FPL wants a rate hike but, after a year of hardship, electric customers need that money | Opinion

After a year of unprecedented hardship, can you imagine this headline coming out of Tallahassee: Gov. Ron DeSantis and state legislators propose biggest tax increase in Florida history.

Obviously, the reaction from all Floridians would be swift and harsh. Even more obviously, our governor and legislators would never consider something so reckless.

But this is, in effect, what Florida Power & Light (FPL) is proposing. The energy giant — which counts over half of all Floridians as its customers — is asking the Public Service Commission for a $6.2 billion rate hike over four years. This 18% hike in rates would be the biggest series of electric rate increases in Florida’s history. And like taxes, there is no alternative but to pay up.

FPL is part of NextEra

To understand such an outrageous request, you have to understand the source. FPL is not your parents’ electric company. It is now a subsidiary of NextEra Energy, one of the largest energy companies in the United States with facilities in 32 states and Canada.

FPL is a profit machine for NextEra, not because FPL is a strong competitor in an open market, but largely because it operates a government-protected monopoly in communities across Florida.

As Florida was mired in an economic meltdown last year, NextEra was celebrating a banner year. Its adjusted fourth-quarter 2020 profits came in at $785 million and annual earnings exceeded $4.5 billion. In fact, throughout every month of the entire pandemic, FPL continued to earn at the absolute maximum of its “authorized range” — 11.60%, as compared to the national average returns of 9.55% approved by utility commissions in other states in 2020.

In January, NextEra reported: “We achieved approximately 10.5% growth in adjusted earnings per share year-over-year and delivered a total shareholder return of approximately 30%, significantly outperforming both the S&P 500 and the S&P 500 Utilities Index.”

Times were good for NextEra’s shareholders, but not so good for its Florida customers. Those hit hardest by the pandemic were low-income wage earners who live paycheck to paycheck, many of whom couldn’t pay their electric bills.

Last year, when plunging fuel prices forced FPL (and other electric utilities) to lower rates, FPL rushed to claim credit for following the law, announcing: “Everyone at FPL understands how critical it is to continue to provide reliable electricity and to keep as much money as possible in our customers’ pockets.”

Meanwhile, a local NBC affiliate in South Florida reported: “FPL Power Shut-Offs Resume as Thousands of Floridians Struggle to Pay Bills.”

Rate decrease?

And now, as Floridians struggle to recover, FPL says it needs more money from them. But a close look at FPL’s rate structure proves that it does not. Based on an analysis of electric utility Return on Equity (ROE) across the country by Regulatory Research Associates, a group within S&P Global Market Intelligence, FPL’s proposed rate hike would create a return on equity for FPL that is more than 20% higher than the average approved return on equity for regulated utilities across America.

Experts hired by the state’s Office of Public Counsel agree. Their analysis concludes that instead of multi-billion-dollar rate increases, FPL should actually be cutting rates to the tune of $70 million per year. We call on the Public Counsel to pursue a rate decrease consistent with the recommendations in the testimony filed by his office’s experts.

Make no mistake: FPL’s proposal is bad for Florida residents and businesses. According to a Florida Chamber of Commerce report last year, almost 61% of small businesses said they are “extremely concerned about the economy” and more than 45% expressed concern about their ability to operate in the future.

Business is booming at FPL while so many of its customers are struggling to pay their bills. And this raises a critical question to be answered in the months ahead by the Florida Public Service Commission: Who needs the money more — Florida consumers, or FPL? The answer is obvious.

Mike Hightower is President of Floridians Against Increased Rates (FAIR) – www.fairfl.org