Vero Beach is hoping to complete the sale of its electric utility to Florida Power and Light by October 2018. With that in mind, the City Council last week approved resolutions that would end the city’s contracts with the Florida Municipal Power Agency and its ownership share in the FPL St. Lucie nuclear plant and Orlando’s Stanton coal plant when the sale closes.
Vero is one of the FMPA owner-member cities that must approve its exit from the electric power cooperative. Vero’s transactional attorney Nathaniel Doliner explained that the Oct. 24 FPL sale contract included some contingencies – Florida Public Service Commission approval, other regulatory approvals and the release of the city from its long-term wholesale power agreements and other contractual entanglements related to the electric utility.
“One of the provisions in our contract with FPL is essentially the requirement that we terminate our relationship with FMPA,” Doliner said.
“What we’re looking at is the ultimate answer in this issue, the ultimate resolution which is that at the closing of the transaction between Vero Beach and FPL … assuming that the closing is in October of 2018, which it is presently scheduled for, Vero Beach would pay from the closing proceeds $108 million and would get a release from FMPA from all obligations and liabilities to FMPA.”
FMPA’s contracts governing its rights and responsibilities with regard to the power plants Vero now partly owns will not be scrapped and renegotiated. For simplicity, Doliner said, Vero’s proportional participation in those plants will be “assigned” to the FMPA and its remaining member cities. All of that would happen in tandem with the closing of the sale of Vero electric to FPL. “If it doesn’t all happen at one time, none of it happens,” Doliner said.
Now that Vero has voted to approve its own exit from the power cooperative, that brings the total number of FMPA cities saying yes to Vero’s departure to 20. Meetings of the town or city councils of the remaining 12 member cities are scheduled throughout December and into early January, with the final one being Jacksonville Beach on Jan. 15. All of those cities must also approve the transaction for it to go forward.
Councilman Tony Young asked FMPA CEO Jacob Williams if he saw any problems cropping up with remaining member cities approving the resolution. Williams said there might be “slight alterations,” but that, “we don’t see any of the changes that would cause a problem in getting to close.”
Doliner explained that Vero and all the other cities are agreeing that the mayor or city manager could sign off on “non-material changes,” but that any material changes would have to come back through all the various city councils.
Williams said the FMPA already has obtained approval by the Fitch bond rating agency, saying the value of the cooperative’s bonds will not be impacted by the transaction, and that he’s awaiting final approval by Moody’s and the bond trustees. “Everything on the financial side is moving along,” he said.
Williams said he plans to have an information item at the January FMPA meeting, with an action item set for February.
With regard to the regulatory hurdles, FPL Regional Director of External Affairs Amy Brunjes said “the approvals are going very well.”
FPL is also working with the city’s technical staff on a strategy to physically weave the Vero system into FPL’s power network. Environmental studies and engineering studies are underway for a new electric substation to replace the one that will be demolished along with Vero’s redundant “Big Blue” power plant sometime after the sale closes.
Brunjes said the first meeting with city electric employees was scheduled for this Tuesday to give them an overview of how the handoff would work, and what opportunities might be open to them with FPL. In the coming year, Brunjes said, FPL will begin to communicate more directly with Vero’s customers about the transition.
Overall, she said things are going so smoothly that “it is our goal to close before October of 2018.”
