INDIAN RIVER COUNTY — The Board of County Commissioners listened Tuesday to a highlight audio file of comments made by Florida Municipal Power Agency board members and by CEO Nick Guarriello.
Listen to the FMPA officials’ comments, as edited into a 10-minute highlight audio file.
The comments were in response to the Florida Auditor General’s draft audit findings (see related 30-page PDF document). Indian River County’s staff and lobbyists in Tallahassee successfully got $200,000 appropriated in the Auditor General’s budget this year for a full operational audit of the FMPA.
The FMPA board members say that the audit was politically motivated. They also accuse the County of engaging in a public relations campaign to smear the FMPA, using the audit as ammunition.
The meeting took place on Feb. 3 while Vero and Indian River County officials were in Tallahassee for a hearing of the Florida Public Service Commission and while Vero’s member of the FMPA Board was attending a regular meeting of the Vero Beach City Council.
Officials from Vero and another member city, Greencove Springs, were harshly criticized for openly expressing their dismay about the audit findings in public meetings and with the media.
Among the rage expressed by FMPA members was over what they felt was the overreaching nature of the audit. As board member Jerry Warren, Director of the City of Winter Park Electric Utility put it, “They’re poking around in places where they have no business poking around in an audit of the agency.”
Auditors found a pattern of generous salaries and benefits, golden parachutes for top managers, lavish travel budgets, employee gifts and parties.
But the most serious of the findings relate to the FMPA’s investment practices and fuel and interest-rate hedging, which it characterized as risky by industry standards. Those practices, over the years, have added up to nearly a half-billion dollars in losses, which are incorporated into the price of the power the FMPA sells to its member cities.
The FMPA is the municipal electric co-op which Vero Beach helped form and joined more than three decades ago. The long-term, costly wholesale contracts Vero is a party to with the FMPA have been pointed to as the reason why Vero has been unable to sell its electric utility to Florida Power and Light, despite trying for more than four years.
High costs of the wholesale power Vero buys from the FMPA has been blamed as a major cause of Vero’s soaring electric rates in 2009 and since. During the summer of 2009, Vero’s rates were 58 percent higher than rates paid by FPL customers for the same power, when Vero customers had to absorb a portion of the cost of bad fuel hedges, plus stiff penalties that had been assessed on the FMPA by regulators. At one point Vero’s electric utility was $14 million in the red.
The FMPA Board members who spoke out at the Feb. 3 meeting do not, however, seem to see the connection between the management practices pointed out by the Auditor General and the high rates that are passed down to electric customers in the member cities, including Vero’s 33,000 ratepayers.
The upshot of the discussion is that the FMPA promises “an aggressive response” to the Florida Auditor General’s draft findings, a response which will include requests to scrub the audit of some of the most damaging comments, on the grounds that the scope of the audit was outside what is allowed by Florida Statute.
To put the comments in the highlight tape into context, listen to the full audio file of the Feb. 3 FMPA meeting held at the agency’s Orlando headquarters.
