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Indian River County Mediation Statement Page 2 of 3 Pursuant to the Franchise, over time the City has erected within the Franchise certain poles, fixtures, conduits, wires, meters, cables, and other such electric transmission and distribution facilities for the purpose of supplying electricity within the Franchise. By its terms,the Franchise expires on March 4, 2017, absent a mutual agreement to continue. On February 22, 2012,the Board properly noticed the City that the County would not renew the Franchise when it expires. It is the Board's position that without the Franchise, the City no longer has the legal authority to occupy or otherwise utilize the roadways, easements, and public property within the Franchise Area. Without this legal authority, City will not be authorized or permitted to provide electric service within the Franchise Area. Additionally,the Legislature adopted Section 366.04(7),for the purpose of allowing electric service customers of an "affected municipal electric utility" the opportunity to choose self- governance. According to the City's own records, the City's customer base was within the customer range set forth in this statute and the City, otherwise met all of the other statutory preconditions for such an election. However,the City failed to conduct the required election. This issue is important since more than half of the City's customers are outside the city limits and these customers have no vote, no voice, and no redress to the Vero Beach City Commission or city officials since they cannot vote in City elections. Finally, in February 2013, the City and FPL agreed to the sale of the entire City electric utility system to FPL, and the sale of the electric system contemplates FPL serving the Franchise Area, as well as within the City limits and the Town. In March 2013, the citizens of the City overwhelmingly voted to approve a referendum supporting the sale. However, since that time the sale as described by City representatives has been "on the backburner" and is prohibited by a condition precedent. It is also important to note that the County is not a party to the lawsuit filed by the Town. The County has filed a Petition for a Declaratory Statement from the Florida Public Service Commission. The County will have filed an Amended and Restated Petition for a Declaratory Statement by the time of this mediation, seeking the Public Service Commission's guidance as to the authority of the County with respect to seeking a successor electric franchisee. Key Interests The County's key interests are as follows: 1) The County believes that the City needs to complete the sale of the City electric utility to FPL. This is the best alternative to providing all electric ratepayers within the County with a utility that is responsive to all customers, has fair and reasonable rates, and is not using electric customers to subsidize City government. 2) In the event the sale cannot be completed, the City needs to provide a functional equivalent of such a sale based upon the following three principles: a. Rates substantially similar to those of FPL. Since the mediator has requested that the parties be as specific as possible, the County would expect such rates to be in a range of plus or minus 5% of FPL rates; ly