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determined they could not take an assignment without violating their bond covenant and that FMPA would not change their bond covenants to accommodate OUC. Attorney Wright maintained that the City's interest was to provide safe and reliable service, and continue earning a reasonable return on their equity, as well as provide service at the lowest possible cost by discussions with OUC which provided 60% of the City's power, pursuant to the 2008 Power Purchase Agreement to get lower rates. He indicated OUC has been very generous and cooperative in working towards some options to assist the City in getting rates lowered. He indicated one option was to continue with the contract, which had 15 years remaining, for the full remainder 15 years with substantial discounts, in return for concessions, including an option to buy the St. Lucie output under the purchasing agreement and taking permanent assignment of the gas transportation contract. He pointed out another option was reducing the remaining period to nine years, shortening the term by six years, but with higher prices. Additionally, a rate study was being done by Public Resources and Management Group to evaluate costs, rates, evaluating a specific alternative, and finance capital expenditures, as opposed to paying annual capital expenditures. He anticipated the completion of the rate study sometime in March or April 2015. He concluded the City was on the threshold of issuing a contract to study the system efficiency/optimization of the City Electric System. It was noted the City adopted a resolution authorizing staff to work with the Town and the County with a referendum and a resolution to move forward with a utility authority to provide geographic representation to all customers with the authority to operate the business of the electric utility system. Attorney Wright concluded the City's position was that the electric rates were higher than they would like and that the City's rate of return was reasonable. The City felt the Florida Public Service Commission (PSC) had the superior jurisdiction to declare who served where, and the Town had the statutory power to run an electric utility system. Mediator Alvarez summarized that all parties were in agreement in that they wanted the electric rates lower and everyone/someone would need to suffer a bit or a lot financially going forward. He said everyone had done a great job identifying interests and took the parties through a problem-solving exercise. Mediator Alvarez identified the problems he perceived though the mediation statements provided by the Town, the County, and the City. Parties want Lower Electric Rates in the Long Term A discussion ensued on the electric rates, and the County wanted the City's rates within the range of 5% of the present FPL rates now and going forward. Attorney Reingold stated if the FPL deal does not go through, the County wanted to see lower rates within a 5% range of FPL, plus or minus, an electric utility authority that was controlled by a governing board that fairly and proportionally represents the geographic makeup of the City electric utility customer base and the cessation of the subsidy to the City's general fund by the City of Vero Beach Utility. Attorney May spoke up for the Town and wanted it to be clear that all parties wanted lower rates for the long term. Town of Indian River Shores - City of Vero Beach - Indian River County Electric Utilities Mediation Page 4 December 17, 2014