As opposition mounts to FPL’s rate increase, regulators delay decision
.jpg "Florida Power & Light is requesting a rate increase starting in January 2022.")
Amid opposition to a proposed settlement agreement that would impose the largest rate increase in state history on Florida Power & Light’s residential customers, state utility regulators on Wednesday decided to spend two months getting feedback on the legal and practical impact of the proposal before approving it.
The Florida Public Service Commission agreed to conduct a hearing on the case on Sept. 20 to review the deal to increase FPL customer utility bills by $1.53 billion over the next four years. An abbreviated hearing on the proposed rate increase will be conducted and a final vote on the settlement would take place on Oct. 26.
The deal was announced Aug. 10 between FPL and the the Florida Industrial Power Users Group, the Florida Retail Federation, the Southern Alliance for Clean Energy and the Office of Public Counsel, which represents commercial and residential ratepayers in utility cases. It must be approved by the five-member PSC.
Under the proposal, FPL would start collecting $692 million more in base rate increases beginning in January, followed by $560 million in 2023, as well as additional rate hikes of $280 million to pay for solar installations through 2025. The money would be used to allow the company to continue paying off its debt from its retired coal-fired power plants, including a Georgia plant that is scheduled to be retired in January. It would increase its solar investment and receive a guaranteed return on equity of 10.6% — the highest of any utility in the state.
But the settlement is vigorously opposed by groups that were not included in negotiations including environmental advocates, organizations representing minority groups and low income residents, a Palm Beach County couple that has joined as intervenors in the case, and a group called Floridians Against Increased Rates (FAIR), led by a former Jacksonville utility executive.
‘Worse off’
Opponents argue that the settlement leaves residential ratepayers “worse off than FPL’s original request” because they are subsidizing commercial and industrial users, who will see lower increases.
“To put it succinctly, a settlement that transfers so much wealth from residential customers to commercial and industrial customers cannot be in the public interest, nor can a settlement that leaves residential customers worse off than in FPL’s original proposal (where they faced an approximately 20% rate hike),’’ wrote Bradley Marshall, attorney for Florida Rising, League of United Latin American Citizens and the Environmental Confederation of Southwest Florida in a response that asks the PSC to reject the deal.
“This joint motion for approval of settlement agreement accomplishes both feats. Everyone gets what they want, except the residential public — who account for the vast majority of total customers, yet notably are the only major customer class unrepresented in the proposed settlement,’’ Marshall wrote.
Marshall said that while the Office of Public Counsel represents both commercial and residential class customers, “it has said many times that they do not take positions on how the pie should be divvied up between the classes.”
A Palm Beach County couple, Daniel R. Larson and Alexandria Larson, joined the case as intervenors and announced their opposition to the proposed settlement Wednesday. They and FAIR argue the settlement will result in rates “that are unfair, unjust, and unreasonable” and will “produce revenues that are far in excess of what FPL requires to provide safe and reliable service during the settlement period.”
‘Lower increases’
By contrast, FPL and the organizations that signed the settlement — the Office of Public Counsel, the Florida Retail Federation, the Florida Industrial Power Users Group and the Southern Alliance for Clean Energy — say the PSC should approve the settlement agreement because:
▪ “Residential and business customers will see lower increases in their bills than they would have experienced under the original [$2 billion] proposed increase.”
▪ It “provides FPL customers with stability and predictability with respect to their electricity rates, while allowing FPL to maintain the financial strength to make investments it believes are necessary to provide customers with safe and reliable power.”
▪ And it “serves the public interest by increasing the amount of emissions-free solar power and energy that will be available to serve all of FPL’s customers on a cost-effective basis.”
Walmart, which also is a party in the rate case, said Wednesday that it is supporting the proposed settlement.
Under the agreement, FPL would devote about $200 million for electric vehicle chargers and about $2 billion in additional solar expansion through its program called SolarTogether, a program that allows customers to voluntarily pay more on their electric bills to finance the solar projects and in return receive credits that are expected to result in them getting a “payback” in about seven years. The agreement dedicates 40% of the solar expansion to residential and small business customers and 60% to commercial, industrial and governmental customers.
Florida Rising and its coalition of partners in the case argue that the SolarTogether program is “a bad idea” because customers pay for solar twice — “once through base rates, and a second time in the form of payments to large commercial and industrial customers who the program is disproportionately reserved for.”
The coalition also argues in its response to the settlement that because no one representing residential customers was included in the bargaining over the settlement agreement, “it is no surprise that since residential customers were denied a seat at the table, they wound up on the menu.”
Residents subsidize commercial
According to FPL’s analysis of its rate increase request, residential customers were going to be paying more than what the utility considers the “fair share of revenues” based on the cost of service and usage, while several commercial customer classes would pay less.
“Under the settlement, they will be paying even more,” said Marshall, attorney for Earthjustice, which represents Florida Rising, League of United Latin American Citizens and the Environmental Confederation of Southwest Florida.
In 2022, for example, according to Marshall’s analysis of the settlement documents, residential customers will pay $253.7 million more than they are currently paying, while large commercial and industrial users (known as general service demand and general service large demand customers) will pay $265 million less.
If approved, the agreement will increase the base rate of a typical monthly residential bill for a customer who uses 1,000 kilowatt hours of electricity by $13.64 over four years. The biggest hike would come next year when a $6.08 a month increase would occur for the typical residential bill using 1,000 kWh. Those customers would see another $3.85 increase in 2023, another increase of $2.21 in 2024, and a final bill increase of $1.50 in 2025.
But for the opponents, those numbers are deceiving because, according to pre-hearing cross examination, FPL said the “typical” bill is actually a “theoretical bill and not the one people actually get in the mail,” Marshall said. “And when you think about the thing that they get every month that they have to pay, which is what we call a bill, they’re actually pretty high...and this rate increase is going to push them even higher.”
Opponents also argue that the PSC does not have the legal authority to approve parts of the settlement. And they all noted that the Office of Public Counsel had reversed course. It had been prepared to put on a case opposing the rate increase and was preparing witnesses to argue that FPL should reduce rates instead of raising them.
The Office of Public Counsel is under new leadership after the Florida Legislature pushed out former OPC head J.R. Kelly and hired attorney Richard Gentry, a former legislative lobbyist who has no previous utility regulation experience.
In the Larsons’ response to the settlement, their attorney Nathan Skop called the terms of the settlement “egregious” and said they contradict the argument the OPC made in July when lawyers representing ratepayers argued that “the FPL request to increase rates was not justified, that the FPL return on equity request was excessive and unjustified” and that the commission “lacked the authority to approve the mechanisms contained within the FPL rate request.”
Skop is a former PSC commissioner.
This story was originally published August 19, 2021 at 2:16 PM.
