HomeMy WebLinkAbout2011-026RESOLUTION 2011 = 026
A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS OF
INDIAN RIVER COUNTY, FLORIDA, SETTING FORTH THE BOARD'S
POSITION ON CERTAIN ISSUES RELATING TO CITY OF VERO
BEACH ELECTRIC SYSTEM
WHEREAS, on November 3, 1981, the Florida Public Service Commission
("PSC") approved a Territorial Agreement between the City of Vero Beach ("City") and
Florida Power & Light ("FPL") which established electric service areas for the City and
FPL in Indian River County. Specifically, the electric service area for the City was
defined to include the City itself, the Town of Indian River Shores, the south barrier
island, and other unincorporated areas of the County, and the service area for FPL was
defined to include all other areas of the County; and
WHEREAS, the demographics of Indian River County have changed significantly
since approval of the Territorial Agreement. In 1981, approximately 10% of the City's
customers were located outside City limits ("non-resident customers"). Today
approximately 61% of the City's customers are non-resident customers. Specifically,
the City has approximately 34,000 total customers, of which approximately 21,000 are
non-resident customers. This percentage of non-resident customers (61%) is believed
to be the highest percentage of any municipal electric system in Florida; and
WHEREAS, the City's rates on average over the past ten years have been 23%
higher than FPL's rates, resulting in a substantial rate disparity for County residents
served by the City, compared to those served by FPL. Current residential rates per
1000 KWH, as set forth in the most recently available data, are 22.1% higher than FPL's
rates. When the rate disparity is applied to all City customers (resident customers and
non-resident customers), approximately $16,000,000 in additional electric charges are
paid each year compared to the amount customers would pay if served by FPL.
Approximately $9,760,000 of this amount (61%) is paid by non-resident customers.
These additional payments take substantial funds out of the private sector of the local
economy and have a negative impact on economic development and recovery efforts in
Indian River County; and
WHEREAS, the City uses its electric system to subsidize its general fund and
reduce taxes for City residents. Specifically, the City transfers approximately
$6,000,000 from its electric system to its general fund each year. Non-resident
customers pay approximately $3,660,000 of this amount (61%), resulting in a form of
"taxation without representation"; and
RESOLUTION 2011 = 026
A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS OF
INDIAN RIVER COUNTY, FLORIDA, SETTING FORTH THE BOARD'S
POSITION ON CERTAIN ISSUES RELATING TO CITY OF VERO
BEACH ELECTRIC SYSTEM
WHEREAS, on November 3, 1981, the Florida Public Service Commission
("PSC") approved a Territorial Agreement between the City of Vero Beach ("City") and
Florida Power & Light ("FPL") which established electric service areas for the City and
FPL in Indian River County. Specifically, the electric service area for the City was
defined to include the City itself, the Town of Indian River Shores, the south barrier
island, and other unincorporated areas of the County, and the service area for FPL was
defined to include all other areas of the County; and
WHEREAS, the demographics of Indian River County have changed significantly
since approval of the Territorial Agreement. In 1981, approximately 10% of the City's
customers were located outside City limits ("non-resident customers"). Today
approximately 61% of the City's customers are non-resident customers. Specifically,
the City has approximately 34,000 total customers, of which approximately 21,000 are
non-resident customers. This percentage of non-resident customers (61%) is believed
to be the highest percentage of any municipal electric system in Florida; and
WHEREAS, the City's rates on average over the past ten years have been 23%
higher than FPL's rates, resulting in a substantial rate disparity for County residents
served by the City, compared to those served by FPL. Current residential rates per
1000 KWH, as set forth in the most recently available data, are 22.1% higher than FPL's
rates. When the rate disparity is applied to all City customers (resident customers and
non-resident customers), approximately $16,000,000 in additional electric charges are
paid each year compared to the amount customers would pay if served by FPL.
Approximately $9,760,000 of this amount (61%) is paid by non-resident customers.
These additional payments take substantial funds out of the private sector of the local
economy and have a negative impact on economic development and recovery efforts in
Indian River County; and
WHEREAS, the City uses its electric system to subsidize its general fund and
reduce taxes for City residents. Specifically, the City transfers approximately
$6,000,000 from its electric system to its general fund each year. Non-resident
customers pay approximately $3,660,000 of this amount (61%), resulting in a form of
"taxation without representation"; and
RESOLUTION NO. 2011-026
WHEREAS, non-resident customers who bear this rate and subsidy burden have
no way to protect themselves or to influence City rates or subsidy practices. While
resident customers protect themselves by voting in City elections, non-resident
customers have no such ability. Non-resident customers are required by the 1981 PSC
order to be customers of the City electric system but, having no vote in City elections,
have no ability to protect themselves from rate and subsidy burdens; and
WHEREAS, in 2008, the Florida Legislature recognized the unfair plight of non-
resident customers by adopting Chapter 2008-227, Laws of Florida. This statute
required that a referendum be held of retail customers of any municipal electric system
falling within statutory parameters to determine whether a separate utility authority
should be created to operate the system. Upon an affirmative vote, the municipality
would be required to create a utility authority with a governing board made up
proportionately of resident and non-resident customers. Although Chapter 2008-227
was introduced by Indian River County State Representative Stan Mayfield and was
intended to apply to the City electric system, the City determined that the statute did not
apply and never held the referendum; and
WHEREAS, in 2009, two Indian River County citizens, Dr. Stephen J. Faherty,
Sr. and Glenn Heran filed a petition with the PSC asking that the PSC (i) act on its own
motion to redefine the territorial service areas of the City and FPL in Indian River
County to better protect non-resident customers, (ii) require that the City stop the
practice of using its electric system to subsidize its general fund, (iii) address and
mitigate the "taxation without representation" situation that exists for the 61 % of City
customers who are non-resident customers, and (iv) enforce Chapter 2008-227 by
requiring the City to hold the referendum and, upon affirmative vote, to create a utility
authority governed proportionately by resident and non-resident customers; and
WHEREAS, the County, as well as several other taxing bodies such as the Town
of Indian River Shores, the Indian River County School Board and the Indian River
County Hospital District, are customers of the City electric system and as such pay
higher City rates. These increased costs result in higher taxes being imposed on Indian
River County taxpayers; and
WHEREAS, on April 4, 2011, FPL submitted a letter of intent to the City
expressing its interest in purchasing the City electric system. If FPL and the City are
able to reach a definitive agreement, and FPL acquires the City electric system, many of
the rate and subsidy issues set forth above will be resolved; and
WHEREAS, given the significance of these issues, particularly as they relate to
non-resident customers, the Board of County Commissioners believes that it should
adopt this resolution setting forth the Board's position on the issues,
NOW THEREFORE BE IT RESOLVED BY THE BOARD OF COUNTY
COMMISSIONERS OF INDIAN RIVER COUNTY, FLORIDA THAT:
- 2 -
RESOLUTION NO. 2011-026
WHEREAS, non-resident customers who bear this rate and subsidy burden have
no way to protect themselves or to influence City rates or subsidy practices. While
resident customers protect themselves by voting in City elections, non-resident
customers have no such ability. Non-resident customers are required by the 1981 PSC
order to be customers of the City electric system but, having no vote in City elections,
have no ability to protect themselves from rate and subsidy burdens; and
WHEREAS, in 2008, the Florida Legislature recognized the unfair plight of non-
resident customers by adopting Chapter 2008-227, Laws of Florida. This statute
required that a referendum be held of retail customers of any municipal electric system
falling within statutory parameters to determine whether a separate utility authority
should be created to operate the system. Upon an affirmative vote, the municipality
would be required to create a utility authority with a governing board made up
proportionately of resident and non-resident customers. Although Chapter 2008-227
was introduced by Indian River County State Representative Stan Mayfield and was
intended to apply to the City electric system, the City determined that the statute did not
apply and never held the referendum; and
WHEREAS, in 2009, two Indian River County citizens, Dr. Stephen J. Faherty,
Sr. and Glenn Heran filed a petition with the PSC asking that the PSC (i) act on its own
motion to redefine the territorial service areas of the City and FPL in Indian River
County to better protect non-resident customers, (ii) require that the City stop the
practice of using its electric system to subsidize its general fund, (iii) address and
mitigate the "taxation without representation" situation that exists for the 61 % of City
customers who are non-resident customers, and (iv) enforce Chapter 2008-227 by
requiring the City to hold the referendum and, upon affirmative vote, to create a utility
authority governed proportionately by resident and non-resident customers; and
WHEREAS, the County, as well as several other taxing bodies such as the Town
of Indian River Shores, the Indian River County School Board and the Indian River
County Hospital District, are customers of the City electric system and as such pay
higher City rates. These increased costs result in higher taxes being imposed on Indian
River County taxpayers; and
WHEREAS, on April 4, 2011, FPL submitted a letter of intent to the City
expressing its interest in purchasing the City electric system. If FPL and the City are
able to reach a definitive agreement, and FPL acquires the City electric system, many of
the rate and subsidy issues set forth above will be resolved; and
WHEREAS, given the significance of these issues, particularly as they relate to
non-resident customers, the Board of County Commissioners believes that it should
adopt this resolution setting forth the Board's position on the issues,
NOW THEREFORE BE IT RESOLVED BY THE BOARD OF COUNTY
COMMISSIONERS OF INDIAN RIVER COUNTY, FLORIDA THAT:
- 2 -
RESOLUTION NO. 2011-026
1. Recitals. The findings set forth in the "whereas" clauses above are true
and correct and are hereby adopted as the findings of the Board.
2. Position of the Board
following positions:
The Board hereby adopts and publishes the
a. Higher Rates. The higher rates charged by the City of Vero
Beach electric system are taking substantial funds out of the hands of
local residents — estimated at $16,000,000 per year, approximately
$9,760,000 (61%) of which is taken from non-resident customers. These
higher rates are having a negative impact on the local economy and are
impeding economic development and recovery efforts. Given the
apparent willingness of FPL to serve City customers, these impacts are
unnecessary;
b. Subsidy Practice. The subsidy practice of the City of Vero
Beach places an unfair burden on non-resident customers who pay
approximately $3,660,000 (61%) of the $6,000,000 transferred each year
from the City electric system to the City general fund. This practice
amounts to "taxation without representation" for non-resident customers;
CM Sale of System. On April 4, 20111 FPL submitted a letter of
intent expressing its interest in purchasing the City electric system for a
cash payment of up to $100 million. The Board urges the City Council
seriously to consider the transaction proposed in the letter of intent. To
the extent the transaction impacts non-resident customers of the City
electric system, the Board offers its support and assistance to FPL and the
City with respect to negotiations for a definitive agreement. If a definitive
agreement is reached, and if the agreement provides for FPL rates for City
customers which are consistent with FPL's rates to its other customers,
the Board urges the PSC to approve the agreement and include County
areas now served by the City within FPL's new service area;
d. Change in City Practices. If a sale of the City electric system
to FPL does not occur, the Board urges the City Council to (i) reduce
electric rates to the lowest level possible, consistent with prudent
practices, and (ii) stop the subsidy practice which places an unfair burden
on non-resident customers;
e. PSC Case. The Board supports the positions asserted by
Dr. Stephen J. Faherty, Sr. and Glenn Heran in the PSC case. If a sale of
the City electric system to FPL does not occur, the Board urges the PSC
to accept jurisdiction of the issues raised and to take appropriate action to
protect non-resident customers of the City electric system from the unfair
subsidy burden which they currently endure;
.3-
RESOLUTION NO. 2011-026
1. Recitals. The findings set forth in the "whereas" clauses above are true
and correct and are hereby adopted as the findings of the Board.
2. Position of the Board
following positions:
The Board hereby adopts and publishes the
a. Higher Rates. The higher rates charged by the City of Vero
Beach electric system are taking substantial funds out of the hands of
local residents — estimated at $16,000,000 per year, approximately
$9,760,000 (61%) of which is taken from non-resident customers. These
higher rates are having a negative impact on the local economy and are
impeding economic development and recovery efforts. Given the
apparent willingness of FPL to serve City customers, these impacts are
unnecessary;
b. Subsidy Practice. The subsidy practice of the City of Vero
Beach places an unfair burden on non-resident customers who pay
approximately $3,660,000 (61%) of the $6,000,000 transferred each year
from the City electric system to the City general fund. This practice
amounts to "taxation without representation" for non-resident customers;
CM Sale of System. On April 4, 20111 FPL submitted a letter of
intent expressing its interest in purchasing the City electric system for a
cash payment of up to $100 million. The Board urges the City Council
seriously to consider the transaction proposed in the letter of intent. To
the extent the transaction impacts non-resident customers of the City
electric system, the Board offers its support and assistance to FPL and the
City with respect to negotiations for a definitive agreement. If a definitive
agreement is reached, and if the agreement provides for FPL rates for City
customers which are consistent with FPL's rates to its other customers,
the Board urges the PSC to approve the agreement and include County
areas now served by the City within FPL's new service area;
d. Change in City Practices. If a sale of the City electric system
to FPL does not occur, the Board urges the City Council to (i) reduce
electric rates to the lowest level possible, consistent with prudent
practices, and (ii) stop the subsidy practice which places an unfair burden
on non-resident customers;
e. PSC Case. The Board supports the positions asserted by
Dr. Stephen J. Faherty, Sr. and Glenn Heran in the PSC case. If a sale of
the City electric system to FPL does not occur, the Board urges the PSC
to accept jurisdiction of the issues raised and to take appropriate action to
protect non-resident customers of the City electric system from the unfair
subsidy burden which they currently endure;
.3-
RESOLUTION NO. 2011-026
f. Amend State Law. If a sale of the City electric system to
FPL does not occur, the Board urges the Indian River County Legislative
Delegation, and the entire Florida Legislature, to amend existing state law
to afford protection to non-resident customers of municipal electric
systems by (i) prohibiting subsidy practices and (ii) requiring the creation
of utility authorities governed proportionately by resident and non-resident
customers; and
g. County Action. If a sale of the City electric system to FPL
does not occur, the Board serves notice that it will seriously consider (i)
intervening in the Faherty/Heran PSC case to protect non-resident
customers, and (ii) filing a civil lawsuit to enforce Chapter 2008-227 so
that a referendum can be held of City customers regarding the creation of
an electric utility authority governed proportionately by resident and non-
resident customers.
The foregoing resolution was moved for adoption by Commissioner O'Bryan, and
the motion was seconded by Commissioner Flescher and, upon being put to a vote, the
vote was, as follows:
Chairman Bob Solari Aye
Vice Chairman Gary C. Wheeler Aye
Commissioner Wesley S. Davis Aye
Commissioner Joseph E. Flescher Aye
Commissioner Peter D. O'Bryan Aye
The Chairman thereupon declared the resolution duly passed and adopted this
5th day of April, 2011.
INDIAN RIVER COUNTY
Board of County Commissioners
Attest: J. K. Barton, Clerk
By: � �' - By:` U o to,
Deputy Clerk Bob Solari, Chairman
Approved for form,, and -1 sufficiency: BCC approval date: April 5, 2011
Alan S. Pola6 wich, Sr., County Attorney
-4-
RESOLUTION NO. 2011-026
f. Amend State Law. If a sale of the City electric system to
FPL does not occur, the Board urges the Indian River County Legislative
Delegation, and the entire Florida Legislature, to amend existing state law
to afford protection to non-resident customers of municipal electric
systems by (i) prohibiting subsidy practices and (ii) requiring the creation
of utility authorities governed proportionately by resident and non-resident
customers; and
g. County Action. If a sale of the City electric system to FPL
does not occur, the Board serves notice that it will seriously consider (i)
intervening in the Faherty/Heran PSC case to protect non-resident
customers, and (ii) filing a civil lawsuit to enforce Chapter 2008-227 so
that a referendum can be held of City customers regarding the creation of
an electric utility authority governed proportionately by resident and non-
resident customers.
The foregoing resolution was moved for adoption by Commissioner O'Bryan, and
the motion was seconded by Commissioner Flescher and, upon being put to a vote, the
vote was, as follows:
Chairman Bob Solari Aye
Vice Chairman Gary C. Wheeler Aye
Commissioner Wesley S. Davis Aye
Commissioner Joseph E. Flescher Aye
Commissioner Peter D. O'Bryan Aye
The Chairman thereupon declared the resolution duly passed and adopted this
5th day of April, 2011.
INDIAN RIVER COUNTY
Board of County Commissioners
Attest: J. K. Barton, Clerk
By: � �' - By:` U o to,
Deputy Clerk Bob Solari, Chairman
Approved for form,, and -1 sufficiency: BCC approval date: April 5, 2011
Alan S. Pola6 wich, Sr., County Attorney
-4-
Bob Solari
Chairman
District 5
Gary Wheeler
Vice Chairman
District 3
Florida Public Service Commission
Florida Legislative Delegation:
Honorable Mike Haridopolos
Honorable Joe Negron
Honorable Debbie Mayfield
Honorable Tom Goodson
April 7, 2011
Vero Beach City Council
c/o Monte K. Falls, Interim City Manager
Indian River Shores Town Council
c/o Richard Jefferson, Town Manager
Sebastian City Council
c/o Al Minner, City Manager
Fellsmere City Council
c/o Jason R. Nunemaker, City Manager
Orchid Town Council
c/o Deb C. Branwell, Town Manager
Dr. Stephen J. Faherty, Sr.
Mr. Glenn Fraser Heran
Wesley S. Davis
District I
Joseph E. Flescher
District 2
Peter D. O'Bryan
District 4
Re: In Re: Complaint Against the City of Vero Beach, Florida, by Stephen
J. Faherty and Glenn Fraser Heran; Docket No. 090524 -EM
Ladies and Gentlemen:
Attached please find a copy of Resolution No. 2011-026 adopted by the Indian River
County Board of County Commissioners on April 5, 2011, entitled "A RESOLUTION OF
THE BOARD OF COUNTY COMMISSIONERS OF INDIAN RIVER COUNTY, FLORIDA,
1801 2e Street, Building A
Vero Beach, FL 32960=3365
Telephone: 772=226=1490 FAX: 772=770=5334
Bob Solari
Chairman
District 5
Gary Wheeler
Vice Chairman
District 3
Florida Public Service Commission
Florida Legislative Delegation:
Honorable Mike Haridopolos
Honorable Joe Negron
Honorable Debbie Mayfield
Honorable Tom Goodson
April 7, 2011
Vero Beach City Council
c/o Monte K. Falls, Interim City Manager
Indian River Shores Town Council
c/o Richard Jefferson, Town Manager
Sebastian City Council
c/o Al Minner, City Manager
Fellsmere City Council
c/o Jason R. Nunemaker, City Manager
Orchid Town Council
c/o Deb C. Branwell, Town Manager
Dr. Stephen J. Faherty, Sr.
Mr. Glenn Fraser Heran
Wesley S. Davis
District I
Joseph E. Flescher
District 2
Peter D. O'Bryan
District 4
Re: In Re: Complaint Against the City of Vero Beach, Florida, by Stephen
J. Faherty and Glenn Fraser Heran; Docket No. 090524 -EM
Ladies and Gentlemen:
Attached please find a copy of Resolution No. 2011-026 adopted by the Indian River
County Board of County Commissioners on April 5, 2011, entitled "A RESOLUTION OF
THE BOARD OF COUNTY COMMISSIONERS OF INDIAN RIVER COUNTY, FLORIDA,
1801 2e Street, Building A
Vero Beach, FL 32960=3365
Telephone: 772=226=1490 FAX: 772=770=5334
Re: Docket No. 090524 -EM
April 7, 2011
Page Two
SETTING FORTH THE BOARD'S POSITION
OF VERO BEACH ELECTRIC SYSTEM."
asp/nhm
attachment
ON CERTAIN ISSUES RELATING TO CITY
Yours truly,
Bob Solari
Chairman
Re: Docket No. 090524 -EM
April 7, 2011
Page Two
SETTING FORTH THE BOARD'S POSITION
OF VERO BEACH ELECTRIC SYSTEM."
asp/nhm
attachment
ON CERTAIN ISSUES RELATING TO CITY
Yours truly,
Bob Solari
Chairman
Address List:
Florida Public Service Commission
2540 Shumard Oak Boulevard
Tallahassee, FL 32399-0850
The Honorable Mike Haridopolos
THE FLORIDA SENATE
409 The Capitol
404 South Monroe Street
Tallahassee, FL 32399-1100
The Honorable Mike Haridopolos
THE FLORIDA SENATE
3270 Suntree Boulevard, Suite 122
Melbourne, FL 32940
The Honorable Joe Negron
THE FLORIDA SENATE
306 Senate Office Building
404 South Monroe Street
Tallahassee, FL 32399-1100
The Honorable Joe Negron
THE FLORIDA SENATE
3500 SW Corporate Parkway, Suite 204
Palm City, FL 34990
The Honorable Debbie Mayfield
FLORIDA HOUSE OF REPRESENTATIVES
317 House Office Building
402 South Monroe Street
Tallahassee, FL 32399-1300
The Honorable Debbie Mayfield
FLORIDA HOUSE OF REPRESENTATIVES
1053 20th Place
Vero Beach, FL 32960-5359
The Honorable Tom Goodson
FLORIDA HOUSE OF REPRESENTATIVES
1101 The Capitol
402 South Monroe Street
Tallahassee, FL 32399-1300
The Honorable Tom Goodson
FLORIDA HOUSE OF REPRESENTATIVES
400 South Street, Suite 1C
Titusville, FL 32780-7610
Address List:
Florida Public Service Commission
2540 Shumard Oak Boulevard
Tallahassee, FL 32399-0850
The Honorable Mike Haridopolos
THE FLORIDA SENATE
409 The Capitol
404 South Monroe Street
Tallahassee, FL 32399-1100
The Honorable Mike Haridopolos
THE FLORIDA SENATE
3270 Suntree Boulevard, Suite 122
Melbourne, FL 32940
The Honorable Joe Negron
THE FLORIDA SENATE
306 Senate Office Building
404 South Monroe Street
Tallahassee, FL 32399-1100
The Honorable Joe Negron
THE FLORIDA SENATE
3500 SW Corporate Parkway, Suite 204
Palm City, FL 34990
The Honorable Debbie Mayfield
FLORIDA HOUSE OF REPRESENTATIVES
317 House Office Building
402 South Monroe Street
Tallahassee, FL 32399-1300
The Honorable Debbie Mayfield
FLORIDA HOUSE OF REPRESENTATIVES
1053 20th Place
Vero Beach, FL 32960-5359
The Honorable Tom Goodson
FLORIDA HOUSE OF REPRESENTATIVES
1101 The Capitol
402 South Monroe Street
Tallahassee, FL 32399-1300
The Honorable Tom Goodson
FLORIDA HOUSE OF REPRESENTATIVES
400 South Street, Suite 1C
Titusville, FL 32780-7610
Vero Beach City Council
c/o Monte K. Falls, Interim City Manager
P. O. Box 1389
Vero Beach, FL 32960
Indian River Shores Town Council
c/o Richard Jefferson, Town Manager
6001 N. Highway A=1 -A
Indian River Shores, FL 32963-1014
Sebastian City Council
c/o Al Minner, City Manager
1225 Main Street
Sebastian, FL 32958
Fellsmere City Council
c/o Jason R. Nunemaker, City Manager
22 S. Orange Street
Fellsmere, FL 32948=6714
Orchid Town Council
c/o Deb C. Branwell, Town Manager
7707=3 U.S. Highway 1
Vero Beach, FL 32967
Dr. Stephen J. Faherty, Sr.
2120 Captains Walk
Vero Beach, FL 32963=2891
Mr. Glenn Fraser Heran
698557 th Street
Vero Beach, FL 32967
FA
Vero Beach City Council
c/o Monte K. Falls, Interim City Manager
P. O. Box 1389
Vero Beach, FL 32960
Indian River Shores Town Council
c/o Richard Jefferson, Town Manager
6001 N. Highway A=1 -A
Indian River Shores, FL 32963-1014
Sebastian City Council
c/o Al Minner, City Manager
1225 Main Street
Sebastian, FL 32958
Fellsmere City Council
c/o Jason R. Nunemaker, City Manager
22 S. Orange Street
Fellsmere, FL 32948=6714
Orchid Town Council
c/o Deb C. Branwell, Town Manager
7707=3 U.S. Highway 1
Vero Beach, FL 32967
Dr. Stephen J. Faherty, Sr.
2120 Captains Walk
Vero Beach, FL 32963=2891
Mr. Glenn Fraser Heran
698557 th Street
Vero Beach, FL 32967
FA