PSC approves FPL bill reduction, asserts jurisdiction over tax savings

Updated Feb 06, 2018
Crew work to repair a damage from Hurricane Irma in West Palm Beach on September 14, 2017. FPL is using part of its tax savings to pay for Irma damage. (Richard Graulich / The Palm Beach Post)

Florida Power & Light customer bills will decrease slightly starting March 1 because the company retired the coal-fired St. Johns River Power Park generating facility.

Tuesday the Florida Public Service Commission approved the early reduction of FPL customer bills. The annual adjustment of the bill related to the closure of the coal-burning plant was not due until January 2019.

The reduction amounts to 38 cents a month to $99.37 for the customer who uses 1,000 kilowatt hours a month. That amount does not include local taxes or franchise fees.

FPL retired the St. Johns plant on Jan. 5, decreasing fuel and other costs associated with it.

In other business, the PSC selected Tuesday as the effective date for any utility rate adjustments due to the federal tax overhaul and declared its jurisdiction over the issue. PSC staff meetings with the utilities about tax reform are set to begin this week.

AARP urged regulators address tax savings

President Donald Trump signed the $1.5 trillion Tax Cuts and Jobs Act of 2017 Dec. 22. The corporate tax rate reduction from 35 percent to 21 percent took effect Jan. 1.

“Today we drove a stake in the ground,” said PSC Chairman Art Graham. “The urgent need was to assert our jurisdiction to determine who should rightly benefit from any tax savings. Now we can embark on a deliberative process to make sure customers are treated fairly.”

PSC staff told the commission it plans to meet with investor-owned electric utilities such as FPL on Thursday to begin work on an agreement on how the rate reduction procedure will work. Staff will also be meeting with the natural gas industry and water and wastewater utilities.

Staff anticipates that changes due to the tax act will be subject to full-fledged formal hearings, including discovery proceedings.

FPL attorney John Butler told the commission Tuesday that an informal process will work.

FPL announced Jan. 16 that because of the tax savings it will not have to charge customers a $4 per month Hurricane Irma-related surcharge that would have started in March. Instead, FPL will apply its tax savings toward the $1.2 billion restoration costs.

Butler said the company also expects to postpone the need for a rate increase at least through 2021. The current rate agreement expires in 2020.

While some utilities recent rate case settlements addressed the issue, FPL’s four year-agreement approved in 2016, did not.

Jon Moyle, an attorney for the Florida Industrial Power Users Group, said tax reform should result in money coming back to the ratepayers sooner rather than later

The savings should be in the form of a reduction on ratepayers’ bills rather than being spent on storm hardening or other expenses.

Associate Public Counsel Charles Rehwinkel said it’s important that the commission keeps track of the tax dollars.

“We are going to be working with all the parties and the staff to understand the magnitude of the tax savings,” Rehwinkel said.

On Jan. 9 Florida Public Counsel J.R. Kelly requested that the PSC hold formal hearings to identify the savings and require FPL and other utilities to pass the savings on to their customers.