Supreme Court weighs role of public advocate in rate cases

Florida’s Supreme Court justices heard arguments Thursday in a case that could set the precedent for how much influence the state’s consumer advocate will have in future cases before the utility board.

At issue is the $350 million rate increase approved in 2012 by the Public Service Commission for Florida Power & Light.

The Public Service Commission circumvented a full rate hearing last year when it approved a settlement between FPL and the company’s largest industrial users that allowed the company to charge customers higher rates in 2013 and automatically increase rates again in 2014 and 2016 when new power plants come online.

The agreement was approved by regulators despite the objections of the Office of Public Counsel, the legislatively appointed lawyer whose office represents customers in rate cases. Public Counsel J.R. Kelly had opposed the rate increase, saying that FPL’s financial projections indicate that rates should be reduced not increased. He also objected to the settlement because it allowed the company to receive a future automatic boost in revenue without having to immediately justify its expenses.

It was the first time the PSC had approved a settlement without the public counsel’s consent, so Kelly, and his office, filed suit. They are asking the court to invalidate the rate increases and require the PSC to start over.

They say that state law gives the public counsel the same veto authority over a settlement agreement that a utility has, and that the settlement set a bad precedent and hurt customers. They also claim that the due process rights of more than 99 percent of FPL’s 4.6 million customers were violated when regulators gave the advantage to the company’s commercial users, who comprise less than one percent of the customer base but use a proportionately higher amount of electricity.

“We believe the public counsel is necessary to the approval for a settlement, based on the court’s previous decision,” said Joseph McGlothlin, associate public counsel. He cited a 1976 court case, Citizens v. Mayo, which said that the role of the public counsel was essential to the representation of the public in rate cases.

Lawyers for FPL joined with the PSC’s staff to argue that the public counsel had plenty of opportunity to challenge the settlement agreement last year and address the many related financial issues.

Alvin Davis, attorney for Juno Beach-based FPL, said that state regulators had four months to review the settlement, conducted 10 days of hearings and had ample time to address all concerns raised by the public counsel. They said if the court throws out the settlement it will give the public counsel virtual veto power of all future settlements.

But McGlothlin told justices that, under the current situation, the PSC has given utilities the veto power over future settlements and the public counsel should be treated the same. “We seek an equal footing and equilibrium,” he said.

Justice Barbara Pariente noted that regulators appeared to move ahead without giving both sides equal treatment. “How can we have a settlement agreement if you don’t have all the parties that have an interest?” she asked.

Justice R. Fred Lewis questioned why regulators would allow FPL to add issues to the settlement — such as the automatic rate increases in 2014 and 20165 — when it wasn’t part of FPL’s original rate request.

He compared it to saying “I want a rate hike for my cup of coffee and, while we’re fussing about that, I want an additional rate increase for my microphone. “I’m trying to understand how you change what’s involved in the dispute while the dispute is pending.”

Davis responded that the PSC identified five additional issues, allowed for three months of discovery on those issues and then held a two-day hearing on them.

“This was not sprung on public counsel at the last minute,” he said.