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IRC to address: 1) whether the rates were reasonable or prudent, and 2) whether the City was <br />being "unjustly enriched" on the backs of the Town and other non-resident customers as a result <br />of this utility revenue transfer. <br />Mediator Alvarez felt it was not in the advantage of anybody to go to trial. Attorney May <br />agreed, and felt that before the Town went down that road, which they were prepared to do, they <br />would make a good faith offer to settle this dispute in a way they felt was fair. <br />Attorney May presented the "Settlement Structure Offered by the Town of Indian River <br />Shores' Mediation Team" and offered to summarize the settlement terms. Attorney Wright <br />wanted a copy of the settlement offer to be able to discuss during lunch. <br />Attorney May stated the settlement structure would be for the purpose of settlement and <br />in return for the Town continuing abatement of its lawsuit against the City for five months to <br />allow the Town to exercise its statutory rights to explore all lawful options to provide electricity <br />to its citizens (either by itself or contracting with another utility). He added as part of the <br />evaluation process, the Town would invite and strongly encourage the City to submit a proposal <br />to provide electricity to the Town citizens for the next 30 years, as well as solicit proposals from <br />other utility providers. He continued, if the City was not selected to continue, then the settlement <br />structure would be the City and the Town could enter into good faith negotiations to determine <br />and agree upon the most appropriate means to discontinue the provision of electric service with <br />the Town after the Franchise Agreement expires. He concluded on June 1, 2015, if the Town <br />would agree, that the City should continue to provide electricity after the franchise agreement <br />expires, then they would dismiss the lawsuit. If the Town and the City do not reach a formal <br />agreement, the Town could proceed with its lawsuit against the City. He said this would give the <br />Town and the City time to look into the matter, and to submit a proposal to give those efforts an <br />opportunity to crystalize before the November 2016 deadline. <br />Attorney May handed out the proposed "Settlement Structure Offered by the Town of <br />Indian River Shores' Mediation Team" to all parties, and a copy was given to the Indian River <br />County Clerk to the Board. <br />Attorney May inquired if the City had done a fiscal analysis of the impact on taxes and <br />rates, if the Town were to leave the City's Electric system. <br />Jim O'Connor replied in affirmative and pointed out the Town represents between 7 to <br />8% of the City's customer base. He indicated the analysis did not focus on sensitivities, for <br />example, the stranded costs involved in that transaction and the impact was not really significant <br />because the Town represents primarily residential customers as opposed to having major <br />commercial customers. He offered to provide the Town with a copy of the analysis. <br />A discussion ensued on the Settlement Proposal regarding rate structure; risks such as an <br />increase in the price of gas; the three scenarios: the existing contract, the 15 -year contract <br />extension or the 9 -year contract extension; the scenario where no funds obtained from the <br />customer go into a general revenue fund and the impact to the electric rates; franchise fees; the <br />Town of Indian River Shores - City of Vero Beach - Indian River County <br />Electric Utilities Mediation <br />December 17, 2014 <br />Page 7 <br />