Michael Moline
The Public Service Commission voted unanimously Tuesday to approve Florida Power & Light Co.’s purchase of the City of Vero Beach’s electric utility.
The $185 million deal took roughly a decade to negotiate but promises lower rates for customers.
Commissioner Julie I. Brown said the switchover was clearly in the public interest — for customers of FPL and the Vero Beach utility who live outside the city limits and have no political say in the utility’s management.
“I’m happy this question was resolved very thoroughly, and I’m glad that we can finally bring some closure here to the issues before us before the end of the year. There are plenty of public benefits here,” Brown said.
“We’ve all worked long and hard to get here,” FPL spokeswoman Sarah Galewood said. “The city’s customers will join FPL’s existing customer base and pay the same rate that every customer pays, which is a savings of about 20 percent for residential customers.”
The $185 million represents the purchase price. The commission OK’d another $114 million “acquisition adjustment” to cover expenses related to the transfer.
“A lot of that money is getting the city out of its existing contracts. For example, they have a contract for wholesale power, and they have contracts with the Florida Municipal Power Agency,” Galewood said.
The $114 million acquisition adjustment represents the difference between the $185 million purchase price and the lower value of the city assets FPL is buying. Its approval is expected to lead to the $114 million being built into the rates that FPL’s overall customers will pay in the future.
According to the utility’s calculations, the deal will save a typical residential customer $330 annually; a typical small store front $410; a typical office building or school $7,600; and a typical large retailer or hospital nearly $80,000.
A Public Service Commission staff analysis concurred, indicating that the $114 million acquisition adjustment will have minimal impacts on the monthly bills of FPL customers. FPL is operating under a four-year rate settlement scheduled to last through 2020, and the $114 million would come into play the next time the utility asks the Public Service Commission to approve new base rates.
“The biggest thing for us is that we wanted to make sure that any decision we made did not harm our existing customers. Even though we are paying this purchase price, over the long term it results in an estimated $130 million in savings for our existing customer base,” she said.
That’s largely because the new customers add to the utility’s economies of scale, Galewood said.
The Office of Public Counsel, which represents ratepayers before the PSC, favored the deal notwithstanding qualms about the accounting underlying the projected rate reductions. FPL has changed those estimates three times, Public Counsel J.R. Kelly said.
“And everyone of them has been different. Who’s to say that if they did a new one today that it wouldn’t be different again?” he said.
Kelly would have preferred to leave the PSC free to revisit the issue during subsequent rate hearings: “You’ll never know whether you’ve done a good thing until well into the future,” he said. He also said the office opposed the acquisition adjustment, and that FPL could have moved forward with the deal without it.
Vero Beach has been attempting to unload the utility — long beset by high customer bills — for roughly a decade. Voters have approved two referendums backing the sale.
The sale’s approval ends what is known as a “territorial agreement,” which has divvied up the county between the city utility and FPL. The commission also approved FPL being able to charge its rates to the customers absorbed from the city utility — a move that regulators and FPL say will mean lower rates for those customers.
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The News Service of Florida contributed to this post.
