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May 13, 2015

13
May
2015

Fact Checking Vero Beach’s Pilar Turner

Summary

City of Vero Beach Councilmember Pilar Turner made several incorrect claims about the Florida Municipal Power Agency (FMPA) in a guest column published May 2, 2015, in the Vero Beach Press-Journal.

  • Regulation: Turner claims FMPA is an “unregulated monopoly” when, in fact, FMPA is accountable to the 31 members it serves, as well as many other governmental agencies and regulatory bodies that oversee aspects of its operations. FMPA introduced substantial market choice for its member cities’ wholesale power needs.
  • Exit Provisions: Turner says the exit provisions from FMPA’s contracts are “arbitrary” and not clearly defined. She asks to know the cost for Vero Beach to exit its contract obligations. FMPA has provided on several occasions detailed descriptions of the exit requirements and costs. In addition, FMPA met with Turner in August 2014 to review the detailed cost estimate. A recent Florida Auditor General’s report says FMPA’s exit costs calculations for Vero Beach followed the contract provisions and “appear to be reasonable.” In addition, the Auditor General’s review of exit provisions in contracts for other joint action agencies, like FMPA, showed that many do not contain any exit provisions at all, and if they do, the provisions are highly restrictive.
  • Transparency: Turner demands transparency, but FMPA is already subject to public records and public meetings laws and is directly governed by the communities it serves.

Detailed Analysis

Vero Beach City Council Member Pilar Turner’s recent Vero Beach Press-Journal guest column was based on several inaccurate claims related to the regulation of FMPA, exit provisions for FMPA members and transparency of the Agency’s operations.

Regulation: Turner began her column with the incorrect statement that, “The FMPA is an unregulated monopoly with no oversight. It uses public funds and tax-free loan benefits without any accountability.” FMPA is directly accountable to the member communities that own and govern it through public meetings. Additionally, FMPA currently operates under several layers of federal and state regulations. For instance, the North American Electric Reliability Corporation and Florida Reliability Coordinating Council enforce mandatory reliability standards for all electric utilities, including FMPA and its members. The U.S. Environmental Protection Agency and Florida Department of Environmental Protection regulate air emissions and water use of FMPA’s power plants. The Florida Public Service Commission (PSC) must approve certain new power plants and transmission lines through its need determination process, and for FMPA’s municipal utility members, the PSC regulates each utility’s rate structure. Retail rates for each individual member municipal electric utility—the total price to consumers—is controlled by each city and is decided by local elected officials, following public input at local public meetings.

Historically, FMPA’s member cities had no market choices among power suppliers. That is why FMPA was formed. In the nearly four decades since FMPA’s formation, it has provided hundreds of millions of dollars in benefits to its member cities and brought real and lasting competition to the wholesale power market in Florida. Today, FMPA is a true competitor with Florida’s largest utilities to provide low-cost and reliable wholesale power to member cities.

Exit Provisions: Turner goes on to say, “We need the FMPA to clearly define how a member city would go about exiting the organization, not some convoluted series of arbitrary requests, but a clear ‘do this and you’re out’ set of substantiated metrics. What would it cost, bottom line, for Vero Beach to exit the FMPA, and why would it cost that amount?” In fact, FMPA has answered all these questions for Vero Beach on a number of occasions. As early as May 2007, FMPA’s bond counsel provided the city of Vero Beach with a roadmap of how to exit its FMPA contract obligations. FMPA re-sent this information and provided further direction in 2012. Exit cost calculations were sent to the city in June 2014. Responding to a request from Turner, FMPA staff met with her on Aug. 13, 2014, to review the detailed cost estimate. Finally, the Florida Auditor General reviewed these calculations during its audit of FMPA and stated in the final audit report, “The FMPA’s assumptions used in estimating the withdrawing member’s share of costs …appear to be reasonable.” In addition, the Auditor General concluded, “The FMPA’s calculations of the withdrawal payments in these instances followed the respective [All-Requirements Project] power supply power contracts’ withdrawal provisions.” The Auditor General’s review of termination and exit provisions in contracts for other joint action agencies (JAA), like FMPA, in the United States showed that many do not contain any exit provisions, and if they do, the provisions are highly restrictive. The Auditor General noted, “… one other JAA allowed a member to exit while project debt was still outstanding, and the contract required the withdrawing member to pay its share of debt service, which is consistent with the FMPA contract provisions.

Transparency: Finally, Turner asks individuals to “fight for transparency and accountability.” Today, FMPA is transparent and accountable. Its records are subject to Florida’s public records laws, and its governing board meetings are open to the public. Its financial statements are audited annually and available to the public. FMPA was audited in 2014 by the Florida Auditor General over the course of six months, during which time the Auditor General’s staff was given unrestricted access to FMPA’s records and personnel. Each of FMPA’s directors is directly accountable to customers in their cities. Finally, FMPA is governed by and accountable to the communities it serves, including Vero Beach, which is represented on FMPA’s Board of Directors by Vero Beach Councilmember Randy Old.

FMPA is a nonprofit entity with no goal other than to serve its members, including the city of Vero Beach.

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