Florida regulators set the stage Tuesday for a process that will allow the utility industry to charge what is estimated to be as much as $50 billion to bury power lines to avoid storm-related damage in the future.
With a unanimous vote, the Florida Public Service Commission approved a series of rules that will allow companies to submit storm protection plans to the PSC for review and approval every three years and pass along the cost to customers on their monthly bills.
Floridians won’t know how much their bills will rise, however, until the rules are implemented and hearings are held likely next year. But Florida Power & Light, the state’s largest utility, has already told shareholders that it expects to spend between $3 billion and $4 billion between now and 2022 and could spend as much as $35 billion in the next 25 years.
The rules were required to be set by Oct. 31 as part of the legislation (SB 796) passed earlier this year and signed into law by Gov. Ron DeSantis. The law allows utility companies to bypass the rigorous rate review to get money for storm expenses. Under the new law, they can petition the PSC to recover their expenses more quickly by adding a charge to customer bills. The added charge will also allow companies to profit off burying power lines and other hardening projects.
But because the utilities are already allowed to charge customers for storm hardening through programs the PSC approved in the base rates, the Office of Public Counsel, which represents the public in rate cases, warned that the rules lack so much detail that utilities could bundle projects together, and double-bill customers.
“This is a $50 billion rule. It should not needlessly be a $54 billion proposed rule,’’ said Charles Rehwinkel, associate public counsel, told the PSC. “But without the needed information, you are on the cusp of doing that.”
He said the Office of Public Counsel supports storm hardening, but the rules the PSC was adopting were “unlawful in their legal basis, contravene specific provisions of the statute you are attempting to implement,” are vague, and violate the state’s rule-making procedures and the Constitution.
The rules require utilities to submit detailed plans for how they will spend the storm hardening money in the first of the three years, but for the second two years they must only provide estimates. Rehwinkel urged them to demand detail every year.
“Without this information, you cannot protect the customers from double recovery,’’ he warned. “Without it, you cannot meet your statutory mandate.”
Marshall Willis, a financial expert working with the OPC, produced evidence that FPL has an internal policy that he said shows FPL “proposes bundling projects to meet the threshold test to pass on the cost through the cost recovery clause and inflate the cost to the customers.”
But FPL lawyer Kenneth M. Rubin said the commission will be the final check on whether customers are double billed.
He said it will be the utilities’ burden “to prove that a cost that is sought in the storm protection plan is not already recovered in base rates ... If we are unable to prove it to the commission, we are not going to be able to recover those costs.”
Rubin also said it is “unrealistic to provide project level detail more than a year ahead” because projects will inevitably change and, if they are required to be locked into them, it will lead to “customer confusion.”
Commissioners agreed with the utilities’ arguments, rejected the OPC claims, and adopted the rules as written by their professional staff.
“The PSC determined that the storm protection rules will protect Florida’s consumers, including those most vulnerable,” said Commissioner Art Graham in a statement after the vote. “OPC had ample opportunity to participate in this process, which they did, and our rules will do what the Legislature intended — protect utility customers’ interests.”
Public Counsel J.R. Kelly however, said the PSC’s violations may be so severe, he is “probably going to appeal” the ruling to the Division of Administrative Hearings, which would delay the process.
“The rule does not establish an adequate standard for the commission to protect the public,’’ Kelly said.
Also appearing at the hearing was state Sen. Jose Javier Rodriguez, a Miami Democrat who voted against the storm hardening bill.
He told the PSC he opposed removing the cost of burying power lines from the rate review process because “it effectively increases rates for the ratepayers” and does it in a way that reduces the amount of scrutiny the costs will get from regulators.
Mary Ellen Klas can be reached at email@example.com and on Twitter @MaryEllenKlas