Surely you have read that on June 16, 2015 the Vero Beach City Council voted unanimously to pursue a “Go To Market” option for lowering its electric rates.
This is not to re-report what others have written but to dig deeper into the nature of the meeting and provide additional insight.
To begin with, in introducing the Finance and Electrical Utility Commission’s recommendation to Go To Market, Attorney Robert Scheffel “Shef” Wright said: “As you know, we’ve been at this for a while, talking with OUC, trying to get, to be candid, tying a deal with OUC that would leave us in a position close to as a good position as we would be in if we were to pursue a Go To Market scenario. By Go To Market, to be blunt and direct, we mean potentially defaulting under the OUC contract and purchasing power from market sources.” (Vero Beach purchases approximately 60% of its power from OUC.)
Attorney Robert Scheffel “Schef” Wright represents the City of Vero Beach with respect to its efforts to reduce its utility costs. With more than 31 years of experience working directly on energy issues in florida, Schef Wright practices extensively on matters involving utilities and energy law.
Attorney Shef Wright
In terms of future energy costs, Attorney Wright indicated that estimates show that if Vero Beach were to stick with its existing contract with OUC until its expiration in 2029, it would cost the City $ 1 billion in nominal dollars/$ 778 million net present value dollars.
If the City were to accept OUC’s latest offer of November 25, 2015, it would cost the City $ 889 million in nominal dollars/$ 660 million net present value dollars.
However, according to the “best information,”if the City were to Go To Market, it would cost the City $ 856 million in nominal dollars/$ 635 million net present value dollars.
The Go To Market scenario would represent a $ 30 – 34 million nominal dollars/$ 20.4 net present value savings over OUC’s latest offer.
“This is real money,” said Attorney Wright. But he also said: “There are risks. There are risks what ever you do.”
If the City were to default on its contract with OUC there would be a termination penalty capped at $ 50 million. Asked if this $ 50 million was reflected in the Go To Market savings, Attorney Wright said it included assumptions the City would pay this amount and still realize the $ 20.4 net present value savings.
Prior to public comments, Mayor Richard Winger cautiously said: “The public should understand that no matter what we do their are risks and there are no perfect conditions. We need to find the best deal we can and pass it on to the rate payers. Crossing over that bridge tonight entails some risk.”
Mayor Richard Winger
Then during public comments only one gentleman spoke, who said: “I don’t want you to speculate with my tax dollars and power bills. What happened years ago cost the City a ton of money because they were on the wrong side of the contract. I would appreciate it if you wouldn’t speculate again with my money.”
In conclusion, Attorney Wright made a “recommendation that we issue a RFP to test the market to determine what the market is and go back to OUC after we have those numbers and see where we get and if we don’t get where we need to get then you (City Council) would make the next move.”
RFP’s are expected to be “on the street” on July 3 with the caveat that they be responded to by July 31.