State regulators are scheduled to cap 10 months of debate and hearings with a vote Wednesday on Florida Power & Light's proposal to boost customers' base rates by nearly $1.3 billion.
Regulators rejected the increase for Progress citing issues similar to those raised during the FPL rate case: utility profit margins, charges for storm funds and money collected from customers for power plants ahead of schedule.
The commission's FPL vote follows months of testimony, nine customer forums around the state and 13 hearings where officials sometimes deliberated into the night.There are 5,435 pages of transcipts from the hearings alone and more than 500 other documents filed as part of the process.
The proposal drew fierce opposition from consumer advocates, the Attorney General's office and groups representing hospitals and businesses in part because it comes during the worst recession since the Great Depression. During the fractious public-review process, critics questioned FPL staffers' ties to the PSC and Gov. Charlie Crist appointed two outsiders to the panel to replace outgoing commissioners.
Under FPL's proposal, customers who use 1,000 kilowatt-hours – slightly less than the utility's average residential customer – would see an $8.85 increase on their monthly bills this year and an additional $2.72 increase next year. FPL officials say the monthly bill for a typical customer has dropped from $110.72 in December to $95.43 this year, mostly due to declining fuel costs, so that should help offset the impact to customers.
FPL officials say they need the increase to help beef up the grid and note the utility's bill for a typical customer is lower than that of other major electric utilities in the state.
"If our rate request is denied, we won't be able make needed investments in the electrical system," FPL President Armando Olivera said recently. If it's approved FPL will invest to make "the system stronger, smarter, cleaner and even more efficient so that bills will remain low in the future."
At hearings last year, FPL was grilled about the 12.5 percent profit it requested on shareholders' investment; $1.25 billion in depreciation costs collected from customers to pay for power plants earlier than required; $150 million requested for a rainy day fund for future storm repairs; and millions of dollars in aviation and executive pay costs, some of which the utility agreed to temporarily remove from base rates.
Rate hike opponents also challenged FPL's request to boost late fees and other service charges not included in the $1.27 billion rate request, as well as its proposal to pass $180 million a year to customers for a new power generator in western Palm Beach County.
The Office of Public Counsel – the state's advocate for utility customers – recommends the utility reduce base rates by $364 million and called FPL's proposal "excessive" and "self-serving."
FPL's moves outside of the commission chambers generated nearly as much attention. Since the utility submitted its request to regulators in March, the Sun Sentinel found that an FPL executive hosted a Kentucky Derby party at his home in May for a group that included a commission employee who has since resigned; utility employees lined up supporters for customer forums on the rate hike; some FPL employeees met with commission representatives over meals and exchanged dozens of phone calls and instant messages with them; and FPL hired 18 former regulators and government officials in recent years.
In October, Crist brought what he called "new blood" to the commission with appointees David Klement and Steve Stevens who started their 4-year terms last week.
The new commission shot down Progress Energy's request for a nearly $500 million rate hike Monday, keeping rates flat. As part of its decision, it approved a 10.5 percent profit on shareholders' investment – lower than the 12.5 percent requested by the utility – trimming about $100 million from the request.
The commission also required Progress to refund $23 million of $680 million in depreciation costs and rejected the utility's request for $5.6 million a year for its storm fund. Commissioners reduced proposed executive pay costs by $12 million and administrative costs by $1.3 million, including expenses for luxury suites at sporting events.
Julie Patel can be reached at 954-356-4667 and firstname.lastname@example.org.