Ever since Florida Municipal Power Association CEO Jacob Williams told the Vero Beach City Council that the co-op’s bondholders would need to approve the partial sale of Vero’s electric system in Indian River Shores, there’s been a cloud of uncertainty about whether that might gum up the works.
But Shores Councilman Bob Auwaerter now says the needed approval may not be a problem after all.
Auwaerter, who serves as the Shores’ representative on Vero’s Utility Commission and also volunteers on the FMPA’s solar survey project, attended the FMPA’s January meeting in Orlando to hear a presentation by top FMPA managers about Vero’s efforts to sell the Shores’ electric customers to Florida Power & Light for $30 million.
“I got the sense that there was acceptance of the partial sale,” Auwaerter said, adding that he did note an error in the staff’s analysis and got it corrected. He said the FMPA had estimated the Shores customers make up 14 percent of the Vero system’s customer base and power consumption, but the actual number is somewhere between 8 and 9 percent.
That number is important because three decades ago when Vero became a founding member of the FMPA co-op, the city pledged its electric utility revenues in perpetuity to back the hundreds of millions of dollars of bonds the FMPA floated to purchase fractional ownership rights in coal and nuclear power plants.
According to FMPA officials and legal opinions the city has obtained, Vero is prohibited from disposing of all or substantially all of its electric system because of this pledged collateral on the bonds. Williams said the bondholders would need to sign off on the Shores sale by saying it does not constitute a substantial portion of Vero’s utility revenues.
The FMPA staff is prepared to present the sale in that light, according to statements made at the meeting.
“I walked away feeling more positive about the partial sale,” Auwaerter said.
Mayor Brian Barefoot said he thinks the FMPA sees the practical value of allowing Vero to sell off the Shores, because the Town, with its determined residents and well-funded utility legal team, has made a lot of noise among state leaders about problems with the FMPA and how it operates.
Key legislators, including State Senator Jack Latvala, have said they will lead efforts to bring FMPA operations and rates under the regulation of the Florida Public Service Commission. Presumably, if the Shores customers are removed from Vero’s service territory and begin paying FPL’s lower rates, the urge to wage war on the FMPA may fade.
“This is really an attempt to get out ahead of that so that legislation will go away,” Barefoot said.
Shores residents would still partially underwrite Vero high electric rates in their county and school property taxes, as many government buildings and several public schools are on Vero’s system, but at least the electric bills they open at home every month would come from FPL and those bills eventually would reflect the lowest or near the lowest rates in the state.
Shores residents, Barefoot said, are also very interested in incentives FPL offers to homeowners who invest in energy-efficient appliances or even solar technology.
With regard to a full sale of Vero electric, the FMPA is working on giving Vero an exit plan with solid numbers for how many tens of millions of dollars it will take for the city to buy its way out of its financial obligations to the other 30 member cities. Auwaerter reported to his fellow Shores council members that “Fred Bryant, the FMPA’s general counsel, said he and his staff are putting together a checklist for Vero, stating that ‘this is a top priority for my staff.”
Williams estimated the bondholder approval for the partial sale would take a couple of months, but that he should be able to obtain those votes by the time Vero and FPL are ready to draft a formal sale and purchase agreement in March.
The change in service territories would also need to be approved by the PSC, but the parties don’t expect a problem there. The Shores petitioned the PSC to review Vero’s territory and let the Town out, but the five-member regulating body encouraged Vero, FPL and the Shores to hammer out a deal to sell instead – which is what they are doing.
