Florida Power & Light customers’ bills will be going up in January following the Florida Public Service Commission’s approval Tuesday of an $811 million rate hike to be spread over the next four years.
Juno Beach-based FPL will raise customers’ base rates by $400 million in 2017, then $211 million more in 2018 and another $200 million more in 2019 to pay for a new Okeechobee power plant. Rates would stay the same in 2020.
The customer who uses 1,000 kilowatt hours a month will experience a bill increase of $11.41 per month by 2020. In January 2017, the typical customer’s bill will rise to $98.77 from $91.56 a month at the current rates, not including franchise fees.
By 2020, that 1,000 kilowatt hour bill will be $102.97, not including franchise fees.
The PSC unanimously approved a settlement agreement between FPL and three groups representing customers, which is $500 million less than what FPL initially sought. In January, FPL said it would be seeking a $1.3 billion rate increase, but in October, before the PSC had a chance to vote on that proposal, the settlement deal was announced.
Still, critics of the settlement accord said it was too generous to FPL.
“This ruling is an early Christmas present for FPL — and Florida consumers are getting stuck with the bill,” said Jeff Johnson, AARP’s Florida state director.
AARP had called for FPL’s rates to be reduced by $300 million. Johnson said the rate increase guarantees FPL’s shareholders an unreasonably high profit at the expense of residential customers. It also sets the precedent for other publicly-owned utilities to ask for unwarranted and outrageous increases, he said.
“Today’s decision demonstrates what observers of Florida utilities regulation have long believed — this system is simply not hearing the voices of residential customers,” Johnson said. “Until this imbalance is addressed, the interests of Florida residential ratepayers need an independent public counsel dedicated to their interests.”
AARP believed the 9.6 to 11.6 rate of return on equity — shareholder profits — that FPL will be allowed to earn is unreasonable and well above the national average of 9.5 percent for similar-sized public utility customers.
“Even before this ruling, FPL stood to make $1.6 billion in profit over the next four years. Now FPL gets even more,” Johnson said.
On Tuesday, commissioners commented on the lengthy and arduous rate case, but said the end result demonstrates that the process works.
Commissioner Lisa Edgar made the motion to approve the settlement, and Commissioner Ronald Brisé seconded it.
Brisé said that at hearings around the state customers said that FPL’s service quality is good, but that they were concerned about the impact on their pockets.
“I think ultimately this settlement handles all those things,” Brisé said.
FPL President and CEO Eric Silagy said the company has been investing an average of approximately $3.5 billion a year in its infrastructure and expects to continue investing at a similar rate over the next four years. The typical bill will continue to remain lower than it was in 2006 at least through the end of 2020.
Silagy said the agreement benefits FPL customers by ensuring rates continue to remain low for at least the next four years.
From Aug. 22 through Sept. 1, the PSC held nine days of contentious and complex hearings with more than 50 witnesses testifying about the $1.3 billion request, and its decision was pending.
But on Oct. 6, FPL and three intervenors representing customers in the case announced they had reached a settlement, with six intervenors not included. The Office of Public Counsel, The Florida Retail Federation and the South Florida Hospital and Healthcare Association signed on to the settlement.
Sierra Club Florida director Frank Jackalone said Tuesday, “We’re very disappointed that the Commission approved this huge rate hike for unnecessary, climate disrupting, gas-burning power plants.”
Jackalone said the decision contradicts the will of Florida’s voters who voted against Amendment 1. Backed by FPL and other utilities, it would have limited the expansion of rooftop solar.
Commissioners asked PSC staff a few questions about the details. Brisé asked for a comparison of the dollars in the original request and the settlement and what made up the difference. About 70 to 75 percent of the difference is explained by a $125.8 million reduction in FPL’s depreciation expense and its allowed ROE, staff said.
Six intervenors in the case, including Loxahatchee residents Alexandria and Daniel Larson, did not sign the settlement. The Larsons opposed the settlement deal, calling it a windfall for FPL.
The Sierra Club also intervened and objected to the initial rate increase and the settlement.
Walmart also decided not to join the settlement agreement because it could not support the return on equity, or ROE, midpoint of 10.55 percent agreed upon by the parties, its attorneys said in a filing. FPL’s current midpoint ROE was 10.5, and it sought 11.5.
However, Walmart and the Federal Executive Agencies, which represents the U.S. military, did not oppose the settlement.
The Florida Industrial Power Users Group did not take a position on agreement which allows commercial industrial load control and demand reduction credits to remain at their current levels.
Sen. Jose Javier Rodriguez, D-Miami, said, “The Public Service Commission’s decision to approve FP&L’s $811 million rate increase is disappointing and serves as further evidence of the need for reform in Florida away from a monopoly system overly controlled by a small handful of giant utilities. That’s bad for consumers, bad for the market, bad for the environment and ultimately bad for our democracy.”
Want to know how much the base rate portion of your bill will be going up based on your usage?
Go to FPL’s online calculator at FPL.com/answers
What the rate settlement means
In addition to raising monthly rates, the PSC-approved settlement also means that:
• FPL’s return on equity — or shareholder profits — will be set at a midpoint of 10.55 percent, with a range of 9.60 percent to 11.60 percent.
• FPL will refrain from engaging in any new financial hedges to purchase natural gas through 2020, which could result in fuel cost savings.
• New meter tampering charges of $200 for residential customers and $1,000 for commercial customers will be implemented.
• New metered rates for all new customer-owned street lighting and traffic signals will be implemented.
• FPL can continue to charge customers for storm damage-related costs at the rate of $4 for every 1,000 kilowatt hours the customer uses.
• FPL can undertake the construction of 300 megawatts of solar photovoltaic generation each year as long as it is cost effective. FPL can charge customers for the solar installations.
• FPL will implement a 50 megawatt battery storage program.