Lake Worth to have discussion on sale of our Electric Utility

Tomorrow night, the Lake Worth commission meets at 6pm. Under New business, there are four items. I am addressing Item A.

Item A. Commissioner Hardy brought forward this item. He thinks it a good idea to get our Electric Utility "off our plate." He wants the City Commission to deliberate and decide the following two questions:

(1) Should the City Commission engage the Florida Municipal Power Agency (FMPA)
to ascertain whether it and its members will release the City from its obligations to
them for an agreed upon price?
(2) Should the City Commission engage Florida Power and Light to ascertain whether
it is willing to transact with the City and purchase its electric utility assets?

Commissioner Hardy, acting alone without vote or any authorization of the commission,  approached FMPA and FPL.

For a little bit of trivia--In year 2002, we entered into a contract with FMPA that locked us into higher power costs.

The beginning of lowering rates started in December 2008 when we voted to exit FMPA All Requirements. By the end of 2013, we ended our contract with them. In January 2014 we got a new energy provider with Orlando Utilities giving us a rate that was more favorable to Lake Worth and renewed with them in 2018 on a five year contract.

Then what did the commission do? FMPA had been contracted again, this time regarding our solar and signed a Solar Power Sales Contract with FMPA; deliveries began June 2020. FMPA screwed us on the gas line years ago so the City must be masochistic to be back in business with them.

The FMPA solar procurement is a 20-year power purchase agreement. Normally they give option renewals to extend the agreement and I have a Public Information Request for the contract. And good luck with the wish to sell our electric utility to Florida Power & Life (NextEra Energy). It will never happen. They don't want it. We all could have told you that Commissioner Hardy.

Even though we have had some problems with our solar energy program...some people believe it easier to sell the whole damn Electric Utility--easier to get it off our plate. We go through this every decade or less.

Just like there is no systemic racism in Lake Worth Commissioner Hardy, no one wants to sell our utility that has been around since 1914. Any sale of our Utility would take a vote of our electorate.

Immediately following is New Business B, Commissioner Maxwell's Resolution 30-2020 in support of the Lake Worth Electric Utility.

Electric Generation Power Summary

In year 2002, we entered into a contract with FMPA that locked us into higher power costs. Commissioner Maxwell voted FOR that contract.

The beginning of lowering rates started in December 2008 when we voted to exit FMPA All Requirements. By the end of 2013, we ended our contract with them. In January 2014 we got a new energy provider with Orlando Utilities giving us a rate that was more favorable to Lake Worth. Tonight, discussion will take place on purchase power contracts.

According to the agenda tonight, FMPA has been contracted again, this time regarding our solar--Solar Power Sales Contract with FMPA; deliveries begin June 2020

C.A.F.R (Audit for 2017) now out.

The audit is now complete for the year ending September 30, 2017.

Lake Worth's Financial Highlights

• The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows by $ 167,898,237. Of this amount, $ 1,254,600 represents unrestricted net position, which may be used to meet the City’s ongoing obligations to citizens and creditors.  The City’s total net position at September 30, 2017 increased by $ 1,754,387 as a result of this year’s operations.

• At the end of the current fiscal year, the governmental funds reported combined fund balances of $ 29,462,340, an increase of $ 20,939,682 in comparison to the prior year. The significant decrease is due to unspent bond proceeds from the General Obligation Bonds issued during the fiscal year. Of the total fund balances reported in governmental funds, $ 4,406,420 was unassigned in the General Fund. This was a decrease of $ 1,189,717 from 2016.

• At September 30, 2017, the governmental activities had total loans outstanding balance of $ 23,240,597, an increase of $ 22,391,151 in comparison to the prior year. The significant increase is mainly due to the General Obligation Bonds Series 2017 issued during the fiscal year in the amount of $ 22,272,286 to fund roadway improvements within the City.

• At September 30, 2017, the Utilities Department had total loans outstanding of $ 67,469,081 including a revenue bond in the amount of $ 39,565,000 and a state revolving loan in the amount of $ 6,060,823 which was obtained to help fund the construction of the Reverse Osmosis Water Treatment Plant and a note payable for $ 21,843,258. The purpose of the revenue bond was to refund previously issued outstanding revenue bonds, refund prior debt with the Florida Municipal Power Agency (FMPA) to fund improvements to the electrical distribution system and to provide funding for the City’s potable water system in the form of a Reverse Osmosis Water Treatment Plant. The note payable of $ 21,843,258 was obtained to fund the agreement that the City entered into with Siemens Industry, Inc. for the installation of certain energy savings infrastructure and equipment throughout the City.

Another Highlight: The General Fund budget for 2018 of approximately $ 35.5 million is approximately $ 1.6 million or 4.7% more than the fiscal year 2017 amended budget. The increase is partly due to Palm Beach Sheriff Office contract and salary increases for employees

2017 Lake Worth Audit

Correcting the Myth

Comment Up

To correct the bully blogger blaming certain past commissioners for a gas line that we pay for in the amount of $64,000 a month,  I have posted this in order to get the facts out there again.

The gas line was installed for the explicit purpose of the generator that was originally Enron that went bankrupt in December 2001.

Please read my blog entitled Reply to the other guy on gas line--The Noodle Mentality. This explains the matter.

Our attorney did not require a performance bond should the project fail. We all know what happened to Enron. We were a part of FMPA and when we gave notice to exit FMPA, they did not honor their agreement to pay for this gas line.

It had nothing to do with the commission. They have no control over a corporation going belly-up. We can blame it on bad legal advice and another lousy Lake Worth contract.

Reply to the other Guy on Gas Line in Lake Worth

Comment Up

The guy with the noodle just wrote a blog on the natural gas line that leaves out some vital facts. He tries so hard but opens mouth and inserts foot...cute graphic though. An example of his foot and mouth disease is making stuff up because of his blind and fierce loyalty to the present commission. He once again attempts to re-invent the wheel (revisionism) and twist the narrative--the facts...and trying to find blame and putting it anywhere but where it should be.

The truth of the matter (from an expert in the field with expertise on Lake Worth Utilities) is as follows--his remarks are in quotations:

"The gas line he is referring to was installed for the explicit purpose of the generator that was originally Enron that went bankrupt in December 2001. (Those were the days of Ramiccio followed by Romano as well as present day commissioner, Scott Maxwell, the one who made the motion to eventually go with FMPA). The main problem was that the attorney for LW never requested a performance bond to protect the interest of LW should the project fail as it ultimately did." The site lease was signed by Robert Baldwin, Interim City manager and four other top executives of the City.

"When LW entered into the All Requirements agreement with FMPA, they (FMPA) paid the cost of the gas line as part of capacity payments for the standby generation at the LW power plant." To further explain, the site lease with FMPA gave them the right to build new and more efficient quick start units at our site to improve generation reliability. They also were to pay for our natural gas supplier, Florida Public Utilities, for the gas line supplying fuel to our plants. They did this up and until we gave them notice to exit. These unpaid costs went into a legal dispute.

Five years ago, FMPA's legal counsel appeared before the city commission and began tightening the noose around our necks when they heard we were leaving FMPA. He talked about their involvement with building two nuclear facilities in Levy County. The city did not want to pay for two nuclear power reactors that were going to cost $17 billion dollars. Once we gave notice to exit FMPA, it played hardball and stuck us with a $60,000 a month bill for a natural gas line. The gas line runs from the Turnpike to our power plant.

So, FMPA screwed us on the gas line charge the entire five years we were exiting All Requirements but Lake Worth, petrified of lawsuits and forever acting like a deer in the headlights at even the mere mention of  a lawsuit, cried foul. If FMPA replied with a resounding "get lost" and the City folded, we the people were not told about any decision or outcome.

Have they been able to offset the lost revenues from FMPA?  The utility department is not talking about these lost revenues. One can't say LW Utilities has a very good track record with providing facts and trust, so to provide us with public information isn't exactly transparent. As a guest blogger wrote last year, "If the new costs under the contract with Orlando Utilities Commission (OUC) are integrated into the cost the ratepayers are now getting as of October 1, 2013, what is the cost difference between what LW is/was and the fully loaded cost to purchase a megawatt of power from FMPA and the new cost to purchase that same megawatt of power from OUC? That question has never been fully explored or explained" and this commission never asked.

In January 2014, the LW commission began its relationship with OUC after interviewing many power suppliers. "They entered into the new agreement for purchased power from OUC in addition to losing about 4 million dollars annually for capacity credits."

Florida Public Utilities is upgrading new pipes and gas lines in three separate phases in the alleyways throughout Lake Worth,  Phase I consisted of 26,000 feet of line. All of it should be completed in the Fall of this year.

Blast from the Past - The Electric Utility Task force

Back on April 18, 2006, the Electric Utility Review Task Force recommended the following:

Retain a qualified consultant with qualifications equal to Ms. Hersey's to evaluate 4 options:

•  5-year withdrawal from the All requirements Project to a Contract Rate of Delivery agreement, followed by a 3-year complete withdrawal from the CRD contract and the outright sale of our generation and distribution assets.

• 5-year withdrawal from the ARP to a CRD, followed by the sale or lease or our generation- assets while maintaining our distribution system, the city would purchase 100% of its power either from the new owner of our power plant or through other purchase power contracts.

• 5-year withdrawal from the ARP to a CRD, the City maintains its generation and upgrades it, while continuing to buy some power through purchased power contracts--basically the City lives on its own, stays a member of FMPA, not a member of ARP, and the city would continue to operate the way it used to operate before it joined ARP.

• Any other option Ms. Hersey wanted to submit

On April 4, April 18, May 2 and June 6, 2006, the City Commission accepted a total of 14 recommendations from the Electric Utility Review Task force.

The Train may not be off the Track

Comment Up

Is it politics or is it sincere? I would suspect it is a little of both.

Scott Maxwell says he wants to create a "culture of challenge"-- wants the city to wean Lake Worth's dependence from Lake Worth Utilities that has helped, in a very large way, to operate our city.  He said that we need to "get the train back on track." The commission now has a five year goal to lower electric rates. They say high electric rates have been a deterrent to people wanting to move or do business here.

In year 2002, we entered into a contract with FMPA that locked us into higher costs. Commissioner Maxwell voted FOR that contract. The beginning of lowering rates started in December 2008 when we voted to exit FMPA All Requirements. By the end of this year, we will have ended our contract with them. In January 2014 we will have a new energy provider with Orlando Utilities giving us a rate that is more favorable to Lake Worth.

The problem is we are an older city with older housing stock on small lots. Many of these properties are less than 1000 s.f. and naturally are worth less. 60% of our city are rentals. Property values plummeted during the financial meltdown and our smaller properties dropped into a category where they no longer contributed to ad-valorem as their values were too low. Property values have yet to recover. Ad-valorem taxes cannot sustain the city's budget. We own our utility and the revenues we generate are there to help our city when necessary. That is what makes it so valuable to us.

With an operating budget of nearly $29 million, public safety takes $20 million. Have you ever heard of a budget where public safety takes 2/3rds of your operating revenue?  What about the pot holes? Out of the $29 million budget, $9.6 million comes from our utility. Without it we would go belly-up. We generate about $6 million in ad-valorem taxes; $4.3 million in utility services taxes; $4.3 million in state shared revenues. The balance of our revenues is from business tax receipts, permits and other incidental revenues.

The CRA just spent $23 million to bring in more low cost housing which includes low cost RENTALS on 6th Avenue South on the railroad tracks.  This is no way to build a tax base. This will only increase the cost of services and will probably get us more Section 8 housing down the road. Everyone can bring up a problem. That is easy.  Stop building low-cost housing--stop packing the people in. We are dense enough as it is and density costs money.

Commissioner McVoy was right when he said that we could be doing everyone a disservice by putting out an expectation without knowing how we're going to accomplish the goal. City Manager Bornstein will come back with a plan during this year's budget cycle. He told the commission that we will be in a tough spot, that we need to be very rational...we are stretched thin. "We can't be consumed by the tyranny of the crazed," he said.

Being a "cheerleader" for the city is fine as well as having a "vision," but blaming it on a former commission or lack of code officers is not the problem here. The Utility has always been the black hole but it has always allowed our city to stay on track by meeting budget. Let's see what the city manager's Plan looks like. It may not be "doable" as Commissioner Szerdi suggests. The train may not be off the track as Maxwell said. We won't know anything until we have a plan and then we will find out if this is nothing more than political posturing.

Lake Worth Commissioner Suzanne Mulvehill, a remarkable woman

Comment Up

Last night was Commissioner Suzanne Mulvehill's last regular meeting as an elected official as she made the decision not to seek a third term in order to pursue her career. She invited some of her close friends to a coffee and cake party in the conference room prior to the city commission meeting. A slide show was presented depicting major achievements for which she was involved over the last four years.

If it weren't for Suzanne, our casino would have been built down by A1A or demolished. She sprearheaded the new casino, allowing it to be built in the same location it has been since 1922 and a structure that will be our pride. Mulligan's restaurant will be serving today and opening to the public tomorrow with the rest of the tenants opening later this year. Our reverse Osmosis plant was built, saving the city $15 million dollars. We exited FMPA and soon we will have a new energy provider. These are some of the multi-million dollar decisions but there were many others that helped and will make our city better.

On October 20, Suzanne Mulvehill will be honored for her work in domestic violence and will be the recipient of the East Florida Chapter of the United States National Committee for UN Women's First End Domestic Violence Community Appreciation Award.

Suzanne Mulvehill started violence awareness when she first took office nearly four years ago. She established the City of Lake Worth’s First Comprehensive Zero Tolerance Domestic Violence Policy in 2011, making it the first city in Florida to set such a policy.  She will courageously and publicly share her story of being in and getting out of a domestically violent relationship, to encourage and help others in similar situations.

Despite overcoming many obstacles, affiliated with domestic abuse, Ms. Mulvehill, became a community leader, authored two books, became an international business consultant and guest lecturer at universities in both the United States and Europe. She still found time to single-handedly educate two children, earn her masters degree, and run for public office. In addition, she won the Point of Light Award, was the recipient of the U.S. Small Business Administration's (SBA) Champion Award and the SBA's Women Advocate of the Year Award.

If you want to attend the Walk beginning at 8:15 on Saturday followed by the Award ceremony, please go to www.unwomen-usnc.org/eastflevents or call Luz at 561-685-1308.

Flowers from Tricia and Annabeth

Lake Worth Utilities and a new energy provider

Back on June 18, 2002, the now Vice Mayor and the then Commissioner, Scott Maxwell, made a motion to adopt the Resolution that took effect immediately for FMPA to be our power provider. The entire Commission voted to accept FMPA:  Mayor Rodney Romano, Vice Mayor Colburn McKinnon and commissioners Gary Bo Allen and Joe Egly.  As this turned out, it was one big mistake and some of the people who backed this commission are the biggest complainers about the high cost of our electricity today.

The site lease with FMPA gave them the right to build new and more efficient quick start units at our site to improve generation reliability. They also were to pay for our natural gas supplier, Florida Public Utilities, for the gas line supplying fuel to our plants. They did this up and until we gave them notice to exit. These unpaid costs are now in a legal dispute. The site lease was signed by Robert Baldwin, Interim City manager and four other top executives of the City.

In December 2008, the City of Lake Worth gave FMPA notice to exit FMPA's All Requirements. By the end of 2013, we will be out of their clutches and have a new energy provider.

Last night's special commission meeting lasted about one half hour with the commission agreeing to go forward with the evaluation of seven of the bids that were submitted from various energy providers. The US Solar bid will be evaluated separately. Hopefully, by the end of 2013, we will start to have a substantial savings realized by contracting with another company.

Slum and Blight and the High Cost of Electricity

Comment Up

On Tuesday, there is a special city commission meeting 6pm City Hall to discuss all the RFP's that have been received in order for the Commission to choose a new power provider. This will be an awesome responsibility. Click on legal opinion relative to this issue.

As I petition, I have had a few residents complain about the high cost of utilities, primarily electric. One guy said his bill was $500 a month. They are looking for the city to do something and relieve them from these costs. I briefly explain the FMPA situation and that we are in the process of contracting with a new provider. This calms them down.

Another observation during my walks is that the City has become more blighted than ever to the point that it was shocking and rather upsetting to me personally. It is affecting all neighborhoods. Something has to be done about this problem or we will never be able to move forward no matter how many new houses or townhouse are built. Realizing that we are a poor city, living in filthy conditions has nothing to do with the lack of money. Elbow grease is free. Soap is cheap. Paint is not that expensive. Yards look like crap because we cannot water but once a week. Weeds have taken over. Hedges and bushes are over-grown from neglect. Building more affordable housing is not the answer.

And building our commercial district higher is not the answer. Infrastructure as well as services will be costly and every taxpayer in the city will be paying.

Last evening, while strolling the Avenue, the slum and blight has affected our wonderful downtown to a point that I had to wonder why anyone wanted to come here. Cigarette butts, trash and debris all over the place...on the sidewalks and on the streets. The walkways are filthy. Why don't shop and restaurant owners routinely go out a clean their areas several times a day? Are they all of the mindset too that we like shopping in filth as well as living that way? How are we going to keep the tourist dollar in our downtown?  This situation is of serious proportions and growing worse daily.

Can we ever get the CRA do fulfill its mission and curb slum and blight, something it has never addressed or changed since it was formed?

Special Meeting tonight on Power Provider

Comment Up

UPDATE from tonight's meeting
Since we gave FMPA notice to exit, fifteen competitive bids were received from eight qualified bidders  to the initial RFP and have successfully completed the screening process and submitted signed Participation Agreements by which they must comply. The companies as of April 2012 were:

1. Constellation Energy
2. Florida Power and Light
3. Orlando Utilities Commission
4. Gainesville Regional Utility
 Seminole
 TECO
5. Wartsila and Burns and McDonnell (Being treated as one provider as Wartsila does generation and Burns does the Engineering)
6. UR Solar
 GE Energy
7. Covanta
8.  Tampa Electric

In looking at the evaluation matrix developed by the City, there are only lines for 9 companies. The City's Selection Committee will be evaluating all the proposals and ranking them as to preference.  They will not know the names of the companies, only their answers.

I wonder if we will need "Peggy's Papers" tonight for the spreadsheet?

Note: As it turned out, the meeting was only for discussion. No ratings of providers were done.

FPL one of the bidders to be our Power Supplier in Lake Worth

Comment Up

Florida Power & Light is one of the companies that has submitted a proposal to be our new energy supplier after we have finally exited All Requirements with FMPA. Our Commission will consider all the proposals this week. FPL has jumped on the hysteria bandwagon and said, "It would be open to a conversation about a potential acquisition of the city’s electric system.”

The sale of our electric Utility was brought up by mayoral candidate Tom Ramiccio last summer, one of the main reasons why he lost his election. A group of residents are still complaining about high power bills and even formulated a citizens Utility Board with the encouragement of the "Visionaries."

Read more...

Electric Power Supply & Legal Services Lake Worth

Comment Up

Tonight there is an agreement before the Commission for legal services in the tune of $250,000 (1/4 of a million big buckeroos!). No matter what we do, it seems, we need outside counsel to get us through the morass. And no matter how you slice this cake, it is costly to end up doing the right thing and exiting FMPA's All Requirements.

This is true of every difficult and perplexing contract we have ever entered...they all have cost us millions in spite of legal advice. Of course, it doesn't help grabbing a beach redevelopment contract out of the hands of former mayor Mark Drautz and signing it, unread. And that side of politics wants to blame the Greater Bay law suit on everyone but the right people! This suit continues to haunt us to this day and has been expensive to defend...but I digress.

Sue Hersey
Energy Advantage Consulting

I thought Sue Hersey was going to help negotiate with a new energy provider. We paid her $413,000. Now this firm, with a bunch of lawyers on the masthead, wants $250,000. It's a good thing that the Vice Mayor "negotiated" the $850,000 settlement with FMPA on the $2.2 million that they owed to us.

What the firm of Gardner, Bist, Wiener, Wadsworth, Bowden, Bush, Dee, LaVia and Wright will advise/do for us:

A wholesale power supply agreement
A generation entitlements transfer agreement
Lake Worth Power Plant capacity and energy sales contract

and what else they might advise/do for us:

renewable energy purchase agreements...feed-in tariffs
reviewing agreements to electric transmission or ancillary services
agreements for provision of energy conservation
possible equipment supply agreements
possible engineering procurement and construction agreements
possible operation and maintenance service agreements

The firm says that it is willing to work with and report to Michael Bornstein (well, I hope so) and anyone our city attorney designates. Let's make sure no politician is included on this list or volunteer citizens from the Utility Advisory Board.

FMPA just agreed to their Settlement with Lake Worth

Comment Up
One new twist:

The Board just approve the settlement. Additionally, our request to receive settlement payments in lump sum instead of over 18 months was also approved. They agreed to two payments with the first $425k made as soon as all the legal documents are finalized (possibly July) and then the other $425k at end of the fiscal year.

From: Michael Bornstein

The "Settlement"

Comment Up

Well, after last night, if there are still some out here who have no idea about this new trio commission, you got a taste of their "vision" last night.

At the meeting in Orlando the commission started with an option from FMPA that had been thrown on the table in 2009, Option #3 whereas FMPA would establish a minimum payment to the City each year of $237,564 for 5 years or rounded up, $1.2 million.

FMPA came back to us with a counter offer of $850,000 with equal payments of $47,222 for 18 months. No one can guarantee that FMPA will not screw us again. They did it once. Our top negotiator did not negotiate a lump sum payment...it wasn't even in the cards.

The commission never entertained the idea of countering that offer. I suppose they felt lucky to get a sound offer from FMPA and perhaps FMPA made them feel that way after all these years of jerking us around. The Mayor and Maxwell kept apologizing saying they could not talk about it in detail as the case was still in litigation. Everything that I have written on the subject was IN public records. Everything.

Pure and simple, the city got screwed by a visionary with no vision...a commission that wants to settle everything because they abhor legal fees and scared of its own shadow--a commission led by Scott Maxwell with the Mayor and Commissioner Amoroso always following right behind. They must have the same mentors.

The FMPA suit has cost us $125 thousand to date in legal fees, a mere pittance after 3 years. We lost approximately $2.7 million last night from what FMPA originally agreed to pay us per contract. What it boiled down to--take the first offer on the table and cut the legal expenses. They were petrified to open up the can of worms and ask for the one time payment of $850,000...scared that FMPA would jerk them around again.

But hey, that's easy. It's not their money. And they have a "vision."

FMPA Settlement - They got us at "hello"

Comment Up
As I did not attend the meeting last month in Orlando nor have I listened to the audio of that meeting, my comments are solely formed by reading the Minutes. This is basically what happened at the FMPA meeting in Orlando on April 19.

Our Visionary commission was in attendance along with new City Manager Michael Bornstein, Utility Director Rebecca Mattey and various executives of the FMPA who undoubtedly came across as our "best friends." They are smooth and they put up another big stall, thus winning the game with a poor city with no "fight."

1. The Mayor stated that the City had a new-vision Commission/Administration that understood the pending litigation issue regarding our natural gas transmission line and said she hoped both sides (FMPA and the City) could find an amicable solution. The implication was that the old commission did not know what in the heck they were thinking when they wanted to get the money that was due the City.

2. As this visionary trio wants to settle everything possible when it comes to law suits, they agreed at this meeting to accept FMPA's offer back in 2009 of Option 3 whereas FMPA established a minimum payment to the City each year of $237,564 for 5 years. It was supposed to be close to $720,000 a year for the same term. We have paid approximately $2.3 million in gas transmission fees since January 2009.

3. The Vice Mayor who seems to be appointed as our top negotiator for everything these days, told FMPA that he was "grateful for the opportunity." What opportunity? To negotiate down what is owed to us? He then asked them to discuss a proposal for settlement and bring it back to Lake Worth. That proposal is on tonight's agenda.

4. Again, Maxwell thanked the FMPA for the opportunity to have the settlement discussion and said that the City was pleased to move in a "positive direction." That means, get the damn thing off our backs...getting some kind of money settlement is better than nothing...give us your best shot.

5. City Manager Bornstein said he looked forward to working with the FMPA and taking a more active role and that he appreciated the opportunity to attend this meeting. He's the city manager for heaven's sake; he should be attending the meeting. We are confident that he will take a more active role.

6. Mayor Triolo thanked the FMPA for their consideration and said she looked forward to an improved relationship. What consideration? Screwing us on what they owe? Improved relationship? We are getting the heck out of FMPA are we not? All we ever wanted was what was owed to us in the first place.

7. Tonight under New Business C, FMPA has proposed its "best shot." The Commission will vote to accept an $850,000 settlement from FMPA (quite a bit less than the original Option 3 and certainly a lot less than what they owed) to be paid in equal installments over the next 18 months.

The essence of this settlement of $850,000 from Florida Municipal Power Agency to the City of Lake Worth over 18 months will be monthly payments of $47,222.22 from July 2012 through December 2013; which will be posted to the Electric Fund (401). Upon settlement, legal fees for Fiscal Year 2012 will be reduced significantly, and eliminated for Fiscal Year 2013 estimated at $300,000. And FMPA will still be our best buds.

Okay, folks. All of you who want to screw the City, come on down. We will give you breaks never dreamed and then some. You want to sue us? Go right ahead. We will settle 10 to 30 cents on the dollar because we can't stand law suits and we have no will. This is our new vision. You don't have to perform per your contract. What the hey. Greater Bay next? Give us a figure and you get it.

Utility Workshop

Comment Up
Part of the discussion at last night's workshop was the Electric Utility's long range plan touching on Reliability, Systems operations capability, Safety, and System configuration which will be implemented, primarily through city staff.

The Plan consists primarily of a 26.4kV sub-transmission system and 13.2kV distribution circuits. The sub-transmission system will be a dedicated system that loops all substations and is not used to serve customer load. Substation voltage will be stepped down to 13.2kV (industry standard) for distribution circuits

The Electric Utility Task Force Chairman, Bill Coakley, was adamant about that years ago and was vilified and stonewalled and stopped by the other volunteer task force members on that board particularly by two alternates, Tony Plakas and Jim Kelly, which ended up costing us perhaps $6 million more than necessary. "They did everything in their power to sink my ship," said Coakley. He further stated, "Always build standard."

We have $16.7 million left for our electric conversion out of the original $34.9 mil that was from the 2004 Bond for the electric and water, divided equally, of nearly $70 mil ($69,925,000). It was reported that we will need to spend another $6 million on the electric. Find a Plan to finish within the money we DO have and do the rest with revenues. Find the right people.

Back on JUNE 10, 2010, our Commission rated what they felt were the most important considerations for our Utility with the lowest number being the most important or the top weight:

1. Reliability: Varela (4), Jennings (1), Golden (1), Mulvehill (1), Maxwell (5)---Weight: 20%
2. Competitive Rate/Fuel Diversity: Varela (1), Jennings (4), Golden (2), Mulvehill (4), Maxwell (2)---Weight: 20%
3. Load estimation/forecasting/Demand: Varela (2), Jennings (2), Golden (6), Mulvehill (2), Maxwell (6) ---Weight: 20%
4. Use of Renewable Energy: Varela (3), Jennings (3), Golden (4). Mulvehill (3), Maxwell (7) ---Weight: 20%
5. Bill stability: Varela (5), Jennings (5), Golden (3), Mulvehill (5), Maxwell (3) ---Weight 10%
6. Own vs. Purchase: Varela (6), Jennings (7), Golden (5), Mulvehill (7), Maxwell (1) ---Weight: 5%
7. Term: Varela (7), Jennings (6), Golden (7), Mulvehill (6), Maxwell (4) ---Weight 5%

The City put out an RFP for a power supplier as we will be out of FMPA's All Requirements by the end of 2013. Eleven providers responded, one of which is FPL and instinctively I would think that FPL has the advantage for many reasons that I won't go into now. All bids are due by the close of business on April 30.

There was to be a selection committee consisting of the City Commission, Finance Director, and the City Manager but last night it was suggested to eliminate the City Manager from this process as he will be in the negotiations and include whoever will be Chair of the new citizen volunteer Utility Board, someone with no professional credentials. If the Chair is Lindsey, she will be more valuable to this process than some Commissioners (see the commission ratings above that will pin-point what I am talking about here) who know absolutely nothing about this. At least the commission is accountable to the residents, not a non-credentialed volunteer citizen and I appreciate Commissioner McVoy's concerns even though they will go nowhere.

The bids will be opened at Energy Advantage Consulting in Newberry, Massachusetts, the offices of the consultant, however it was mentioned that the bids don't have to be opened there and Mr. Bornstein will pursue. Thirty days from the bid openings, the redacted information will be made public.

A report was given by Burton & Associates on their audit of commercial accounts. They discovered many errors in meter reading and billing to a tune of an estimated historical impact loss of $1.3 mil. Palm Beach State College was not billed for sewer services. Most of the audits have not yet been finalized.

City of Lake Worth vs. FMPA

Comment Up
Today is the day that the City of Lake Worth meets with FMPA (on their turf) to discuss the law suit filed against them on April 15, 2011 by Lake Worth. Click here to read the Agenda that begins at 11am.

What triggered this law suit by the City was the day that we gave notice to exit All Requirements FMPA in December 2008. At that point, FMPA retaliated and said that they were no longer going to pay us the $60,000+ a month for the natural gas pipeline that we had built. This resulted in a law suit. The Contract required that we purchase power from FMPA for five years after giving notice to exit.

Sue Hersey, owner of Energy Advantage Consulting, was retained by the City and signed a contract for $413,400 to advise us and write an RFP to find a traditional power supplier. It was said that ending the FMPA power-supply agreement would save the city about $11 million annually and would reduce power bills by at least 15 percent for the utility's 25,000 customers.

At the time, Ms. Hersey said that since we own our asset and that all was in good condition because it has been maintained, the best plan of action is to maintain local generation for reliability, exit FMPA, run our transmission studies, do an RFP for long-term capacity and energy purchases and highly consider a Stand Alone operation with the LM6000.

The objectives are as follows:

1. Maintain retail electric rates below the average cost of all providers in Florida
2. Provide stable electric rates and continue to offer programs to help customers useelectricity efficiently
   
3. Promote limited use of renewable energy resources into power supply plans without causing electric rates to increase by more than 10%
4. Achieve the best value for the City of Lake Worth by acceptance of diverse term limit proposals (3, 5, 10, 20 yrs) that allow responders the latitude to develop creative submittals that coordinate submitter assets and City needs.
5. Provide additional service for City of Lake Worth customers through the consideration of value added services offered with bid submittals. Value added services could include additional audit programs, marketing, key account assistance, rate analysis services, etc.
   
6. Mitigate rate volatility by seeking power supply offers that include a diverse fuel supply mix including nuclear, coal, gas and oil, with limited coal exposure not greater than current level from Stanton I ownership
   
7. Ensure maximum bid participation by allowing responders a wide range of response options, to include but not be limited to submittals for asset ownership, purchase power agreements, and partnership proposals
8. Improve the reliability of the City of Lake Worth system and enhance network transmission service from FPL by seeking an additional interconnection location (tie-line)
9. Obtain a power supply that meets operating flexibility requirements of FPL NetworkTransmission tariffs
   
10. Maintain control of Lake Worth Electric

On another note, Mary Lindsey, someone who has taken a keen interest over the years to become very informed on our Utility and probably knows more about it than any "lay" person in this City, is a first-class example for dispelling the notion that those working in certain professions (so called qualified people) are the only ones who are capable in rendering good, solid opinions as volunteers on the Planning & Zoning board. She has spoken for professionals relative to that board but recently advocated for a citizens volunteer Utility Board without the requirement of professional qualifications. She organized a bus load of citizens who traveled to Orlando at 7am to listen to the law suit discussions at the FMPA headquarters.

Visionaries want to discuss selling our electric Utility?

Comment Up
The Finance Director sent out an e-mail--

There appears to be renewed discussion about the possibility of selling the Electric Utility. In order for you to have some idea of the complexities surrounding that idea, I asked the Utilities Director to draft the attached memorandum.

The memo discusses many of the issues and considerations surrounding discussion selling the Electric Utility and is staff’s attempt to make sure that you as policy makers have as much information as we can furnish. There has been a subsequent Public Records request by a citizen and this memorandum (2 pages from Becky Mattey) was included in the information given to that individual, so I wanted to make sure you had the same information.
Thanks.

Steve Carr
Finance Director
..................
Who in the heck on the Commission wants this discussion?

The City is in the process of converting participation of the All Requirements Project of FMPA to the Contract Rate of Delivery (CROD). An RFP for power purchase has been issued and responses will be submitted and reviewed over the next three months. Public discussion about the sale of the electric utility at this time will jeopardize the bid process and likely prevent or dissuade bidder response. The Utility has invested in excess of $500,000 in this process. It is imperative that the process continue unhindered. Nine bidders have been qualified and there is every indication that positive short and long term responses will result. The January 1, 2014 CROD deadline is fast approaching. A short term power purchase agreement will provide the City ample time to convert the FMPA participation as well as consider the points listed above and develop a comprehensive Request for Proposal for the sale of the Electric Utility that guarantees the City maximum price and benefits.

Recognizing the Demon

Comment Up

The Lake Worth city commission finally and at last, repealed the two previous resolutions from 2011 that allowed them to enact a fire and street light assessment. It was a long time coming considering the "visionaries" did not want any part of this tax from the get go. Most of the public was in agreement. The vote was 3/2 with McVoy and Mulvehill dissenting. It was never about the amount of the assessment; it was always the principle behind the tax--once implemented, it would never go away and it was an easy way for the City not to do everything within its power to live within a "normal" budget. At least that was my thinking.

The Commission had directed Staff back in December to contact the Palm Beach County Tax Collector and Palm Beach County Property Appraiser to determine if they would agree to a March 10, 2012 notification date as allowed by State Statute.

At the December 20, 2011, Commission meeting, the OMB Manager, Ed Fry, informed the Commission that the Tax Collector and Property Appraiser had agreed to the March 10, 2012 notification date. Based on that agreement, the Commission continued the public hearing on the uniform method for the levy, collection, and enforcement of non-ad valorem assessments for fire services to a date certain that fell on February 21, 2012.

The fact remains that if the economy continues along the the same lines, by 2016 our budget deficit is projected at $7 million as told to us last December by the Office of Budget & Management. Commissioner Mulvehill mentioned that again on Tuesday night. That is the main reason why McVoy and Mulvehill are in support of this assessment. They are preparing the City for the worst case scenario to keep us out of harms way. That is what you call "responsible" government.

The City has promised to pay approximately $67 million in future benefits to past and current employees yet does not currently have that amount in its various pension funds with no means to get the revenue. We did have a presentation from the Firefighter's Rep at Tuesday's meeting who said that their fund portfolio had gone up 7% or $1.8 million this past quarter and that is encouraging.

Vice Mayor Scott Maxwell said he did not disagree with the concept of a fire assessment, but said the one approved in October was created by "demonizing" the firefighter pension cost while creating new city positions and increasing spending. "It was not fair," Maxwell said. What is fair? The word "demonizing" is one of Maxwell's favorites to describe his opponent's different view or things he doesn't like. It's right in your face just like he is.

His point is well taken, to a degree. We do need to watch our budget closely and cut where possible. New hires should be delayed. The Sustainability Director, however, was only a cost in the operating budget of around $10 thousand a year and a needed position because of our exiting FMPA to ensure the best price possible when the time comes to exit the ARP. We can't stop city services. Pot holes must be fixed. The city needs to operate and it needs money.

What can be done about Union pensions that we no longer can afford and are expected to escalate to sums unimaginable? Perhaps the Vice Mayor can speak to that as he can cut everything imaginable in our Budget right now and we still can't afford the Union pensions. Property values are expected to fall again this year which will mean less revenue to Lake Worth.

This political hot potato just won't go away. You just can't continue to throw kisses at the unions. Every time this new commission trio has an opportunity to outsource and reduce the union problem and get rid of union labor, (outsourcing of Utility Customer Service that would have saved us 1/2 million dollars the first year through their management as well as to outsource some Grounds Keepers) they have played politics by supporting the unions.

Maxwell wants to be fiscally conservative but on the other he has said to the Unions--no problem--you get to keep your members at customer service and Lake Worth will foot the ever growing bill. Even Mayor Triolo blamed the Utility Director for the problem at the Utility Customer Service and boasted that she saved employees their jobs. No she did not as those employees were to be hired with Data Management. What she did was to save union jobs. That will be a whole new article.

In our particular case as well as most cities across the country, the Unions are fiscally choking the life out of municipalities right and left and Scott Maxwell knows that. This "Visionary" Commission needs to address this head on and admit who the demons really are. It is not their fellow commissioners.