State utility regulators Tuesday approved Florida Power & Light’s acquisition of a city-run utility, overriding a staff proposal that could have scuttled the deal.
With a deal in the works for more than a decade, the Florida Public Service Commission approved FPL’s purchase of the city of Vero Beach’s electric system without accepting a downward “adjustment” recommended by staff that would have shaved about $90 million off the $185 million acquisition.
Public Service Commission member Gary Clark, in moving to approve the deal backed by municipalities served by the Vero Beach utility, said the structure worked out between FPL and the local communities “will have no adverse impact to existing FPL customers.”
The staff proposal was described as better reflecting the value of the existing system and, if approved, would have required a surcharge on the 35,123 existing customers of the local utility.
But officials from Indian River County warned that the proposal would jeopardize the deal.
Indian River County Commission Chairman Peter O’Bryan called the prospect of a surcharge, which could have lasted from 10 to 20 years, “a prison term” for ratepayers.
The approval came with the state Office of Public Council, which represents consumers in utility issues, announcing it did not oppose the deal and would not file an objection.
An expert for the Office of Public Council had said there were “flaws” in FPL’s projection that its customers would save $105.3 million over 30 years with the acquisition, by overstating the potential revenue and understating the capital expenditures in the existing Vero Beach system. FPL is Florida's largest electric utility.
Under the approved proposal, $116.2 million of the deal is considered above the value of the assets being acquired, which can now be factored into future ratemaking.
When the deal is complete by the end of the year, customers of the city utility are projected to get about a 21 percent rate savings. For the typical residential customer using 1,000 kilowatts a month — the industry standard — the savings would equate to about a $27 reduction in the monthly bill.
“That makes a real difference in the lives of our many citizens,” Vero Beach Mayor Harry Howie said. “Additionally, FPL’s reliable service and storm recovery capabilities provide the benefit of peace of mind to protect our local economy, which would be crippled in the aftermath of a strong storm.”
FPL residential customers currently pay $99.87 a month on a 1,000-kilowatt bill.
FPL has been looking to pick up the Vero Beach utility since the 1970s. The latest effort began just over a decade ago. The utility also serves areas around Vero Beach.
“We’re unique in the standpoint that 60 percent of our residents live outside the corporate area, but we’re also very unique in this decision and process because of the number of people that had to come together and approve this process,” said Sen. Debbie Mayfield, a Rockledge Republican who represents Indian River County and traveled with local officials to the meeting. “I don’t know that you will ever see any situation like this.”
In the past year, 20 municipalities served by the Vero Beach utility have approved the deal. Negotiations were also held with the Florida Municipal Power Agency and the Orlando Utilities Commission to resolve contractual obligations.
Brian Barefoot, who for years fought for Indian River Shores to withdraw from the Vero Beach system, said he resigned from the Indian River Shores Town Council in April as he considered his work done because of the support for the sale of the city electric system to FPL.
“I believed my primary work was done when all parties agreed to this transaction,” Barefoot said.