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PRESENTATION FOR THE COUNTY • I'm John McCord. I live in Indian River County, in the Town of Indian River Shores. I'm here today on behalf of myself as a citizen, a tax payer and a ratepayer of the City of Vero Beach electric system. I'm representing no one but myself, and the statements that I'm about to make are my mine and mine alone. • Commissioners, I've spent last weekend reading and re -reading the Auditor General's audit findings about FMPA's operations. I'm disgusted and the more I think about it the more disgusted I become. • I know that my friends and neighbors throughout the County are disgusted as well, and I would expect that you as the County Government and the City of Vero Beach share my disgust. • I'm disgusted because the audit indicates that over the last 12 years FMPA has lost over $247 Million through bogus hedging activities that the auditor noted were "inconsistent with industry practice." Folks, that's a loss of almost a quarter of a BILLION DOLLARS!,„ • I spent over 20 years of my business career using financial hedges and I can attest to the auditor's concerns. FMPA's hedging practices are inexcusable. • To add insult to injury, the audit indicates that FMPA entered into a series of bogus interest rate swaps totaling $700 Million for a coal-fired power plant that was never built. The audit notes that the FMPA's swap agreements represent "risk-taking in excess of industry practice," That's an understatement for the ages. Think about it—FMPA obligated its members ( and their rate payers) to the swaps before the plant was even permitted. And for the record, those swaps are currently underwater to the tune of negative $109 million. • If a regulated utility did something that stupid and tried to have its customers pay for it, the regulated utility would be run out of town on a rail. Just looking at FMPA's imprudent hedging and interest rate swaps shows that FMPA has losses in excess of $350 Million! No wonder FMPA fought so hard to keep this audit from happening. • Do you know who ultimately pays for those losses? You and I do-- as ratepayers. The losses are initially pushed down to the municipal utilities like Vero that belong to FMPA. But those utilities pass those costs on to the ratepayers. So you and I as utility customers are paying for FMPA's bogus, risky and costly hedging practices. • In light of these practices, it comes at no surprise that the auditors found FMPA's wholesale power costs were almost 32% higher than Florida's regulated utilities. • This goes to the heart of the disputes between the County, Town and City. FMPA's bad business practices caused the rate issues we're dealing with, and now they want to hold us all hostage to rates that are high because of their negligence. Does FMPA care that its costs are so high? Why should it? The audit notes that FMPA is an un -elected, unregulated government monopoly. The audit goes on to reveal a culture of FMPA management abuses, good -old -boy procurement practices, exorbitant post- retirement benefits, lavish entertainment budgets, and an overall disregard for the customer. Ladies and Gentlemen, those are all traits to be expected of an unregulated monopoly. That's why I'm so disgusted today. Now what should we do about it? I'm going to propose something novel. Why don't the City, the County, and every other municipal utility customer in Florida join together in saying – ENOUGH IS ENOUGH! 31