ATLANTA - The Sebring, Fla., Utilities Commission has approved a proposal to sell its remaining electric power assets to the Florida Power Corp., ending months of debate over how to avoid a possible default.

The commissioners agreed among themselves Wednesday to sell the assets for at least $17.8 million, which the utility could then use to help avert a default on $85.6 million in outstanding debt.

Jim Lentz, the commission's financial adviser, said yesterday that the commission's unanimous approval of its assets sale package followed statements by city officials earlier this week that the city of Sebring is not interested in buying the electric system.

Mr. Lentz also said the officials were given a chance to object to the proposed sale at the commission meeting Wednesday evening, but did not.

"The commissioners felt comfortable with approving the proposal after getting a clear indication that the city was not going to step up and buy these assets," Mr. Lentz said. "Now the ball is in Florida Power's court.

Approval of the proposal follows a contentious meeting of the commission on June 25 in which members refused to discuss a commission staff proposal to sell the electric distribution system for $17.8 million.

Mr. Lentz, who said Florida Power officials have already agreed "in principal" to the commission's contract proposal, expects the board of directors of the privately owned utility to formally approve the contract at a meeting on Aug.3. Officials at Florida Power, which is headquartered in St. Petersburg, could not be reached for comment

Mr. Lentz said the commission-approved proposal is virtually identical to the one the commissioners refused to consider two weeks ago. He said the commissioners stressed in approving the sale package that they cannot accept less than the $17.8 million they expect to receive for the electric distribution assets.

In addition, he said, the commission expects to be charged a rate no greater than 7.75% on the $38.1 million loan it expects to receive from Florida Power.

Earlier, a maximum rate of 8% was discussed. This $55.9 million total would then be added to $21.5 million from the sale of the utility's water system to the city of Sebring and $10.7 million in reserve funds, allowing the commission to pay off its bonds and cover $2.5 million in closeout costs.

The city's agreement to purchase the water system is contingent on sale of the electric power system and receipt of the loan. After the commission pays off its bondholders, it plans to dissolve itself.

Unless the commission arranges to pay off the bonds, it will be forced to sharply raise rates after the start of its 1993 fiscal year, which begins Oct. 1., to cover a substantial rise in debt service costs.

Commission Chairman Ned Hancock, however, has said that community resistance to such an increase makes it unlikely the board would approve a rate increase, obliging the commission to tap its reserve fund and thus triggering technical default.

The commission's current debt was originally sold in 1986 and is insured by AMBAC Indemnity Corp.

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