There was a sweet, fleeting peace over the holidays between Vero Beach and Indian River Shores after Florida Power & Light closed on the sale of Vero electric, but now the Shores and Vero are at odds once again over utility rates.
This time, the dispute involves reuse irrigation water, and differing interpretations of a contract signed seven years ago. The discrepancy between the rate Vero is charging, and the rate Indian River Shores says its residents should be paying is more than a quarter million dollars annually.
In 2012, tens of millions of dollars in Indian River Shores’ water and sewer utility business was up for grabs. The town was on the verge of terminating Vero’s utility franchise and contracting with Indian River County Utilities for service, but some last-minute horse trading ensued and Vero offered to give the Shores the same exact rates they’d be charged by Indian River County.
The Shores Town Council, in good faith, executed a new 15-year franchise agreement with Vero with the certainty that residents’ rates would be directly tied to county rates for the term of the contract. The provision was added to page 3, section 6 of the May 1, 2012 franchise agreement, and it seemed pretty simple. If Indian River County Utilities rates went up, or down, the rates the Shores would be charged by Vero would go up or down as well.
Shores residents, condominiums and community organizations saw the savings immediately, especially in terms of “reuse” water for irrigation. This gray, partially-treated water is a waste product, clean enough so it’s safe for watering landscaping or a golf course but not something you’d drink or take a shower in.
Vero had been charging the Shores hefty rates to pump its reuse water into the town and the county’s rates at the time of the agreement were significantly lower.
This sweet deal on reuse water was the deciding factor that led the Shores to stay with Vero instead of switching to Indian River County as its provider. Now, however, as of March 1, Indian River Shores is paying a different, much higher rate than Indian River County reuse customers and Vero says it’s justified.
Back in December, the county took a look at its various utility consumption charges to make sure they were in line with the cost of delivering the commodity and, based on staff’s recommendation, the County Commission voted to reduce the unit price of reuse water from 67 cents per 1,000 gallons to 21 cents per 1,000 gallons, effective March 1.
Aware of the impending change, Shores officials assumed the rate Vero charged them for reuse water would be dropping dramatically, in accordance with the franchise agreement. On Jan. 11, then-town manager Robbie Stabe wrote a letter to then Vero City Manager Jim O’Connor to firm up that assumption, and to get confirmation back from the city. He cited the rate clause from the 2012 franchise agreement and attached a schedule of the new county rates for reference.
O’Connor responded by saying that was not the way the city reads the contract. New Shores town manager Joe Griffin met with Vero Water-Sewer Director Rob Bolton and Interim City Manager Monte Falls last week, but even after that meeting, defended the city’s position.
Bolton said the rates are not going down for Shores customers due to a technicality. “The county’s new reuse rate is for ‘Non-Pressurized’ customers with ‘interruptible service,’” Bolton said.
By contrast, Vero delivers pressurized reuse water to the Shores and guarantees a steady flow and certain volume.
The rub is that Indian River County only had one rate, the non-pressurized rate, in 2012 when the franchise agreement was signed, and that’s the rate Vero gave to the Shores and to Vero utility customers who live outside city limits on the southern end of the island. The contract did not make a distinction between a rate for pressurized water and non-pressurized water.
Vero wants to try to fix this by coming up with a hypothetical pressurized county rate, which the county would have to adopt – despite the fact that they have no pressurized service.
“Since the county never established a rate for the other ‘rate classifications,’ the city is in the process of hiring their rate consultant to do so,” said Bolton.
Shores Vice Mayor Bob Auwaerter said Vero’s argument is pretty ridiculous, and so is the plan to create a hypothetical rate. He added that Bolton’s response is typical of how the City of Vero Beach frames issues to meet its own agenda of padding the city’s general fund with utility revenues.
“We’re not taking this lying down, our town manager is on this,” he said on Saturday, adding that the county only has one rate, and that’s the rate the parties used, in good faith, in negotiating terms. Auwaerter said Indian River Shores will not allow Vero to ignore or violate the provisions in the franchise agreement.
According to records Bolton provided to Vero Beach 32963, Vero’s annual sales of reuse water to Shores customers amounts to $396,000 at the current 67-cent rate. If charged the 21-cent rate for that same amount of reuse water, Shores customers would only pay about $194,000. That means Vero would receive $272,000 less revenue annually.
Vero’s water-sewer franchise with Indian River Shores will expire on Oct. 1, 2027, and the town must give Vero at least four years’ notice if it wants to switch to the county as a provider.
Timing is key on this issue since the city is in the planning stages of constructing a new wastewater treatment plant at the Vero Beach Regional Airport, which would allow the city to move its old sewer plant off the river.
In figuring the capacity of that new plant, unless notified otherwise, Vero would plan for a volume of water that would accommodate the Shores.
