FPL seeks state go-ahead to purchase Vero Beach’s power company

FPL employees walk through the bucket truck area in a preparation exercise for the 2015 hurricane season at Gulfstream Park in Hallandale Beach, Wednesday, April 15, 2015.
FPL employees walk through the bucket truck area in a preparation exercise for the 2015 hurricane season at Gulfstream Park in Hallandale Beach, Wednesday, April 15, 2015. Miami Herald file photo

After what it described as “very extended discussions and negotiations,” Florida Power & Light is asking state regulators to clear the way for a $185 million deal to purchase a utility system run by the city of Vero Beach.

FPL filed documents Friday at the state Public Service Commission seeking approval of changes needed to carry out the deal, which was finalized by the city and FPL last month. It comes after a long-running debate about utility service in Indian River County — a debate that included a Florida Supreme Court ruling last year in a dispute between the city and county.

The city has provided service for decades in some unincorporated areas of the county, with FPL serving surrounding areas. But with the planned deal, FPL would provide electricity to all of the areas through elimination of what is known as a “territorial agreement” that carved up the county.

“The existing COVB [city of Vero Beach] service territory is essentially an island surrounded by FPL’s service territory,” FPL said in one of the filings. “This geographic configuration will allow FPL to make efficient use of available resources in providing service to COVB customers. As such, termination of the territorial agreement will eliminate existing or potential uneconomic duplication of facilities through the integration of the COVB electric utility into the FPL system.”

Under the agreement FPL would pay $185 million in cash for such infrastructure as 550 miles of transmission and distribution lines and 10 substations, along with the right to provide service to 34,000 customers, according to one of the filings. About 12,000 of the customers are in the city of Vero Beach, while 22,000 are in unincorporated parts of Indian River County and a portion of the town of Indian River Shores.

FPL said it will not seek to increase base rates to carry out the deal and that customers of the city of Vero Beach will see their monthly bills drop as they are absorbed into the larger utility.

“FPL’s principal requirement was that its customers would not be harmed economically by the transaction,” one of the filings said. “One of the city’s principal requirements was that its customers receive FPL’s lower electric rates.”

For the deal to move forward, FPL needs the Public Service Commission to approve ending the territorial agreement. It also needs approval to charge FPL’s rates to the city of Vero Beach customers and needs approval of certain accounting issues.

One example of the issues involved: the city of Vero Beach has an agreement to buy wholesale power from the Orlando Utilities Commission. To help carry out the deal, FPL said it negotiated an agreement to purchase power from the Orlando Utilities Commission through 2020.

A potential sale to FPL was an issue in the lawsuit that ended up at the Florida Supreme Court.

In that case, Indian River County sought to end a “franchise” agreement in which the city provided electricity in the unincorporated areas. But the Supreme Court, upholding a decision by the Public Service Commission, said in March 2016 the city had the right to serve the designated territory.