Shame on the PSC

Florida Power & Light paints a glowing portrait of a proposal to charge customers some $191 million a year over decades as an investment in natural gas purchases from an Oklahoma company engaged in fracking.

The state’s largest utility company presented this idea to the Public Service Commission as a way to stabilize long-term costs of gas and avoid market fluctuations by investing in gas reserves.

Last week, the state utility regulators serving on the PSC set a precedent by approving this investment by ratepayers — its Florida customers — not stockholders.

Customers should not be forced to invest in a private venture by a monopoly. The PSC decision — not completely unexpected given the commission’s reputation as a lapdog to utilities — opens the door to future approvals that burden customers with the financial risk that properly belongs on stockholders and the company.

Don’t be surprised if other utilities are expected to line up for similar approvals.

The PSC ignored the opposition to FPL’s request, from the legal experts who represent the public in these cases and environmental organizations to the state’s biggest industrial energy consumers and the Florida Retail Federation.

FPL contends the joint-venture investment in PetroQuest Energy Inc. will save customers around $52 million by securing fuel at a set cost for the lifetime of the natural gas wells, which the company says are already in production.

The reported rate of return to ratepayers: 50 cents to one dollar annually. And should this venture fail to produce the forecast results, what then?

Currently, Florida does not allow utilities to profit from fuel charges. Natural gas expenses are passed to customers at cost. But this new PSC decision changes that and allows FPL to profit from the fuel that powers plants — some 10.5 percent.

The company and its shareholders will benefit at ratepayer expense. Utilities are already guaranteed a reasonable profit on investments, and this new deal fattens that return.

One of FPL’s vice presidents, Sam Forrest, has stated that the company’s “investment would actually reduce financial risk for customers by cutting out the middleman mark-up and serving as a hedge against fluctuating fuel prices.”

If this is such a good deal, why isn’t the company and shareholders putting up the financial risk?

This investment is an Oklahoma fracking operation raises environmental issues, too, as witnessed by objections to FPL’s proposal.

Hydraulic fracking injects chemicals, sand and water in voluminous amounts to capture natural gas and oil from rock formations deep inside the planet.

The full environmental ramifications have yet to be ascertained, but the chemical pollution and its impact on water quality must be a consideration. Utility customers, now compelled to invest in this, should have a say but their voice has been ignored.

Granted, among the state’s largest electricity suppliers, FPL charges are the lowest. Also to its credit, the company is committed to slashing foreign oil purchases by 99 percent, FPL President Eric Silagy told a Lakewood Ranch gathering in October.

But shame on the tone-deaf Public Service Commission for bowing to this utility request to pocket more money on an investment that should be borne by shareholders.

This editorial first appeared in the Bradenton Herald, a McClatchy newspaper.