Florida Politics

State Supreme Court to decide fate of plan to open electricity market to competition

A proposed constitutional amendment, known as Florida Energy Choices, asks Florida voters to approve a major restructuring of electricity markets by giving consumers the right to choose their providers by dismantling the state’s existing utility giants.
A proposed constitutional amendment, known as Florida Energy Choices, asks Florida voters to approve a major restructuring of electricity markets by giving consumers the right to choose their providers by dismantling the state’s existing utility giants.

The colossal fight to open electricity generation to competition in Florida — which is being led by a Gainesville-based natural gas marketing company — made its way before the new-look Florida Supreme Court on Wednesday and it became clear the constitutional amendment drive is no David v. Goliath battle.

It looked more like David versus the world.

The measure, known as Florida Energy Choices, asks voters to approve a major restructuring of electricity markets by giving consumers the right to choose their providers by dismantling the state’s existing utility giants.

The concept is modeled after Texas, one of 17 states and the District of Columbia that have opened their monopoly-owned retail electricity markets to competition since the early 1990s.

Supporters say the change will significantly lower utility costs, super-charge renewable energy and electricity innovation, create thousands of jobs, attract new business to the state and pump more money into rural areas. Opponents, led by the state’s powerful utility industry, warn that the change is too disruptive and will bring more problems than it solves by creating uneven service reliability and few cost savings.

Whether the idea gets on the ballot depends in part on the court, which must determine if the ballot language complies with the single-subject provisions of the Florida Constitution and doesn’t mislead voters.

This is the first test for how the seven-member Florida Supreme Court, which now includes three justices appointed by Republican Gov. Ron DeSantis, will view constitutional amendments. Other citizen amendments expected to face the court scrutiny are proposals relating to opening Florida’s primaries to all voters, establishing a $15 minimum wage, an assault weapons ban, and a redundant proposal that makes a three-word modification to an existing provision in the Constitution that says that only citizens be allowed to vote.

During more than an hour of questioning Wednesday, the justices appeared skeptical.

The justices peppered lawyers for the proponents with questions. Could voters reliably understand that they would have to choose another electric company if they support the amendment? Was the public’s right to sell electricity guaranteed or implied?

“A summary cannot be affirmatively misleading,” said Chief Justice Charles Canady amid questions during the arguments. “It cannot state something that is untrue.”

Barry Richard, a lawyer for Florida Power & Light and its affiliate, Gulf Power, told justices Wednesday that the confusing nature of the amendment and its ability to “radically change an industry of such importance to Florida” — violates the constitutional test petitions must pass to make it onto the ballot.

“This initiative is a seismic change for Florida and Floridians,’’ said John Guard, chief deputy attorney general who joined the utilities in opposing the amendment. “While framed of giving Floridians choice, all this does is take away the current electric provider to 70% of Floridians.”

Under the current system, utilities are guaranteed a rate of return for their shareholders when they invest in everything from power plants and solar farms to the cost of cleaning up nuclear cooling canals.

But under the Energy Choice model, Florida Power & Light, Tampa Electric, Duke Energy and Gulf Power would continue to provide transmission and distribution of electricity, but they would have to sell their power plants to another company or a new subsidiary — which they could also own.

The existing utility giants would continue to own the lines, wires, poles and meters in their respective service areas but electricity would be sold by new companies that would compete for consumers. Companies could offer an assortment of options for their energy sources, including 100% renewable energy.

NextEra Energy, FPL’s parent, already sells electricity in other states that have restructured their energy markets, such as Texas but, in Florida, the company is working hard to defeat the proposal.

During the arguments before the court, FPL’s CEO, Eric Silagy, sat in the audience along with other top officials of the company. Silagy claimed the measure is “really about furthering the business interests of a few folks, including a retail electric provider that’s located and based out of Gainesville that markets power currently outside of Florida,” during a Jan. 25 earnings call.

Three lawyers, representing more than 40 entities who filed 18 separate briefs, also spoke in opposition to the amendment. The lineup of opponents includes Republican leaders who control the state House and Senate, more than a dozen Tallahassee special interest groups — such as the Florida Sheriff’s Association, the Florida Audubon Society, the Florida Chamber of Commerce, the Florida Hospital Association — and at least 10 individual cities and counties as well as the statewide associations that represent them.

Jody Finklea, representing the municipal utilities, argued that the ballot summary is “fatally misleading to the voters, who are left with the impression that Florida municipal utilities are unaffected” by the amendment. He said municipal utilities that don’t generate their own electricity often purchase it from the state’s monopoly utilities, and this could leave them stranded.

George Meros, representing the Florida Electric Cooperatives Association, argued the ballot measure violates the single-subject rule for citizen proposals, because it does not explain that the Public Service Commission would no longer regulate rates and the judiciary’s oversight would also change.

The initiative is being shepherded by Infinite Energy, a Gainesville-based retail and wholesale energy company which also backed an unsuccessful proposal for deregulation in 2018 before the Florida Constitutional Revision Commission, which meets every 20 years. Also supporting the effort is NRG Energy Inc. and Vistra Energy Corp, the trade group National Energy Marketers Association and the nonprofit Energy Choice Coalition.

Their lawyer, Ken Suhkia, argued the proposal, which requires the Florida Legislature to adopt legislation, effective June 1, 2025, will open wholesale and retail electricity markets to competition.

Canady told Suhkia he was “having trouble” understanding how they approve the amendment because, although it guarantees a constitutional right to be able to purchase electricity in an open market, it did not explicitly explain there was no guarantee that people could sell electric power. Justice Ricky Polston then asked if the Legislature could restrict the public’s right to sell electricity?

Suhkia answered both of them: The Legislature “must create a competitive wholesale marketplace,’’ he said. “If you guarantee the right to energy choice, we are opened up to competition.”

When he added that “we’re creating something entirely new here,’’ Justice Barbara Lagoa pounced. “The ballot summary doesn’t tell me we are creating an entirely new scheme,’’ she said.

Suhkia countered: “This creates something new in the sense that I have a choice and ballot title says ‘allow energy choice’ ’’ and that is new because “I’ve never had choice before.”

Justice Carlos Muñiz raised that point as well when questioning FPL’s lawyer, Richard, about his claim that the amendment was misleading.

“What principle do you have to assume ignorance on the party of the voter?” Muñiz asked. “Just the fact of choice is a significant change … It seems like if you know how this industry works, you could figure that out.”

A decision on the fate of the amendment is not expected until later this year. Meanwhile, the political committee, Citizens for Energy Choices, which is behind the signature gathering effort has collected 403,130 signatures out of the 766,200 to make it to the ballot.

Mary Ellen Klas is the capital bureau chief for the Miami Herald, where she covers government and politics and focuses on investigative and accountability reporting. In 2018-19, Mary Ellen was a Nieman Fellow at Harvard University and was named the 2019 Murrey Marder Nieman Fellow in Watchdog Journalism. In 2018, she won the Sunshine Award from the Society of Professional Journalists. The Herald’s statehouse bureau is a joint operation with the Tampa Bay Times’ statehouse staff. Please support her work with a digital subscription. You can reach her at meklas@miamiherald.com and on Twitter @MaryEllenKlas.
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