Florida regulators OK FPL purchase of Vero Beach electric system

Dive Brief:

The Florida Public Service Commission has allowed the state's largest utility to purchase the city-run electric system of Vero Beach, Fla., in a deal expected to create long-term savings for all customers involved.
NextEra Energy subsidiary Florida Power & Light will pay $185 million for the municipal utility and expects to begin serving its 35,000 customers this fall. Existing FPL customers could see savings of up to $100 million as a result of the deal.
PSC staff had recommended cutting the purchase price roughly in half, but that would have meant a years-long surcharge on Vero Beach customers that officials said was unnecessary. FPL's purchase is not expected to have any negative impacts on its existing customers.

Dive Insight:

The city of Vero Beach approached FPL in 2009 with the proposal, hoping to reduce electricity costs for residents. Almost a decade later, those savings may soon materialize.

Eric Silagy, president and CEO of FPL, said the effort included work with city, state and federal regulators, the Orlando Utilities Commission, the Florida Municipal Power Agency and more than a dozen cities.

The Vero Beach City Council last year approved a $185 million agreement that will allow the city to exit its contractual obligations, pay off its existing debt and receive a cash payment. FPL officials said existing customers will benefit as well.

"The purchase is expected to produce long-term savings of more than $100 million for FPL's existing customers," the utility said in a statement. FPL told the commission that the incremental revenues from the new customers will be greater than the incremental cost of serving them. In addition, the increase in FPL's total number of customers will lower the shared amount of fixed costs spread across FPL's existing customers.

In addition, Vero Beach customers could see their bills decrease more than 20% after the deal is completed, according to the Miami Herald.

"A decade of hard work came to fruition, and we're lucky to now have FPL as our power provider," Bob Solari, vice chairman of the Indian River County Commission, said in a statement.

FPL said the deal has a target closing date of Oct. 1. PSC staff had recommended a purchase price about $95 million lower, to better reflect the system's actual value, but commissioners approved the deal at the behest of both parties.