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Board of County Commissioners March 7, 2011 Page Two The territorial service areas of the two providers, and County's relationship with the providers, are defined by three the fundamental documents: (1). the 1981 order of the PSC approving a territorial agreement between the City and FPL. This order and the underlying agreement provide that (a) the City shall serve an area, consisting of the City itself, and certain areas outside the City, including the Town of Indian River Shores, the south barrier island and other unincorporated parts of the County, and (b) FPL shall serve all other areas of the County, (2) IRC Resolution 87-12, in which the County granted a 30 year franchise to the City to provide electric service within the City's territory as defined in the 1981 PSC order. This franchise was accepted by the City on March 5, 1987, and the franchise resolution, similar to the water and sewer franchise resolutions, contains a five year notice provision for intent to renew, and (3) IRC Code, Chapter 312, Part II, adopted in June 2007, in which the County granted a 30 year franchise to FPL to provide electric service within FPL's territory as defined in the 1981 PSC order. It is important to note that while the County franchises include territorial service areas, those franchises follow the PSC order, because ultimately it is the PSC and not the County which defines electric utility territorial service areas. In 2008, then State Representative Stan Mayfield introduced legislation requiring that any municipal electric utility falling within certain parameters must hold a referendum of its retail customers on the following question: "Should a separate electric authority be created to operate the business of the electric utility in the affected municipal electric utility?" If a majority voted "yes" then an electric utility authority would be created with a governing board proportionately representing the number of ratepayers located. inside and outside of the municipality. The parameters of the legislation were designed specifically to include the City of Vero Beach. However, the City made a determination that it did not fall within the parameters of the legislation and never held the referendum. In 2010, City voters elected four new City Council members who were viewed as more favorably inclined to consider changes in the City's electric system, including a possible sale of the system to FPL. These four new members joined the single "carryover" member who had expressed many of the same views. The City Council has in fact engaged in discussions with FPL about a possible sale, and it is anticipated that FPL will decide whether to present a purchase offer by early summer 2011. DISCUSSION AND ANALYSIS. If the Board of County Commissioners wants to become more involved in City electric issues, there are several alternatives open to the Board, which are distinguished from each other by the level of involvement and aggression the Board wants to take. Those alternatives include: 1. Intervention in the Faherty/Heran PSC Case. The PSC has limited jurisdiction over municipal electric utilities, compared to its more extensive jurisdiction over private, investor owned utilities like FPL. With respect to private electric utilities, the PSC has jurisdiction to regulate and supervise virtually every aspect of rates and service. With respect to municipal electric utilities, however, its jurisdiction is limited to specifically enumerated matters, such as prescribing a rate structure (but not F.4lnnnre),Dn&AGENERAL\B C COge 1. Me MRC-COVQ (Elw k b—s).duc f