Dispute Over FPL Tax Cuts, Irma Costs Dismissed

Posted By: Garnie Holmes Industry, Legislative/Regulatory,

The state Office of Public Counsel, which represents consumers in utility issues, has dismissed a challenge to a Florida Power & Light plan to use federal tax savings to cover costs of restoring electricity after 2017’s Hurricane Irma.

The public counsel’s office on Friday filed a notice of dismissal in an appeal it filed in July at the Florida Supreme Court. The appeal came after the state Public Service Commission signed off on the FPL plan. The dispute stemmed from damage caused by Hurricane Irma, which forced FPL to spend about $1.3 billion to restore electricity and rebuild systems. Utilities in the past have typically been allowed to recoup such costs from consumers by tacking extra charges onto monthly bills.

But in late 2017, Congress and President Donald Trump approved a tax overhaul that included reducing the corporate income-tax rate from 35 percent to 21 percent, providing huge savings to companies such as FPL. The utility decided to tap a reserve to cover Irma restoration costs and then replenish the reserve with savings from the tax overhaul, avoiding the need to tack extra charges onto consumers’ bills. But the public counsel’s office objected, contending, in part, that hundreds of millions of dollars in savings from the tax overhaul should flow through to FPL customers through lower base electric rates --- rather than being used to cover storm costs. The Public Service Commission, however, pointed to a 2017 base-rate settlement agreement that included the reserve to help FPL manage fluctuations in costs and revenues. 

Article reposted with permission from The News Service of Florida.