TALLAHASSEE — Utility regulators turned aside consumer advocates’ objections Wednesday and agreed to hold formal hearings on Florida Power & Light Co.’s proposed rate increase settlement endorsed by large commercial and government customers.
Commissioners liked parts of the proposal but said they needed more supporting evidence before deciding whether to approve the deal. That’s because it includes elements not covered by previous hearings on FPL’s original request to raise base rates by
$690.4 million effective in January.
The proposal would increase rates by only $378 million in 2013, but opponents argued they’d go up another $1 billion by the end of the four-year agreement.
It would raise residential customers’ base rates by 24 percent over that span. FPL estimates overall bills would go up only 7 percent, though, due to anticipated reductions in other billing factors, mainly fuel costs.
FPL signed the tentative agreement with three groups representing industrial power users, federal agencies and South Florida hospitals. Overall rates for such large commercial customers would remain flat or decline under the proposal at least through 2013.
“It’s a bad deal for the vast majority of FPL’s customers,” said Assistant Public Counsel Charles Rehwinkel. “It will not, as settlements should, promote the efficiency, speed and just resolution of this case. Instead, the proposal will entangle the commission and the parties in a quagmire of wrangling for months, if not years, to come.”
The state’s Office of Public Counsel and Florida Retail Federation urged outright rejection of the proposal, but the four members of the five-member panel who were present refused after hearing oral argument.
“The public interest will be served if customers can enjoy the prospect of low rates and high reliability sustainably into the future and, secondly, that at the same time the company and its investors can earn a fair return on their investment,” FPL lawyer Wade Litchfield told the commissioners.
He said the agreement accomplishes both objectives and FPL would still have the lowest rates in the state. If the commissioners ultimately reject the proposal, they would resume consideration of FPL’s original request, also opposed by consumer advocates.
Rehwinkel participated under protest, saying the oral argument violated public notice and other legal requirements.
He said the groups signing the agreement include only about 500 customers while the public counsel represents all 4.5 million FPL customers in 35 South Florida and Atlantic Coast counties.
The commission has never before approved a settlement opposed by the public counsel’s office, which could appeal such a decision to the Florida Supreme Court.
Besides raising rates in 2013, the settlement calls for additional increases when new power plants go into service in 2014 and 2016. The company also would be barred from seeking another base rate increase for four years. If the commission rejects the agreement, FPL could file additional rate cases after 2013.
Any increase approved for 2013 would go into effect in two steps, one in January and another in June when a new plant at Cape Canaveral is due to go online.
The settlement would raise the base rate for a typical residential customer using 1,000 kilowatt hours by a total of $5.77 in 2013 after the June increase. Due to anticipated reductions in other charges the overall monthly bill, though, would increase by only $1.56 to $96.18 as of June.
The base rate increase for the full four years would be $10.39. The company also is estimating overall bills would go up by $6.56 through 2016 for a total of $101.18 with the caveat that figures for the last three years of the agreement do not include potential changes in the fuel adjustment charges that are made on an annual basis.
Under FPL’s original proposal the total bill as of June would be $97.22 after an increase of $2.60.