Vero electric customers may not even notice a $2.50 rate reduction when they get electric bills for a summer-like December that has kept their air conditioners working overtime, but that small break is all anyone can expect until the middle of next year, according to city officials.
The City Council in October voted to enter into an amended bulk power agreement with the Orlando Utilities Commission, with the promise of twofold savings – a bit now due to reduced costs of wholesale power, and more later after Big Blue is totally shut down.
“Rates went down effective December 1, 2015 by $2.50. The current rate per 1,000 kWh residential customer is $119.58,” said Vero’s Finance Director Cindy Lawson, who has analyzed the city’s rate sufficiency on a quarterly basis since being hired in 2011.
The bills reflecting that $2.50 rate reduction will start going out next week. Vero has adjusted rates up or down slightly by a percent or so these past few years, depending on how revenues matched up with projections.
Meanwhile, Vero is waiting for rate consultants to bring back recommendations for revamping rates to fit the new business model based on the revised OUC deal and no power plant in operation here.
The city “powered down” Big Blue in November upon receiving the go-ahead from OUC that transmission agreements needed to send more power to Vero if need be were in place. But power plant workers were told to expect to stay on until July 2016.
Lawson, who is working with the rate consultants on the financial end, did not promise anything concrete in the next few months, but said, “We do anticipate another rate decrease in 2016, due to the reduction in costs from closing the plant. These revised costs are being incorporated into the completion of the rate study, which should be finalized by mid-year (but probably not ‘early’ 2016).”
Just before Christmas, Mayor Jay Kramer dangled the promise of lower rates out there on a local news radio program. “This year I think we’re going to be dropping the rates, (which) I’m sure everybody loves to hear.”
“Hopefully this year you should be seeing at least a $5-$6 drop on those rates and as time moves on we should be able to drop them a little bit more than that,” Kramer said. “Hopefully this year is the year that we finally get to see some significant break on the rates.”
Estimates tossed out about how much rates could go down vary widely, with most guesses centering somewhere around what Kramer cited in the $5 or $6 per month range on a $1,000 kilowatt-hour residential bill, all the way up to 10 percent, which would be about $12 on the same 1,000 kilowatts.
Based on that best-case scenario of 10 percent, the very lowest rates Vero customers in the city, the county and Indian River Shores might hope for down the road would still be roughly 20 percent higher than Florida Power and Light’s equivalent rate of $92.12 as of January 2016, or $94.48 including the gross receipts tax, which is the rate FPL publishes.
Much of the long-term equation used in those projections is based on unknowns – how much will it cost to decommission Big Blue and clean up the site, for example. Other big question marks are whether Vero will opt to take the building and generation units down around the substation and switching equipment and leave some structure in place, or whether it will move the equipment off-site to free up the longest possible tract of riverfront.
Depending on the desired end use, the city could bring in fill and cover the existing foundation, and sod or build over it, or it could break down and remove what lies beneath Big Blue and deal with any issues or contamination that might be present. Initial environmental studies, the city says, show no problems. But all of those options come with an unknown cost.
These attempts at rate reduction are taking place with a breach of contract lawsuit as a backdrop, as the Town of Indian River Shores has sued Vero for charging unreasonable rates in alleged violation of Vero’s 30-year franchise agreement with the town.
That case is winding its way through Circuit Court, with the Shores filing an amended complaint and Vero’s response due Jan. 11, according to the city’s utilities attorney, Robert Scheffel “Schef” Wright.
