Florida utility regulators on Thursday will consider one of the most pivotal cases of their term — whether to approve a base rate increase of more than $543 million for Florida Power & Light without the consent of the office that represents consumers.
The proposed settlement would mean a $1 per month increase for typical customers next year and would allow the company to automatically raise rates again for two new power plants without the approval of the Public Service Commission in 2014 and 2016.
The proposal has the backing of the state’s largest commercial power users, who would benefit from the deal.
But it is vigorously opposed by the Office of Public Counsel, the state agency charged with representing most consumers in utility rate cases.
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Depending on how the PSC rules, the case “has the potential to change the way cases proceed in the future and, we think, not in a positive way,” said J.R. Kelly, the state’s public counsel.
FPL counters that “this has been a very thorough process and we think that the settlement is really the right path forward that benefits all of our customers and effectively locks in low rates while helping us deliver strong service for at least four more years,’’ said Mark Bubriski, FPL spokesman.
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 a settlement to the rate case scheduled to begin in August.
The groups represent about a half of one percent of FPL’s 4.6 million customers.
The Office of Public Counsel, which is backed by other groups such as the Florida Retail Federation, refused to sign on.
They say that the settlement was not in the public interest because, they argued, FPL’s base rates should decrease by as much as $253 million.
The PSC went ahead with hearings on the rate case, but despite objections from the public counsel, agreed to consider the settlement during a special hearing this month.
If the five-member PSC rejects the settlement, the focus reverts back to FPL’s original proposal — a plan to increase base rates $690.4 million or 16 percent, which amounts to $7.04 a month for typical customers — and regulators would decide whether or not to approve their request during a Jan. 23 hearing.
If the PSC approves the settlement, the base rates will climb according a yet-to-be-determined amount over the next four years as three new power plants come into service.
If the settlement goes forward, Kelly said, the influence of the public counsel could be forever muted.
“If they approve this settlement, then the concern we have is then what is going to be the function of the public counsel’s office,’’ he said.
“It could open the door to every utility out there just simply bypassing our office and entering into any kind of self-serving settlement with any other party that represents that .5 percent, 1 percent or 2 percent of their customers, and it doesn’t matter what the rest of the customers think.”
The settlement calls for giving FPL the ability to collect $378 million more from customer base rates, starting in January, and another $165.3 million more to pay for its Cape Canaveral plant starting in June.
The cost to customers: no increase in January and $1 more a month in June for the customer using 1,000 kilowatt hours a month.
The settlement also stretches four years into the future, allowing the base rate to rise two more times without PSC approval.
Under the plan, rates would increase again in 2014, enough to pay for $236 million in annual costs to pay for the modernized Riviera Beach plant, and again in 2016, to pay for $217.9 million when the company’s new Port Everglades plant comes into service.
PSC Chairman Ronald Brisé, a former state representative from Miami, is considered the swing vote on the issue.
Commissioners Lisa Edgar and Art Graham will likely side with FPL and vote to approve the settlement, while Commissioners Eduardo Balbis and Julie Brown are expected to vote against it.