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