TALLAHASSEE The Public Service Commission on Thursday agreed to award Florida Power & Light a $358 million base rate request that includes a series of rate increases over four years and rejected a call from the public counsel that the company scale back its rates.
After a morning hearing discussing the nuts and bolts of a proposed settlement, the five-member commission appears on track to vote 4-1 to modify the settlement agreement presented by the company, and allow FPL to received guaranteed profits of between 9.5 to 11.5 percent through 2016.
The settlement is less than the $543 million the company originally sought in its first settlement offer, but the profit level – which would guarantee a midpoint return on equity of 10.5 percent – is higher than the 10 percent the PSC staff recommended in a draft recommendation.
Commissioner Eduardo Balbis, who supported giving the company the 10.5 percent return on equity, expressed interest in demanding that the company also make a concession to collect at least $10 million less from consumers in other areas. No other commissioners would agree
FPL, a regulated monopoly with 4.6 million customers in Florida, is currently making profits at about 11 percent, the most allowed under current law. But the company’s rate agreement ends in January and it has asked the PSC to allow it to collect more money from customers to pay back the costs of the Cape Canaveral power plant, scheduled to go into service in June.
The company has scheduled two other power plants to go online in 2014 and 2016 and has joined with its largest power users to offer up a settlement that will allow it the flexibility to raise its rates for those plants without PSC oversight, and the expensive and contested rate case that would come with it.
The decision by the PSC to approve much of the settlement effectively shuts down the argument of the Office of Public Counsel, the state agency that represents customers in rate cases. The public counsel has vigorously opposed the settlement deal and instead has argued that the company is making about $253 million more than it should and wants the PSC to lower FPL's rate of return and charge customers less money.
The PSC decision Thursday marks the first time the PSC has moved forward on a rate settlement without the public counsel’s consent.
J.R. Kelly, the state’s chief public counsel, told the Herald/Times that a ruling in favor of the proposed settlement could work against the public in future cases because it would give an incentive for utility companies in the future to do as FPL did and circumvent his office.
FPL side-stepped the public counsel when it entered into its agreement with Florida Industrial Power Users Group, the South Florida Hospital and Healthcare Association and the Federal Executive Agencies and announced the settlement just as the company’s rate case was scheduled to begin in August.
The groups represent about a half of one percent of FPL’s 4.6 million customers but use nearly half of all the electricity generated. Under the deal, they would get lower rates than regular residential customers.
This is also the first major rate case decided by this commission for FPL, the states’s largest utility, since the legislature unseated four members of the previous commission when it rejected most of a $1 billion rate increase request in 2009.