In the face of shifting facts, will opinions on power sale remain unchanged? 6

Vero Beach FPL* Differential
March, 2017 116.08 105.98 8.7%
October, 2016 116.08 94.63 18.5%
November, 2013 130.93 98.29 24.9%
June, 2009 158.82 104.37 34.3%
COMMENTARY

“If the residents of Vero Beach who continue to support the power sale believe the deal will lead to significantly lower electric rates, they are going to be disappointed. If they think the move will not result in higher taxes, cuts in services, and major setbacks for the City, they are sorely misguided.”

“Sponsored and supported by FPL, aided by a power-hungry County Commission, and advised by Indian River Shores Mayor Brian Barefoot, what Howle, Moss and Sykes most lack is loyalty to the City and to the people of Vero Beach. Bathed in blissful ignorance, and supported by outside interests, they are prepared to drive the City to the brink of financial disaster.”

MARK SCHUMANN

In 2009, utility activists Glenn Heran and Steven Faherty began making presentations throughout the community to build support for the sale of Vero Electric to Florida Power and Light. At the time, the rate differential between the two utilities was 34.3%. Not only did Heran and Faherty promise impressive savings on electric bills, they assured everyone the sale would net the City more than $180 million. The money, they reasoned, could be invested, with the earnings used to make up for the $7 million that is annually transferred from the electric fund to the General Fund. That money helps pay for municipal services, such as police protection, recreation programs, life guards and parks maintenance.

It has been eight years since the two utility activists, encouraged and aided by FPL, began persuading the public of the supposed benefits of selling Vero Beach’s electric utility. Over the past eight years much has changed. FPL’s rates have risen, but more importantly Vero Electric’s rates have continued to decline. As a result, customers of Vero Electric stand to save far, far less than originally promised. Based on information available through the Florida Municipal Electric Association, for Vero Beach residents, the effective rate differential is now 8.7%. According to rate information quoted on FPL’s website, the differential is just 6.3%. (According the rates currently being quoted by FPL on its website, the after residential customers using 1000 kWh per month is paying $102.64, this is $2.66 more than the 1000 kWh rate listed on the FMEA website. The difference may have to do with peaking charges, but suffice to say FPL’s rate structure is complicated.)

The implications for taxes and municipal services have also changed, and not for the better. FPL’s offer is now on the table, and it is clear the City will net, not $180 million, but closer to $30 million. These projected sale proceeds will not be nearly enough to make up for the loss of revenue to the General Fund. Every member of the City Council, and every senior member of the Staff knows the financial consequences of the sale are going to be exceedingly painful. Taxes will have to be raised and services will have to be cut as scores of employees are laid off.  Staff reduction will be the hardest to absorb. Since 2009, the City has reduced its workforce 25%. Without question, any additional cuts will impact services.

When it comes to calling for the tax increases that will be needed to balance the City’s budget, the political will, and more importantly the necessary courage, simply will not be there.

Some who have long questioned the wisdom of selling the electric system on terms that would lead to painful tax increases and deep service cuts now support accepting the terms set forth in a letter of intent FPL presented to the City just two days ago. Ask City leaders what tax increases and service cuts will be needed to make up for the loss of $7 million, and they quickly suggest the short-term fix will be to use the sale proceeds to cover operating expenses, or to pay down pension obligations. When it comes to dealing with the long-term budget shortfall, they have little to offer in the way of specifics. Quite simply, they have no plan.

Howle, Moss and Sykes lack, not only a plan, but basic knowledge about the City’s finances.  They have also demonstrated contempt for facts and an inability to comprehend complexities. Their failure to inform themselves, and their celebration of ignorance, may be explained by research done at Cambridge University. Researchers found that the least proficient students often lacked a capacity for accurate self-assessment. “The incompetent are often blessed with an inappropriate confidence buoyed by something that feels to them like knowledge.”

Sponsored and supported by FPL, aided by a power-hungry County Commission, and advised by Indian River Shores Mayor Brian Barefoot, what Howle, Moss and Sykes most lack is loyalty to the City and to the people of Vero Beach. Bathed in blissful ignorance, and supported by outside interests, they are prepared to drive the City to the brink of financial disaster.

Why is this acceptable to people who genuinely care about the future of Vero Beach? Much like those who negotiated the Munich Agreement of 1938, those who are now going along with Howle, Moss and Sykes believe peace can be achieved through appeasement. They are wrong. Following the sale of Vero Electric, limited government extremists, who long for unified local government, will push for the sale of Vero Beach’s profitable water and sewer utility to the County. They will then call for the sale of the City’s solid waste utility, and they will push for the absorption of Vero Beach’s Police Department into the Indian River County Sheriff’s Office. Their ultimate goal, of course, is the disincorporation of the City of Vero Beach. With the City absorbed into the County, it will be easier for Bob Solari and his kind to help their developer friends make fortunes turning Vero Beach into a little Fort Lauderdale.

If the residents of Vero Beach who continue to support the power sale believe the deal will lead to significantly lower electric rates, they are going to be disappointed. If they think the move will not Result in higher taxes, cuts in services, and major setbacks for the City, they are sorely misguided.

Three members of the City Council — Howle, Moss and Sykes — were all elected with significant financial support from FPL. In the face of their inevitable support for FPL’s offer, the remaining two Council members, Richard Winger and Tony Young, may go along as well. Given FPL’s ability to buy whatever political influence it needs to achieve its growth and profit objectives, supporting the sale may be politically expedient. But a few years from now, when things begin to unravel for the City of Vero Beach, some may look back and wonder why they did not stand up for what they truly believed was best for the community.

A long-time family friend wrote this past week asking if I sometimes feel like a lone voice crying in the wilderness. Certainly I do. But I will continue to report the facts that will enable Vero Beach voters to make informed decisions about what is best for their community. If this information is buried in a mountain of FPL propaganda, and if a majority of Vero Beach residents choose to believe FPL’s spin on the truth, then so be it. I will at least have done my job to the best of my ability; and I will not have to regret having made compromises in principle that ultimately served no useful purpose.

*Rates for municipal utilities include payment-in-lieu of tax to the city’s general fund. Rates for investor-owned utilities do not include franchise payments, which average 6%. For example, on top of FPL’s rates, residents in Indian River County pay a 6% franchise fee that is assessed by the County Commission and go to help pay for County government. If and when Vero Beach residents become customers of FPL, they will begin paying a 6% franchise fee to be assessed by the City Council.

6 comments

  1. The cost for Vero Beach residents getting lower power rates (if that actually happens) is higher property taxes and lower level of services? That doesn’t sound like much of a trade-off. And both Vero and County residents currently on City utilities would be charged a 6% fee by our County government? Excuse me while I laugh and cry at the same time. If this is what we have to look forward to, I guess we’re darned fools and deserve what we get. This is actually humiliating. I thought the City government was smarter than that. Not the first time I was wrong about anything.

  2. Cathy, The forces pushing for the sale may, indeed, be irresistible. Solari and his so-called “conservative” friends are really just a front for wealthy development interests. The Shores folks have inexhaustible financial resources with which to fund disinformation campaigns, as does Florida Power & Light. In addition, the local daily newspaper and the island weekly refuse to report the downside of the sale, while they dutifully repeat the talking points of pro-sale advocates. The consequences of the sale could well be the eventual financial collapse of the City, but that may be a price people will have to pay for swallowing the pro-sale propaganda. Willful ignorance and gullibility have their consequences. Perhaps the best that can be hoped for at this point is that Richard Winger and Tony Young will do what they can to negotiate the best deal possible for the City. That is not going to be easy, though, for in Harry Howle, Laura Moss and Lange Sykes, FPL already controls/owns three votes.

  3. Interestingly if the people fall for FPL’s Surgeshield program it adds another $11.72 onto the bill which makes Vero Beach cheaper then FPL. Of course, the PSC has given FPL permission to increase the bills by about $4 at the end of 2017, and almost another $4 at the end of 2018. This is the classic bait and switch move, advertise on being the lowest in Florida then after the deal closes raise the prices on everyone. BTW, did anyone notice the $10.63 price jump at the end of 2016, why did none of our elected officials say anything to prevent this?

    Right Vero Beach and drop its rate another $2 or so without a problem, but this council will be like every other FPL Council and find reasons to raise the rates to keep the issue going.

    In the end I can almost guarantee you your taxes will nearly double and your electric bill will be about the same as it is now.

  4. Jay, I did and duly noted.I uses less in kwh last year for the same month and paid more.

  5. Three members of the City Council absolutely refuse to examine any evidence placed before them. When appearing before them, it’s like trying to blow wet sand. I wish every CVB electric customer had Mark Schumann and Jay Kramer’s wisdom. It certainly is in short supply on this City Council. This sale will cost the COVB one of its main sources of income – the transfer of about $5 million dollars a year into its General Fund. Taxes on City residents would have to double or worse to make up this loss. Are approximately 7600 home owners in the COVB able to do this?
    The COVB cannot tax outside its jurisdiction limits – where most of its Electric Utility customers reside.l I have spoken before the City Council until I’m blue in the face – to NO AVAIL! God help us, we have traitors on the City Council.

  6. Forgot to mention. With the net dollars gained from the sale (following all of the deductions and payments to others) – I think the COVB will be in serious financial trouble in less than a decade.

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