On June 5, 2018, the Florida Public Service Commission (FPSC) approved the $185 million purchase of the Vero Beach municipal utility by Florida Power & Light (FPL). The approval came after debate on the portion of acquisition costs to recover from customers and the precedent such a deal may set for future acquisitions. FPL had shown an interest in this acquisition as far back as the 1970s. The FPSC’s approval came amidst increasing interest in utility asset sales and consolidation.
As mentioned by the Vero Beach city manager in 2017, “the primary driver for [the municipal utility] is rates.” With power purchase costs rising based on wholesale market conditions and the utility facing large potential capital costs associated with technology improvements, the utility determined that a sale to FPL was the most viable option to maintain affordable customer rates. Other smaller municipal utilities may be faced with similar decisions, as they shutter small, inefficient generation units or work to meet renewable standards. Even larger public power utilities, such as JEA, have explored the benefits of a potential sale to private entities (although JEA has tabled the exploration of privatization until a permanent CEO is appointed). It will be interesting to see how this plays out across the public power sector as the energy landscape continues to evolve.
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S&P Global Market Intelligence: “Fla. regulators approve FPL purchase of Vero Beach utility”*
Orlando Sentinel: “OUC braces for loss of its biggest customer: Vero Beach”
Florida Power & Light: “FPL Okeechobee Clean Energy Center”
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Additional Contributing Author: Benjamin Lozier
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