What is FPL’s purchase offer, as outlined in the PSA?
The updated purchase offer to the City is worth almost $179 million, consisting of:
- Cash payment: $111.5 million
- Estimated cost to assume City's pension liability: $16.4 million
- Estimated cost to upgrade transmission: $7.8 million
- Estimated cost to relocate substation: $7.8 million
- Estimated cost to decommission the plant: $5.5 million
- Estimated cost of three-year entitlement power purchase agreement with Orlando Utilities Commission: $30 million
- In addition, we will offer Vero Beach electric employees a minimum of two years employment with FPL
Our offer will allow the City to pay off its outstanding debt associated with the electric system and exit its current contracts. We look forward to having the opportunity to provide the City of Vero Beach electric customers with affordable, reliable electricity, excellent customer service, and the lowest typical residential bills in the state.
What are the next steps?
The sale of the electric system has been approved by the Vero Beach City Council as well as the voters of Vero Beach. Moving forward, the Florida Public Service Commission, Federal Energy Regulatory Commission and Florida Municipal Power Agency need to approve various aspects before the acquisition is completed.
What is the agreement with Orlando Utilities Commission?
In order to close the sale of the utility to FPL, Vero Beach has to assign its FMPA entitlements and terminate its wholesale power agreement with OUC. In October 2012, the City, OUC and FPL finalized mutually-beneficial agreements that provided a path forward for the sale of the City's electric system. The terms include:
- Ending Vero Beach's existing wholesale power supply agreement with OUC for $20 million. In addition, OUC will retain Vero Beach's Florida Gas Transmission (FGT) gas transport rights.
- Transferring all of Vero Beach's FMPA power entitlements in the St. Lucie, Stanton I and Stanton II Projects to OUC for a $34 million payment by Vero Beach.
- In addition, FPL will enter into a three-year power purchase agreement with OUC for the Stanton I and II Projects.
The transfer of all rights and payments would take place at the closing of the sale of Vero Beach's electric system to FPL, which would occur on or after January 1, 2014.
Has FMPA signed off on the agreements with OUC?
FPL, the City and OUC reached a mutually beneficial agreement that provides a complete solution to Vero Beach's current contractual obligations at no cost to FMPA. FMPA has yet to formally sign off on the agreement, but it has continuously expressed its willingness to cooperate with Vero Beach on this issue. Should the City Council and the voters continue to pursue the sale of the electric system, we expect FMPA will honor its previous commitment and work cooperatively with the parties to approve the agreements with OUC very soon.
How will City revenues compare after this transaction?
FPL’s purchase offer should allow the City to pay off its outstanding debt associated with the electric system and exit its current contracts while still providing cash that can be used to offset potential future budget deficits. In addition, the City of Vero Beach would receive annual revenues from FPL in the form of franchise fees, property taxes and annual lease payments for the Vero Beach power plant.
If the deal is approved, how quickly will customers see lower rates?
The acquisition process will take several months, but customers would see lower rates as soon as it is completed. FPL's typical residential electric bills are currently the lowest of the state's 55 utilities.