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FPL Offers To Settle Rate Case; Opponents Wary Of Costs

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(Photo Credit: CBS4)

(Photo Credit: CBS4)

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TALLAHASSEE (CBSMiami) — Florida Power & Light made a deal late Wednesday to settle its $690 million rate case by offering to cut the cost $138 million next year.

CBS4 news partner The Miami Herald reports the state’s largest utility offered up the deal after reaching an agreement with the state’s largest commercial utility users just days before Monday’s expected rate hearing.

Lawyers representing all ratepayers, however, said the offer is worse for residential customers than the company’s original plan.

“We just flat out don’t think it’s a good deal for customers,’’ said J.R. Kelly, director of the Office of Public Counsel on Thursday.

He said the proposal shifts $50 million of utility costs from the large utility users, hospitals and military bases who agreed to the deal and puts it onto residential customers and small businesses.

The proposal also would raise late fees $10 million a year “and that goes on the backs of people who can least afford it,” Kelly said. It also gives FPL $1 billion in additional rate hikes through 2016, more than the original rate case, he said, to pay for new power plants.

News reports that the settlement would reduce the rate case to $358 million next year “are absolutely wrong,’’ Kelly said.

FPL argues that it needs to charge customers more as it moves forward with plans to build new power plants in Cape Canaveral, Rivera Beach and Port Everglades. The company contends that savings from fuel will offset most of the increased costs to consumers.

Kelly, instead, argues that FPL is making excessive profits, using its utility monopoly to subsidize shareholder earnings for the non-regulated side of its business at its parent company, NextEra, and cannot justify the rate increase. He is asking regulators to reject FPL’s rate case request and instead lower customer bills by about $250 million a year.

“We won’t sign it,’’ Kelly said of the settlement offer. His office agreed to a less generous settlement sought by FPL two years ago. “I’m asking myself if I went through the rate case and lost everything, they would get $690 million. Why would I want to sign this and given them $1 billion?”

Signing on to the proposed agreement was the Florida Industrial Power Users Group, which represents large companies and has been one of the most vocal opponents of the rate increases of the past, the South Florida Hospital and Healthcare Association and the Federal Executive Agencies.

They praised the proposal as a way to offer stability during a tough economy.

“This agreement will provide Florida’s largest industrial and commercial customers with predictable rates for the next four years, something that is important as the Florida economy emerges from the Great Recession,’’ said Jon Moyle, lawyer for the large utility users.

Linda Quick of the hospital association commended the agreement because it “helps secure low rates for four years” and will provide “rate stability despite an uncertain economy.”

FPL President Eric Silagy touted the company’s current bill as justification for allowing the increases to go forward.

“We are pleased to propose a solution that would limit the increase for the typical residential customer to about 4 cents a day, including changes in base rates, fuel and other components of the bill,’’ he said in a prepared statement. “Under this proposed settlement, our customers are projected to continue to have the lowest typical bills in the state along with reliability and an emissions profile that are among the best in the country.”

The Public Service Commission can approve the settlement or reject it and move ahead with the hearings scheduled to begin on Monday.

Also opposing the settlement was the Florida Retail Federation and a series of individual ratepayers who have joined the legal case as intervenors.

“The proposed settlement is not fair nor reasonable and is not in the general interest of the public and consumers,’’ said Thomas Saporito, one of the citizen intervenors. He criticized the settlement offer as a secret deal negotiated by a small group of attorneys that did not include all parties involved in the rate case.

“As a private citizen, I Intervened in this proceeding believing in the legal system – that if I followed all the rules set out by the Commission – that I would have an opportunity to share my views and points with the Commission at a technical hearing – as to why FPL’s request to raise base rates is not in the best interests of consumers and that the Commission should order FPL to lower its base rates in these dire economic times,’’ he said. “Now, everything is in flux?”

The proposed settlement would also reduce the company’s proposed return on equity, a measure of the amount of profit the company generates for shareholders, from the 11.25 percent the company requested to 10.7 percent. Kelly believes the level should be closer to 9 percent. The current level is 10 percent.

(©2012 CBS Local Media, a division of CBS Radio Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. CBS4 news partner The Miami Herald contributed material for this report.)

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