VERO BEACH — In a move that left his vice mayor visibly frustrated, Vero Beach Mayor Dick Winger said he wanted to wait until March before considering a major effort to restructure the city’s electric system.
Vice Mayor Jay Kramer in November revealed a plan to look for ways to reduce electric rates by managing the utility differently. Kramer asserts that, since the effort to sell to Florida Power and Light began in 2010, the city has not actively managed Vero electric to keep rates down.
Currently, Vero electric rates sit at nearly 40 percent higher than FPL rates. The most recent rate hike was 1.9 percent, effective Oct. 1, to make up for a nearly $1 million shortfall in revenues.
A long-time proponent of a so-called “partial sale” of the electric system whereby the city would sell off 61 percent of its customers who live outside the city limits, Kramer asked his fellow council members on Tuesday to start looking at other options for operating the electric system because, he claims, a sale is not possible until late 2016.
“We’ve got to do something in the meantime,” Kramer said about rates. “I’d like to see the staff get busy and lower the rates.”
Kramer’s motion to set staff on a project to lower the rates now, died for lack of a second.
Winger, who could have been the deciding vote to move forward with an “optimization plan” for the utility, said he wanted to wait to see what happens in February when the statewide power co-op takes up the Vero sale issue.
Winger also stated that he is not in favor of a partial sale, but he did ask the staff to analyze the electric utility’s financials and to come back to the council with a rate-sufficency study.
Finance Director Cindy Lawson said she would have those figures for the city’s Finance Commission when it meets next week.
“We decided to hold the course,” Winger said during a radio interview after Tuesday’s meeting, adding that Kramer put forth no specific cost-reducing proposals and nothing that could be accomplished in 30, 60 or 90 days.
During Tuesday’s meeting, Winger pressed Kramer for specifics, but Kramer referred only to past suggestions that were rejected, including closing down the power plant.
Councilwoman Pilar Turner chastised Kramer’s suggestions as “not practical solutions.”
Kramer says the city needs to hire consultants to do an operational “optimization study” similar to the study the city completed for its water-sewer utility.
“First of all I take exception to the idea that we have not done anything to reduce electric rates,” said Turner, who cited budget cuts including a 12 percent reduction in staffing and other major cuts in spending. “We have been making whatever efforts we can to keep the rates as low as possible.”
FPL External Affairs Director Amy Brunjes was asked to come to the podium to report any progress and to weigh in on Kramer’s statement that the sale cannot be closed for another two years.
Brunjes said she expects to have a response to the latest negotiations on the table “in the very near future” and said it’s news to her that there is no clear path forward, or that a sale prior to the end of 2016 is impossible.
Looking forward, Brunjes reminded the council that a discussion is coming up before the Florida Municipal Power Agency later this month and an important vote related to Vero’s exit from its long-term power agreements is scheduled for February.
“I think that’s a good answer, at least for myself,” Winger told Brunjes, emphasizing that “these things take a long time to analyze.”
Ratepayers have been waiting for the FMPA and FPL to coalesce around a deal since August, and prior to that, negotiations had been stalled for more than a year over the quandary of how to get the city out of its FMPA membership obligations.
“This is just one of those things that takes patience,” said Councilman Craig Fletcher.
Despite the heated discussion that ensued among the council members and between the council and Brunjes and several members of the public who rose to the podium to speak, newcomer Councilwoman Amelia Graves remained silent — other than to ask one question to clarify the intent of Kramer’s motion.
During the lead-up to November’s election, Graves was widely criticized for her lack of professional experience that would qualify her to handle a $179 million deal to sell the electric utility.
The city’s $89 million electric utility budget is hamstrung by several factors, including steep salary and benefit costs and nearly $8 million in direct and indirect transfers into the general fund. About $5.4 million is transferred over as a “return on investment,” plus the utility pays the city administration costs to help cover overhead for city hall, the city manager, city attorney, finance and payroll services.
For years, various city officials have promised that Vero could get its rates down to less than or equal to FPL rates, but those low rates have never materialized.
Turner pointed out that $60 million of the utility’s budget is fuel costs.
Utility activist Glenn Heran, a CPA who has done extensive analysis of statewide electric issues, has for years said the city would have to “get the power for free,” or at least the Orlando Utilities Commission wholesale power for free, to be able to even come close to FPL rates. Heran has pointed out that there is inefficiency at every layer of electric utilities that are run by government entities.
Turner serves as the city’s representative on the FMPA board and as such she is scheduled to attend FMPA meetings on Jan. 23 in at the FMPA headquarters in Orlando.