VERO BEACH — Vero Beach City Manager Jim O’Connor told the Vero Beach Utilities Commission Tuesday that he will meet Wednesday with officials from the Orlando Utilities Commission to attempt to negotiate better terms into a power deal that would allow Vero to mothball the power plant.
O’Connor said he and attorney Robert Scheffel “Schef” Wright will be meeting with OUC’s attorney and assistant chief operating officer about the proposed deal first announced in October. Their goal would be addressing some of the more distressing parts of the plan.
“We heard from the community as to some of the terms,” O’Connor said, specifically, “transferring the assets and the length of the term.”
When the skeleton plan came out, critics raised concerns that Vero would be giving up too much in the terms of the deal in exchange for $7 million in rate discounts the first three years, plus smaller discounts going forward.
In exchange for those discounts, Vero would be signing a commitment to purchase a set amount of 85 megawatts of power, plus 54 more megawatts of peaking power to replace the electricity that could be generated by the city’s power plant. This provision is called “take or pay” and Vero has no long-term minimum amount that it must purchase under the present contract.
This “take or pay” clause is a concern due to pending disputes, both in circuit court and with the Florida Public Service Commission with Vero’s 22,000 customers outside the city limits. If either Indian River Shores or the County, or both, succeed in exiting Vero electric, that would reduce the city’s need for power from OUC.
“What is going to be the most economical way to take the power, that’s what we’re trying to figure out,” O’Connor said, adding that OUC has indicated that it may not be able to provide the extra megawatts of peaking power.
Vero would also allow OUC to take over Vero’s rights to purchase cheap nuclear power from Florida Power and Light’s St. Lucie plant. And though Vero would be held to the entire term of the contract until 2029 or face up to $50 million in penalties, OUC would be allowed to back out of the deal anytime after 2020 with no penalty.
The worry is that OUC could bail on its commitment to Vero at a time when it can sell that power for a higher price, leaving Vero to fend for itself to replace that power in an unfavorable market for electricity.
