State regulators will discuss next week whether Florida Power & Light's profits may be higher than allowed, a determination that could lead to a refund for FPL customers.
Regulators also will consider a plan to keep FPL's base rates flat through 2012.
The Public Service Commission staff released a report Monday saying FPL's profit on shareholders' investment in May and June exceeded the 11 percent allowed. The staff recommended launching a review of the profits and requiring FPL to set aside the amount above 11 percent through March 2011 in case the commission decides customers should get refunds.
In January, the PSC rejected all but 6 percent of FPL's largest requested rate increase and capped return on equity at 11 percent.
FPL, the state's largest utility, reported a net income of $191 million in the first quarter of 2010 — up 50 percent from the year before — and a net income of $265 million for the second quarter, up 24 percent.
FPL attorney John Butler wrote to the PSC last week saying a refund is not warranted because the utility's profit margin, as it's measured to set rates, did not exceed 11 percent. He said record cold weather in January and hot weather in June led to a spike in electricity sales, and utilities shouldn't be rewarded or punished for unusual weather.
Butler also said the PSC doesn't have the authority order a refund because it would be considered "retroactive ratemaking."
At the same time, he encouraged regulators to approve an agreement would keep base rates flat for FPL customers through 2012.
Base rates make up more than 40 percent of a typical residential customer's monthly bill.
The agreement would allow a base rate increase to pay for FPL's new natural gas power generator in western Palm Beach County, but only in an amount equal to the projected fuel cost savings from the unit. PSC employees on Monday recommended the commission approve the agreement at an Oct. 12 meeting.
At the same meeting, commissioners are set to weigh FPL's proposed discounts to reduce energy use and FPL's request to rethink a PSC decision in June requiring the utility to refund $13.9 million to customers for costs related to a massive 2008 power outage.
The PSC staff has recommending FPL redo some of the energy-saving programs to cut energy use even more and the staff on Monday recommended the PSC reject FPL's request on the power outage refund.
The meeting starts at 9:30 a.m. and can be viewed live at http://www.psc.state.fl.us/agendas/audiovideo.
Julie Patel can be reached at firstname.lastname@example.org and 954-356-4667.