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Town of Indian River Shores – City of Vero Beach – Indian River County Electric Utilities Mediation Page 3 May 1, 2015 Attorney Wright pointed out if the City accepted the OUC offer and dependent upon the rate study, the City may be able to lower their power supply costs by $6.50 to $7 per 1000 kilowatts hours, if the sales and the price of natural gas remain static, pricing assumptions improve, and there were no unexpected costs in other aspects of the electric utility systems operation. Attorney Wright added the City may be able to reduce the power supply costs by an additional $1.50 to $2 per 1000 kilowatt hours of costs by going to the market, subject to the caveats described. He said another option would be to finance the capital expenditures for the next two to three years, over a ten to fifteen year period, that would significantly delay the rate impact for the next three years. He explained in the year 2019, there would be a significant reduction in cost for the FMPA’s Stanton Unit 1 Project, because the debt would roll off. He said the City was the largest participant in the project and the debt would change over to the City in the amount of $2.6 million a year when it rolls off. Indian River County County Attorney Dylan Reingold advised after the mediation held on December 17, 2014, the City filed a petition with the Public Service Commission (PSC). On February 3, 2015, the PSC ruled in favor for granting the declaratory statement for the City and declined one for the County. Since then, the County has filed a notice of appeal with the Florida Supreme Court and the proposed briefing schedule for both parties begins around the first week of June. At that time, the County plans on filing their brief and the Florida Association of County Attorneys decided to file an amicus brief in the support of the County. The Town of Indian River Shores The Town’s Legal Counsel Bruce May expressed the Town’s frustration that they had not heard back from the City on some quantification as to what kind of rate relief they could expect. He recalled from the December 17, 2014 Mediation Meeting, the Town believes the optimal solution was for the City to sell its entire electric system to FPL; however, it was apparent that the FMPA had no intentions of allowing the City to sell its entire system. However, Attorney May explained the contractual provision that gives FMPA veto authority on the City’s ability to sell their electric system, found in Section 28(c) of the requirements, stating, “the project participant “the City” agrees that it will not sell, lease, abandon or otherwise dispose of all or substantially all of its electric or integrated utility system without the FMPA’s consent”. He called attention to the fact that FMPA’s consent was not required for the City to sell a small portion of its sys tem in the Town. Attorney May revealed that the Town wanted to propose to the City, a partial sale to FPL. Attorney May touched on the City’s concerns regarding the partial sale to FPL. He identified three basic concerns: 1) the City views itself in litigation with the Town and the County; 2) the City has a substation within the Town that serves as a backbone for the City’s overall distribution system; and 3) there were stranded costs. A discussion ensued on stranded costs and Attorney May referred to the South Daytona and Winter Park electric utility's acquisitions.