FPL Chief Defends $1.3B Rate Request

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TALLAHASSEE (CBSMiami/NSF) – A request for $1.3 billion in base-rate hikes is "driven by investment and infrastructure" rather than profit as critics claim, the president of Florida Power & Light told regulators Monday during the opening of an expected two-week hearing on the proposal.

Eric Silagy, president and CEO of the Juno Beach-based utility, defended the request to the Florida Public Service Commission as a way to maintain the company's "stability and predictability" while making improvements that include increased use of solar power.

"Ultimately, these are going to end up providing savings for customers," Silagy said.

But the company's proposal has met stiff opposition from representatives of consumers and some business groups. Patricia Christensen, an attorney with the state Office of Public Counsel, was among the critics telling the commission that the four-year request is "unjustifiable."

"We believe that at the end of the hearing the commission will also conclude that FPL's excessive rate request needs to be dramatically cut," said Christensen, whose agency represents consumers in utility issues.

Under the proposal, FPL wants regulators to approve rates that would generate an additional $826 million in 2017, $270 million in 2018 and $209 million in 2019.

The 2019 money would be tied to the start of a new Okeechobee County power plant, which is scheduled to come online June 1, 2019. There would be no increase requested for 2020.

The proposal, if approved, would increase the monthly base rate for a typical residential customer using 1,000 kilowatt hours of electricity from $57 to about $70 by 2020. Base rates, however, only make up a portion of customers' bills, as utilities also pass along the tab for expenses such as power-plant fuel.

As part of the filing with the regulatory agency, FPL estimates that a typical residential customer's overall bill would go from the current $91.94 to $101.18 starting in January 2017, $104.45 in January 2018 and $107.29 in June 2019.

Commission Chairwoman Julie Brown said the goal is to complete the hearing within two weeks. There are 50 witnesses scheduled from 11 parties.

A decision from the commission is expected in the fall.

Christensen said evidence will be presented that shows a rate decrease is warranted for 2017, with no changes needed in 2018 or 2019. Christensen added that while FPL has professed it would not seek additional rate increases if the proposal is approved, "there is no prohibition against FPL filing for an increase should its earnings fall below its authorized rate-of-return range at any time during the four-year period."

Silagy responded that the company couldn't commit to such a freeze if the commission approves less than the full request.

FPL, a regulated monopoly whose territory includes 35 counties, says it intends to use the money to help pay for $16 billion in upgrades to its electricity service, reduce emissions, improve fuel efficiency and strengthen the electric system to better handle severe weather and an increase in customers. The request also would cover the $1.3 billion needed for the natural gas-fired power plant in rural Okeechobee County.

Silagy said a current PSC-approved rate settlement, which expires at the end of this year, has allowed the company to keep costs down and maintain fiscal stability while upgrading its system.

"We are asking the commission allow us to continue on the path we are on," Silagy said.

FPL attorney R. Wade Litchfield told regulators the proposal would bring the company's rates closer to state averages.

In 2015, the statewide monthly average on a typical 1,000 kilowatt-hour bill was $121.46. The national average, as of July 2015, was $137.29.

But Robert Scheffel Wright, an attorney representing the Florida Retail Federation, said the utility is "over-reaching" in its request, asking for "way more" than needed.

"Even if the commission froze FPL's rates at current levels … FPL can pay all its bills and all its employees and support its investment in 2017 and still have net operating income of $1.6 billion," he said. "Their service is indeed valuable, but the customers have already paid for that value."

Others opposed to the proposal include the senior-advocacy group AARP, federal government executive agencies, the Florida Industrial Power Users Group, the South Florida Hospital and Healthcare Association, the Sierra Club and Wal-Mart Stores East.

Jon Moyle, an attorney representing the Florida Industrial Power Users Group, which represents businesses that use large amounts of electricity, argued the increase will be a burden on the state's industrial customers.

"Rates, just like taxes, before you get an increase should be looked at very closely and with heavy skepticism," Moyle said.

The News Service of Florida's Jim Turner contributed to this report.