Lavish expenses of the Florida Municipal Power Agency — including providing healthcare for life for its chief executive officer, nearly $13,000 in holiday parties and a pair of season tickets to Orlando Magic games — will be center stage when the Joint Legislative Auditing Committee meets Monday afternoon.
The Auditor General’s final report on the operational audit on the power agency showed that it spent $7.2 million for administrative and general salaries and $2.4 billion on FMPA employee benefits. In all, the audit had 15 findings in a variety of areas that were problematic, including the hedging activities, investing practices, and information technology.
The Vero News reported that in February the FMPA Board of Directors agreed to spend $100,000 on Tallahassee lobbyists and consulting agencies to beat back potential backlash stemming from the auditor general’s findings.
The Florida Municipal Power Agency is created through a series of inter-local agreements with municipalities to finance, acquire, manage and operate its electric power projects or jointly accomplish the same purposes with other public or private utilities. The FMPA has 31 member municipalities, 20 of which participate in utility projects.
Vero Beach has been unsuccessfully trying to break its contract with the FMPA. Vero Beach is being sued by Town of Indian River Shores, alleging citizens are paying $2 million more per year than they should for utilities.
With a growing controversy, the Legislature agreed last year to tuck money into the budget to pay for the audit.
In addition to the high salaries, other findings show the FMPA did not competitively bid services for financial advisers and bond counsel and did not properly issue credit cards or monitor their use.
The audit also disclosed that for certain employees hired before October 2004 and are 55 years of age, the organization will continue to pay the health insurance premiums and all but $600 of the $5000 (single) deductible and $10,000 (family) deductible.
The audit shows that seven retirees were receiving the benefits and up to 26 active employees are eligible to receive the benefits. The CEO also has a contract that would allow him to receive six months of his salary if fired for cause. Additionally, the contract shows that the the agency will pay or reimburse the CEO’s health insurance premiums and corresponding health reimbursement account for life.
FMPA in the statement takes issue with some of the auditor general’s findings in regard to fuel hedging. The audit found that the power agency’s investments in natural gas exploration and drilling were complex and involved more risk than alternative forms of hedging.
FMPA group questioned the state auditor’s sample of eight agencies with a lower risk profile to natural gas to determine common industry standards for fuel hedging. FMPA generates 80 percent of its energy from natural gas. The auditor general’s sample included coal-dominated utilities where 40 percent of their energy comes from gas, the agency said in is statement.
Similarly, the Florida Municipal Power Agency also called out the auditor general for comparing the FMPA with between 8 and 17 other joint-action agencies.
“Given that there are approximately 3,000 electric utilities, and many segments of that industry, in the United States, this does not yield a representative sample to compare to FMPA,” the FMPA said in the statement. “Therefore, the findings are based on these narrow comparisons and is not representative of common practices in the electric utility industry.”