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.”

 

 

 

 

 

 

 

 

AARP, others call for utility regulation reform in wake of FPL rate hike

FPL's Riviera Beach plant is among those fueled by natural gas.
FPL said it needed the rate increase to pay for new natural gas-powered plants such as this one in Riviera Beach.

Since January, thousands of residential Florida Power & Light customers submitted signed petitions and comments and made phone calls to regulators asking them to not allow FPL to raise its rates.

Despite that, the five-member Florida Public Service Commission unanimously approved a settlement deal Tuesday that allows FPL to increase its base rates by $811 million through 2020.

Now some are calling for reform of Florida’s utility regulation system, while others assert that the Office of Public Counsel, which represents all ratepayers, should not have been a party to the settlement.

The PSC approved a settlement agreement announced Oct. 6 by FPL, the Florida Retail Federation, the South Florida Hospital and Healthcare Association and the OPC.

Not including franchise fees and local taxes, which vary from city to city and can be substantial,   the bill for a customer who uses 1,000 kilowatt hours a month will jump from $91.56 to $102.97 in 2020.

Following the vote, AARP Florida’s state director Jeff Johnson, said consumers are not being heard, and residential ratepayers need an independent public counsel dedicated to their interests.

AARP’s  Advocacy Manager Jack McRay said the group with 2.8 million members in Florida is “exploring all options” as to what the next step should be.

FPL spokeswoman Alys Daly said Wednesday that FPL’s typical residential customer bill is $40 lower than the national average.

“Our typical business and residential bills are expected to remain lower than they were in 2006 for at least the next four years.  AARP members who are served by FPL are paying less for their electricity than the majority of AARP members who live in other parts of the country and at the same time, our customers have cleaner and more reliable service,” Daly said.

“We invest more than 3.5 billion a year – far more than our earnings – in infrastructure to deliver our customers with top-ranked reliability and bills that are among the lowest in the nation,” Daly said.

State Sen. Jose Javier Rodriguez, D-Miami,  said the rate increase serves “as further evidence of the need for reform in Florida away from a monopoly system overly controlled by a small handful of giant utilities.”

Florida Public Counsel J.R. Kelly said as for any calls for reform, “That is a decision for the Legislature.  Our office has always strived to provide the best legal representation for all ratepayers of the regulated utilities (electric, water, wastewater and gas), and we will continue to do so.”

Kelly has said the settlement was fair and far less than FPL’s original $1.3 billion request. In addition, among other positives such as more solar power plants, FPL is now required to begin terminating hedging activities for natural gas prices, a practice which has cost all Florida ratepayers more than $6 billion over the last 14 years.

AARP’s Associate Director for Advocacy Zayne Smith said the 6,700 petition signatures and 769 individual comments submitted to the Florida Public Service Commission were the biggest ever response from AARP members in any Florida rate case.

The Sierra Club also encouraged consumers to submit comments throughout the process that began in January and Monday it submitted 5,768 comments in bulk. Many of them explained the hardship posed by any rate increase and argued that there isn’t a need for more gas-burning power plants.

The other six parties who participated in the rate case, including AARP and the Sierra Club, did not sign on to the agreement.

Nathan Skop, a former PSC commissioner who represented Alexandria and Daniel Larson of Loxahatchee in the rate case, said Wednesday that by agreeing to the settlement, the Office of Public Counsel compromised its position to “advocate on behalf of Florida ratepayers.”

“The Larsons believe that the Office of Public Counsel should not have been a signatory to this terrible settlement which completely contradicts what OPC argued at hearing,” Skop said.

OPC originally said FPL’s rates should be reduced by more than $800 million, but later revised that and said the reduction should be more than $300 million.

“Had OPC not agreed to the settlement and remained neutral, it would have sent a clear message that the settlement was not in the public interest and forced the Commission to approve the settlement or decide the FPL rate case.  OPC agreeing to the settlement gave the Commission the pretext to approve the settlement and issue gushing praise on what a great deal it is.  Clearly this is not the case.  A comparison to the 2010 settlement clearly illustrates how bad a deal the current settlement really is,” Skop said.

In 2010, FPL received a $75.5 million increase after regulators slashed its $1.2 billion request.

In 2013, a $350 million, or 8 percent base rate increase, took effect after FPL reached a settlement with large power users in late 2012, and the PSC also granted FPL another $620 million rate increase for new power plants. OPC was  left out of the 2012 settlement, the first time that ever occurred. OPC said the settlement was invalid without its signature. Kelly  took the issue to the Florida Supreme Court, but ultimately lost.

 

AARP objects to proposed FPL rate case deal, calls it harmful to customers

FPL has 15,000 restoration workers ready to roll.
AARP has formally objected to a proposed settlement of FPL’s rate case.

AARP has strongly objected to the proposed rate case settlement between Florida Power & Light Co. and three intervenors, saying the $811 million base rate increase will be harmful to FPL’s residential customers.

John Coffman, an attorney representing AARP, said in a document filed late Thursday with the Florida Public Service Commission, that the deal is contrary to the evidence filed in the case and should be rejected. The evidentiary record in the case heard for nine days ending Sept. 1 supports a reduction of more than $300 million in FPL’s rate revenue for 2017, he added.

Coffman called the proposed rate of return on equity — or profits —  11.6 percent that FPL could earn under the deal “outrageous.”

“Forcing consumers to pay such excessive profit levels would place the Florida Commission far out of the mainstream, as compared to other public utility commission decisions throughout the United States,” Coffman stated.

In January FPL filed a petition with the PSC seeking a $1.3 billion increase in customers’ base rates. If approved, that would have resulted in a monthly bill increase of $13.28 by 2020 for the customer who uses 1,000 kilowatt hours.

If the PSC approves the settlement it is set to consider Oct. 27, the typical customer would see a bill increase of $9.48 a month by 2020, with the first $5 increase  kicking in next year.

AARP, with 2.8 million members in Florida, has fought FPL’s quest for a rate increase from the beginning, and launched a campaign resulting in more than 760 consumers submitting comments to the PSC.

On Oct. 6 the Office of Public Counsel, which represents all ratepayers, the South Florida Hospital and Healthcare Association and the Florida Retail Federation signed the deal. Under it FPL would charge customers $400 million more in 2017, $211 million more in 2018 and $200 million more in 2019.

Public Counsel J.R. Kelly said earlier this week the agreement is fair to everyone and will save customers an estimated $2 billion. He had no further comment Friday.

FPL  spokesman Mark Bubriski said earlier this week the company is pleased to have reached a fair, long-term agreement that will help it to continue to deliver superior value for customers.

AARP also said the deal would lock in “improper additional piecemeal rate increase in unknown amounts for new solar generation,” and would permit FPL to collect additional amounts over current rates by maintaining and expanding storm costs and other surcharges over the next four years.

It appears that the settlement would grant significant rate relief to larger customer groups at the expense of residential customers, Coffman stated.

AARP and five other intervenors who not sign the agreement were not notified prior to its Oct. 6 filing. Attorneys for FPL and the other three signatories stated in a filing that they  could not reach the other parties because Hurricane Matthew was on its way.

Nathan Skop, a former PSC commissioner who represents Alexandria and Daniel Larson of Loxahatchee in the case, said Florida Administrative Code rules require any statement that parties could not be contacted to be backed up with details about the dates and methods of the attempted contact.

The Larsons have also filed a formal objection to the settlement agreement.

AARP has requested  the hearing set for Oct. 27 be delayed for two more weeks because there  isn’t enough time  to address the “significantly anti-consumer” provisions proposed in the non-unanimous agreement.

Skop has also asked the PSC to delay any decision on FPL’s storm hardening plan and wooden pole inspection, which was included in the rate case. First, it should hold a workshop to assess how FPL’s system held up during Hurricane Matthew in light of the outages that occurred.

Other intervenors including the Sierra Club, the Federal Executive Agencies, the Florida Industrial Power Users Group and Wal-Mart have not taken a public stance for or against the agreement.

 

FPL’s proposed $1.34 billion rate increase unreasonable, AARP asserts

FPL customers can comment on its proposed rate increase at a hearing Wednesday in West Palm Beach.
FPL customers can comment on its proposed rate increase at a hearing Wednesday in West Palm Beach.

AARP Florida  said Tuesday that Florida Power & Light’s proposed $1.34 billion rate increase, which amounts to a base rate increase of almost 24 percent,  is unreasonably high and  insufficiently justified.

 

AARP Florida is calling on FPL customers to raise their voices against the increase by the sole utility provider in hundreds of communities throughout central and south Florida. Customers can weigh in on FPL’s rate request by speaking up at the Public Service Commission hearings.

A hearing is scheduled for 6 p.m. Wednesday at the Solid Waste Authority of Palm Beach County, 7501 N. Jog Road, West Palm Beach.

Other hearings are planned for:

  • Thursday, June 16: Melbourne
  • Thursday, June 16, Daytona Beach
  • Monday, June 27: Miami
  • Tuesday, June 28: Ft. Lauderdale
  • Wednesday, June 29: Miami Gardens

 

“People keep seeing retirement savings shrink and they earn fractions of a percentage on their own investments,” said Jeff Johnson, AARP Florida state director. “Yet, FPL is asking for a return on their equity of 12.5 percent, while the allowable industry average is between nine and 11.5 percent. Even at nine percent, their return on investment far outpaces what most retirees can depend on and FPL’s proposed increase is detrimental to consumers, especially those with fixed incomes.”

FPL officials have stated the increase is needed to cover increased costs and to pay for infrastructure, new generation and smart grid technology totaling close to $16 billion.

 

FPL’s requested rate increase is one part of a complex and multi-layered proposal, AARP said.  The utility company wants to increase its base rate from $54.86 to $68.14 a month for all ratepayers, which equals a 12.5 percent increase. Additionally, they are also asking for a $2 fixed charge (to reportedly cover future infrastructure and technology costs), per household that is unrelated to electric usage.

 

“It is difficult to tell a residential customer, whether they are saving for retirement or just trying to get by that FPL deserves to take more of their hard-earned money just to pad its bottom line,” Johnson said.

 

In addition, to the base rate increase and the additional $2 charge, FPL is seeking to increase the Storm Cost Recovery rider that would be on top of other monthly fees.

 

After the public comment period concludes, the PSC will hold a formal hearing beginning Aug. 22 in Tallahassee. The PSC will make its final decision before year’s end. Should FPL’s request be granted, the new rates would take effect Jan. 1, 2017.