Anger over FPL rate hike fuels call for utility regulation reform



Anger over regulators’ approval of an $811 million rate hike for Florida Power & Light boiled over Wednesday with calls for utility regulation reform and second-guessing of the state’s Public Counsel.

Officials with AARP, which vehemently opposed a rate hike, were sharply critical of the settlement agreement approved by the Florida Public Service Commission on Tuesday. AARP’s Advocacy Manager Jack McRay said the group with 2.8 million members in Florida is “exploring all options” as to what the next step should be.

State Sen. Jose Javier Rodriguez, D-Miami, said the rate increase 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.”

Rate hikes aren’t unusual, but this year’s bid by FPL drew much more vocal opposition. Since January, thousands of residential FPL customers submitted signed petitions and comments and made phone calls to regulators asking them to not allow FPL to raise its rates.

AARP’s Associate Director for Advocacy Zayne Smith said the 6,700 petition signatures and 769 individual comments submitted to the Florida Public Service Commission were the biggest ever response from AARP members in any Florida rate case.

The Sierra Club also encouraged consumers to submit comments all along — and on Monday it submitted 5,768 comments in bulk. Many of those who spoke up explained the hardship posed by any rate increase and argued that there isn’t a need for more gas-burning power plants.

Still, the five-member PSC unanimously approved a settlement deal Tuesday allowing FPL to increase its base rates by $811 million through 2020. Not including franchise fees and local taxes, the bill for a customer who uses 1,000 kilowatt hours a month will jump from $91.56 to $102.97 in 2020.

The PSC approved the settlement announced Oct. 6 by FPL, the Florida Retail Federation, the South Florida Hospital and Healthcare Association and the Public Counsel, who by law represents all utility customers. But these were only three of the nine groups, including AARP and the Sierra Club, that intervened.

Now some are calling for reform of Florida’s utility regulation system, while others assert that the Office of Public Counsel should not have been a party to the settlement. Following the vote, AARP Florida’s state director Jeff Johnson, said consumers are not being heard, and residential ratepayers need an independent public counsel dedicated to their interests.

FPL spokeswoman Alys Daly defended the rate hike Wednesday saying FPL’s typical residential customer bill is $40 lower than the national average.

“Our typical business and residential bills are expected to remain lower than they were in 2006 for at least the next four years. AARP members who are served by FPL are paying less for their electricity than the majority of AARP members who live in other parts of the country and at the same time, our customers have cleaner and more reliable service,” Daly said.

“We invest more than 3.5 billion a year – far more than our earnings – in infrastructure to deliver our customers with top-ranked reliability and bills that are among the lowest in the nation,” Daly said.

Florida Public Counsel J.R. Kelly said calls for reform is a matter for lawmakers.

“That is a decision for the Legislature,” he said. “Our office has always strived to provide the best legal representation for all ratepayers of the regulated utilities (electric, water, wastewater and gas), and we will continue to do so.”

Kelly has said the settlement was fair and far less than FPL’s original $1.3 billion request. In addition, among other positives such as more solar power plants, FPL will now be required to begin terminating hedging activities for natural gas prices, a practice which has cost all Florida ratepayers more than $6 billion over the last 14 years.

It’s not the first time, though, that a settlement with FPL is met with controversy.

In 2013, a $350 million, or 8 percent base rate increase, took effect after FPL reached a settlement with large power users in late 2012, and the PSC also granted FPL another $620 million rate increase for new power plants. OPC was left out of the 2012 settlement, the first time that ever occurred. OPC said the settlement was invalid without its signature. Kelly took the issue to the Florida Supreme Court, but ultimately lost.

Nathan Skop, a former PSC commissioner who represented Alexandria and Daniel Larson of Loxahatchee in the rate case, said Wednesday that by agreeing to the settlement, the Office of Public Counsel compromised its position to “advocate on behalf of Florida ratepayers.”

TheOPC originally said FPL’s rates should be reduced by more than $800 million, but later revised that and said the reduction should be more than $300 million.

“The Larsons believe that the Office of Public Counsel should not have been a signatory to this terrible settlement which completely contradicts what OPC argued at hearing,” Skop said. “Had OPC not agreed to the settlement and remained neutral, it would have sent a clear message that the settlement was not in the public interest and forced the Commission to approve the settlement or decide the FPL rate case.”


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