Regulators Weigh FPL Rate Hike

Posted By: Garnie Holmes (deleted) Industry, Legislative/Regulatory,

FPLBy Jim Turner

Attorneys for groups challenging a proposed settlement that Florida Power & Light reached with consumer and business representatives to raise base electric rates and add solar energy told state regulators Monday that the requested increase is more than the company needs as Floridians continue to grapple with the COVID-19 pandemic.

But FPL officials argued that the request is justified based upon the “superior performance” provided to consumers, as the state Public Service Commission began what could be a three-day hearing on the proposed settlement to raise base electric rates over four years.
The plan now before state regulators also adds more solar energy than initially requested, retires a coal unit in Georgia and continues to carry out FPL’s merger with Northwest Florida’s Gulf Power that formally took effect Jan. 1.

Robert Scheffel Wright, an attorney who represents one of the groups challenging the proposal, told the commission that FPL --- the state's largest energy provider --- doesn’t need to increase its rate in 2022 to continue providing safe and reliable services and still earn a “reasonable” return on equity.

“More than half of Florida citizens and businesses are still struggling with the COVID -19 pandemic. Florida's COVID death rate is devastating. And FPL has asked you to approve the largest rate increases in the history of Florida utility regulation,” said Wright, who represents Floridians Against Increased Rates.

But Robert Barrett, vice president of finance for Juno Beach-based FPL, told regulators that approval of the request would send a strong message to other companies that “superior performance will be rewarded.”

The proposed settlement would lead to a $692 million increase in base rates in January and another increase of $560 million in 2023, with additional increases in 2024 and 2025 to pay for solar projects. The settlement came after FPL filed a proposal in March to raise base rates. The deal now before the commission trimmed FPL’s original proposed rate increases by about $428 million.

Wright noted that the commission in 2012 approved a $350 million rate increase after FPL asked for $528 million and in 2016 granted FPL increases totaling $811 million a year for three years, down from the more than $1.3 billion a year which was sought.

But Barrett argued that FPL “has demonstrated that, across the metrics that matter most to customers, we are a top performer and have been for many years.”

“Also, since its (Gulf Power's) acquisition by NextEra (Energy), FPL has demonstrated significant operational and cost improvement, proving this superior performance as a matter of culture and financial strength,” Barrett told regulators Monday. “What intervenors choose to argue is that superior performance should be expected due to our obligation to serve. This is patently absurd, or else every other company not achieving our level of performance is failing in their basic obligation to their customers.”

The amount of proposed base rate increases in the new settlement was reduced from FPL’s March proposal, at least in part, because a potential return on equity --- a closely watched measure of profitability --- was reduced.

The agreement also addresses a series of solar-energy issues, which FPL has said would “support the development of 16 million solar panels across more than 50 new sites.”

FPL reached the proposed settlement with the state Office of Public Counsel, which represents consumers; the Florida Retail Federation; the Florida Industrial Power Users Group; and the Southern Alliance for Clean Energy. Supporters argue that the proposed changes will help make the grid more resilient to a failure similar to what experienced last winter in Texas.

The proposed settlement has faced objections from Floridians Against Increased Rates, the League of United Latin American Citizens of Florida, the Environmental Confederation of Southwest Florida and Florida Rising, which are parties in the case and whose members include residential customers of FPL.

Bradley Marshall, who represents Florida Rising, told the commission Monday that the groups are not simply opposing the proposal but are seeking “equity and fairness and a just transition” to clean, renewable energy.

“In all, for the four-year term of the settlement, residential and small business customers will be subsidizing the rates of large commercial and industrial customers by over $1 billion,” Marshall said. “That's a lot of money. That's hundreds of dollars per residential customer that they shouldn't be paying in order to subsidize the rates of a few large companies.”

After this week, the parties will have about two weeks to file briefs on whether the settlement should be approved. The commission is expected to make a final decision on the proposal Oct. 26.

If approved by the commission, the agreement would lead to residential customers outside of Northwest Florida who use 1,000 kilowatt hours of electricity a month seeing their bills go from the current $101.70 to $107.78 in January, according to the utility’s projections. Those bills would increase to $111.63 in 2023, $113.84 in 2024, and $115.34 in 2025.

Because FPL and Gulf have had substantially different rates, the proposal would take that into account through what is described as a “transition rider.” The result would leave Northwest Florida customers paying more than FPL customers in other areas.

Under the plan, Gulf residential customers who use 1,000 kilowatt hours a month would see their bills go from the current $129.24 to $131.43 in January, according to the utility’s projections. They then would see the bills decrease to $130.55 in 2023, $128.03 in 2024 and $124.80 in 2025.

FPL has been operating under a base-rate settlement that took effect in January 2017 and will end in December.

Article reposted with permission from The News Service of Florida.