicate but critical balance, all parties in the deal gave a little or a lot. FPL increased the cash purchase price from $100 million to $115 million, out of which the city would pay off $46.1 million in debt it will still have on the books at closing, projected to occur no earlier than Jan. 1, 2014.
FPL also agreed to take over Vero’s share of the Florida Municipal Power Agency (FMPA) rights and responsibilities for three years at an estimated cost of $30 million to FPL.
OUC agreed to cancel its contract with the city 16 years early in exchange for the $20 million exit penalty outlined in the agreement. OUC also agreed to absorb Vero’s interests in the FMPA and buy power under that agreement in exchange for $34 million consideration from the city.
After the closing, Vero Beach Electric employees would have jobs with FPL for at least two years.
During the four years that FPL estimates it would take to make $7.7 million in transmission upgrades to strengthen the local system and pave the way to dismantle the power plant, FPL would pay the city $1 million per year to lease the riverfront land underneath Big Blue.
Other items in the deal were brought forward from the April 2011 letter of intent from FPL, including FPL’s assumption of $14.4 million in pension liabilities for the electric employees, the $7.8 million relocation of the substation off the river and the dismantling of the power plant at a cost to FPL of $4.7 million so the city would get back a vacant parcel of land on the Indian River lagoon.
City Manager Jim O’Connor said the deal was about what he expected and that he’s pleased with the terms.
FMPA membership was considered the largest stumbling block, but O’Connor said that his thoughts going into negotiations, after serving on the FMPA board during his tenure as the Bartow city manager, were that “as long as FMPA was made whole, they would be willing to work with the city.”
Instead of waiting until the Sept. 30 deadline to find out if the negotiating team would be able to find the way to move forward with a sale, Vero taxpayers, ratepayers and staffers now have that path mapped out.
O’Connor said they hope to have a proposed Memorandum of Understanding ready for review Sept. 4, giving the Utilities Commission a chance to discuss it and ask questions before it would come before the City Council for a vote, potentially on Sept. 18.
