Editor’s note: Vice-Mayor Harry Howle recently asserted that the sale of Vero Electric to Florida Power and Light will leave the city in a “damn good” position. The following analysis, almost surely beyond Howle attention span, if not over his head, confirms that he, and all those now supporting the sale of Vero Electric, are dead wrong about the supposed financial benefits of the deal. In truth, the sale of Vero Electric will seriously damage the City financially, while yielding only marginal of benefits to the customers of Vero Electric.
Even more damaging that a sale of the full system would be a partial sale, in which the Indian River Shores portion of the system would be carved off and sold to FPL. Tomorrow, InsideVero will publish an analysis of the likely negative impacts of a so-called partial sale.
“Netting the lost fund transfers, franchise fee and net interest income effects, the resulting $4.1MM in net reduction in City revenues may be financed by a combination of (1) increased water utility rates, (2) reduction of General Fund service levels, or (3) increase in ad valorem taxes. (Sale of city assets is not included as a potential revenue source, as suggested, because by definition of prudent financial management practice, non-recurring gains or revenues are never used to fund recurring expense.)”
Much adoo about…
The sale of City of Vero Beach Electric is, and has been for nearly a generation the bitter Third Rail of local politics. If one good things comes from the Full Sale, it will be the end of the poisonous political atmosphere perpetuated in the name of this issue.
Harry Howle – A single-issue councilman giving unquestioning support to all things FPL.
In the meantime, who benefits from this awful business?
Political careers and organizations and at least one highly-profitable media platform been built on flogging the electric utility.
So it’s much adoo about the activists, their political allies and their dedicated media outlet.
Second, Indian River Shores and South Beach customers will benefit. It is acknowledged that they provide a disproportionate share of the profits reaped by the electric utility. Moreover, it is acknowledged that they cannot vote for the governing body that controls electric policy and rates. These circumstances led a group of them to pool their money to buy an election, and install a City Council that performs to their will.
Their mass-deployment of election capital was greatly magnified by the constant barrage of electioneering propaganda issued from their captive “news” outlet.
It used to be “how you played the game.” Today, the Big Egos get their way by any means. Congratulations – you ‘won.’
Undoubtedly, FPL benefits. They will receive an enormously profitable enterprise.
Lange Sykes – Received 90% of his campaign contributions from Indian River Shores residents.
Given the mark-to-market equity valuation of $64 million as shown below, the system produces about $13.5 in operating cash flow, against which it must spend about $4.0 million to sustain capital investments, leaving $8.5 million in free cash flow.
That’s a return on equity for the City of Vero Beach Electric of 13.3%.
FPL’s regulated return on equity is only 9.6% – 11.6%; Duke Energy earns 6%. Southern Company 11%.
And that’s before the axe comes out to chop down local resources, cut capital spending, cut staff, cut customer service and cut local response. From a reduced cost base–and with political leverage in Tallahassee to enforce continually rising rates, the FPL acquisition will be a goldmine for FPL.
After all, they have put up with – instigated – all the political nonsense and have stuck with it for all these years for a reason – profit.
Figure 11 – Leona Helmsley, wealthy New York real estate magnate, famously observed that “only the little people pay taxes.” She became known as the “Queen of Mean.”
Laura Moss – Self-described “Queen of Vero Beach.”
But what’s in it for the We the “Little People” of Vero Beach? Fifty cents a month off your electric bill? A 43% hike in your property tax bill? Is that it—this is all we get?
Unfortunately, no. There’s more: We get corruption.
The Mayor, along with her two council trustys on the City Council, rolled into office on a tidal-wave of special interest money from, you guessed it, FPL.
When asked by a quizzical child, “what is a mayor?” the mayor intuitively responded that it’s “kind of like being Queen.” This moment of honest reflection—shared between a grown-up and an innocent—is apocryphal in explaining the Mayor’s self-image, her imperious style and authoritarian conduct.
Buying an election and a city council to benefit special and sectional interests is extraordinarily bad behavior for those otherwise up-standing citizens of Indian River Shores that donated to “Operation Flip Switch.” More…