FPL seeks $318 million for Hurricane Matthew costs, storm reserve

FPL storm headquarters in West Palm Beach tracked Hurricane Matthew.

FPL storm headquarters in West Palm Beach tracked Hurricane Matthew.

The biggest chunk of Florida Power & Light Co.’s $811 million rate increase started in January, as the typical customer’s bill rose by $7.21 a month. Now another $3.36 a month increase is expected to show up beginning in March.

That’s because FPL, headquartered in Juno Beach,  is seeking to raise its customers bills to recoup $318.5 million for power restoration and replenishing its storm reserve fund following Hurricane Matthew. The storm grazed Florida’s east coast in October, with gusts exceeding 100 miles an hour in some spots.

The company said in filings with the Florida Public Service Commission that under a 2012 settlement agreement that expired Dec. 31,  it has the right to collect money from customers for hurricane-related costs, including the storm reserve.

If granted, the increase will result in a typical customer bill jumping to $102.77 from $91.56 in December. Those amounts do not include franchise  fees or local taxes, which vary. It’s likely the PSC will take up the issue in February.

Under the 2012 agreement, storm charges cannot exceed $4 per 1,000 kilowatt-hours of usage a month. The Matthew-related fees for FPL’s 4.8 million customer accounts will continue through February 2018.

“Obviously, Hurricane Matthew was a large and powerful storm that affected major portions of our service area and severely damaged the electric grid in some areas, particularly northern and central Florida. It knocked out power to about 1.2 million customers,” FPL spokesman Dave McDermitt said Wednesday.

“Our prompt response, which included approximately 14,600 restoration workers, really was the most effective in FPL history and helped us restore service to 99 percent of our customers within two days following the storm,” McDermitt said.

“We had to replace 250 miles of power lines, 900 transformers and 400 utility poles,” McDermitt said.

AARP and other intervenors fought against FPL’s proposed rate increase of $1.3 billion that the company had sought last year. Ultimately, FPL reached a settlement agreement between FPL and three groups representing customers. That base rate hike includes $400 million this year, $211 million in 2018 and $200 million in 2019.

AARP opposed that settlement, and has expressed concerns about the impact of the bigger bills on fixed-income seniors.

Wednesday,  Jack McRay, AARP Florida Advocacy Manager, said, “AARP Florida is concerned about the impact that this new rate increase would have on Florida residential ratepayers.  Given the new makeup of the Florida Legislature, we are exploring our options for addressing utilities regulation in 2017.”

Storm reserve funds were used to pay for damage from Hurricane Hermine in September, and by the time Matthew hit in early October, the fund was down to $93 million. FPL is allowed to bring it back to $117 million.

FPL has been collecting a storm charge since 2007 to pay for the costs of previous major storms, particularly those in 2004 and 2005, McDermitt said. The last bond payment to finance those repairs is  scheduled for August 2019.

Since 2009, FPL has not been permitted to collect money from customers in advance for future storm costs.

“This allowed base rates to be somewhat lower, but customers will now pay for Hurricane Matthew recovery costs,” McDermitt said.

In the last decade, FPL has spent roughly $2 billion on storm hardening costs, including strengthening 600 main power lines, placing 450 main power lines underground and clearing vegetation from more than 135,000 miles of power lines. In addition, 1.4 million poles have been inspected and upgraded or replaced as needed.

Storm-hardened feeder lines performed more than 30 percent better during Matthew than those that weren’t, McDermitt said. Smart grid technology helped avoid more than 118,000 service interruptions. No hardened distribution feeder pole or transmission structure failed.

Florida’s last major storms until Hermine and Matthew were 11 years ago, but restoration costs were fairly comparable, McDermitt said.

FPL spent more than $906 million on restoration following the 2005 hurricanes, with $721 million due to  Hurricane Wilma in October 2005. That storm left 98 percent of FPL customers without power.

While Florida was spared the worst of Matthew, the damage to FPL’s 35-county territory was substantial.

“The most striking difference was the recovery time,” McDermitt said. We had work crews that started in South Florida and then hopscotched up the coast. It hugged the coast the whole way up.”

 

 

 

 

 

 

 

 

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