Sierra Club files Florida Supreme Court suit to block FPL rate hike

FPL's Riviera Beach plant is among those fueled by natural gas.
FPL’s Riviera Beach plant is among those fueled by natural gas.

Sierra Club  filed a lawsuit Tuesday in the Florida Supreme Court to block Florida Power & Light’s rate hike for an energy plan that the environmental group says “bilks millions of customers and further locks the Sunshine State into an over-reliance on financially risky, climate-disrupting gas.”

On Nov. 29, the Florida Public Service Commission unanimously approved FPL’s $811 million base rate increase following a settlement between the company and  three customer groups. The rate increase took effect this month.

Prior to the rate increase’s approval, Sierra Club had submitted nearly 6,000 comments to the commission from Floridians who said the rate increase posed an economic hardship for them. The commenters also stressed that there’s no need for the gas-burning power plants in Florida.

Tuesday, FPL issued a statement calling the Sierra Club “an extreme group which takes extreme positions.”

The Sierra Club objects to FPL’s reliance on natural gas, which is used to produce about 70 percent of its electricity, while using solar energy to produce less than 1 percent.  It asserts that the Florida Public Service Commission violated Florida law in approving the rate increase.

Sierra Club officials said Florida law states that utilities may raise rates only after the PSC agrees that the increase is prudent and necessary to continue providing reliable, affordable power. To comply with Florida law, FPL was required to present the PSC—and the public—with substantial evidence to prove the gas plants were needed and were the least-cost option before building the plants or asking to raise customers’ rates to cover the costs.

FPL spokeswoman Sarah Gatewood said in a statement Tuesday:

“The Sierra Club is an extreme group that takes extreme positions, so while we are disappointed, we’re not surprised at the actions taken today by this Washington-based lobbying group.   Apparently they’re more interested in generating headlines and donations than working with the cleanest electric company in Florida and the only electric utility in the Southeast United States to already be in compliance with the EPA’s 2030 Clean Power Plan today.

“Rather than recognizing our innovative approach to running our business and the resulting significant benefits for all customers, including 1,200 megawatts of cost-effective new solar right here in Florida over the next four years, this out-of-state group is instead moving forward with more frivolous, expensive litigation that will cost all Floridians – not just FPL customers, but all Florida taxpayers,” Gatewood said.

“After a nearly year-long process that included more than 30 witnesses, countless hours of cross examination by attorneys for all parties, including the Sierra Club, and hundreds of thousands of pages of evidence, FPL and the Office of Public Counsel, which represents all customers, as well as other major customer stakeholder groups, reached a fair settlement that is clearly in the best interest of all of FPL’s customers – and the Florida Public Service Commission unanimously agreed.

“The settlement supports billions of dollars in planned investments to continue improving FPL’s electrical infrastructure, which is already one of the cleanest and most reliable in the U.S., while still keeping typical customer bills lower than they were in 2006 through 2020. We look forward to demonstrating those benefits yet again,” Gatewood said.

Sierra Club also criticized the $3 billion 515-mile Sabal Trail pipeline slated to be completed this year. It will  transport fracked gas to central Florida and then to FPL’s South Florida plants.

The pipeline’s construction threatens local waterways and wetlands and the fragile limestone surrounding the Floridan Aquifer, one of the largest freshwater aquifers in the world, the Sierra Club and others contend.

“There’s absolutely no justification for making families and businesses pay more of our hard-earned money just so FPL can line its shareholders’ pockets and pollute our air and water in the process,” said Sierra Club Florida Chapter Director Frank Jackalone.

Sierra Club Florida Chapter Chair Mark Walters said, “The PSC is supposed to make sure our energy sources are safe, reasonable and reliable. Instead, they’ve chosen to let FPL leave us vulnerable to price spikes when investments in solar and energy efficiency are proving to be safer and cheaper in states across the country.”

Floridians made it clear in November that they want more solar by voting down Amendment 1, a failed multi-million dollar attempt by FPL and other Florida utilities to mislead voters and hobble solar growth in the Sunshine State, Sierra Club officials said.

“FPL should take full advantage of our state’s clean energy potential instead of stubbornly building out dirty, unnecessary gas plants and pipelines that increase pollution and electric bills,” Walters said. “Renewable energy technologies are smarter, more cost-effective and safer than fossil fuels. FPL needs to stop propping up its stockholders at the expense of our communities and our natural resources.”





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.


Loxahatchee residents oppose FPL settlement deal, say it’s a windfall

Parties to FPL's settlement assert they could not notify others involved in the case due to Hurricane Matthew.
The hurricane’s fault? Parties to FPL’s settlement assert they could not notify others involved in the case due to Hurricane Matthew.

A Loxahatchee couple who intervened in Florida Power & Light Co.’s rate case has now taken a stance opposing a proposed settlement deal  that would give FPL an $811 million rate increase through 2020.

“Their profit is $1.6 billion, and now ratepayers will be paying more. When does the gluttony end?”  Alexandria Larson, who along with her husband Daniel intervened in the rate case, said Wednesday.

FPL filed a petition with the Florida Public Service Commission in January seeking a $1.3 billion rate increase. That case was heard before the PSC for nine days ending Sept. 1. Last week FPL and three intervenors announced they had reached a settlement that if approved by the PSC, would give FPL an $811 million.

Click here to read more about the settlement.

Nathan Skop, a former PSC commissioner who represents the Larsons, said the proposed settlement represents a financial windfall to FPL to the detriment of residential customers. If approved, it would be the largest base rate increase in decades.

The Office of Public Counsel, the South Florida Hospital and Healthcare Association and the Florida Retail Federation signed on to the agreement with FPL. The other six intervenors in the case did not sign the deal, and it’s not known how many will object to it.

In a motion seeking approval of the agreement filed Oct. 6, attorneys for FPL, OPC, the FRF and the SFHHA state, “Due to the conditions surrounding Hurricane Matthew, the signatories were unable to reach other parties to this proceeding to determine their positions at the time of this filing. The signatories will endeavor to do so as soon as practicable after Hurricane Matthew and will file an updated certificate of conferral with the Commission.”

Skop called the assertion that there wasn’t enough time to consult the parties prior to the hurricane is
“completely disengenuous,” because according to published reports, OPC had the settlement a week before it was filed Oct. 6.

Florida Public Counsel J.R. Kelly said Wednesday while it’s true the terms had been conceptually  agreed to, the settlement was not finalized in writing by the parties and signed until Oct. 6.

AARP officials said Tuesday they and their regulated utility experts are reviewing and analyzing the settlement.

The PSC can approve the settlement without the other intervenors’ okay.

Nathan Skop, a former PSC commissioner who represents the Larsons, said the proposed settlement represents a financial windfall to FPL to the detriment of residential customers.

Skop said the Larsons were not given the opportunity to meaningfully participate in the settlement discussions.

“The Larsons believe that OPC sold out residential ratepayers and should not have agreed to this settlement,” Skop said.

Kelly said Tuesday that the settlement is a fair deal for everybody.

The PSC has to either vote against the agreement, or approve it, but cannot modify it, the filing states.

Kelly said the other intervenors have not notified him about their positions.  There will be a  hearing where all the parties will have an opportunity to oppose or take no position, make  comments and present witnesses.

A hearing is scheduled for Oct. 27.








Regulators allow utilities to continue but reduce natural gas hedging

Florida Power & LIght's Riviera Beach power plant runs on natural gas. Staff photo/Lannis Waters
Florida Power & Light’s Riviera Beach power plant runs on natural gas. Staff photo/Lannis Waters

Florida Power & Light Co. customers and those of the state’s other three investor-owned utilities will have lost more than $6.6 billion by the end of this year because the utilities have purchased much of their  natural gas through hedging since 2002 rather than on the open market.

Despite those massive losses, Thursday, the Florida Public Service Commission voted to allow hedging to continue but approved the utilities’ request to reduce the amount of fuel purchased through hedging by up to 25 percent this year and by 25 percent in 2017 and 2018.

The move  will reduce customers’ exposure and could ultimately result in less of a loss moving forward. Utilities pass on the cost of fuel to their customers.

Attorneys for  the Office of Public Counsel, which represents consumers,  and the Florida Industrial Power Users Group once again called  for the commission to stop allowing the utilities to hedge on natural gas purchases.

Hedging, which allows utilities to lock in prices in long-term contracts,  began in 2002 following volatile natural gas prices in 2000 and 2001. In December the commission voted to allow hedging to continue, but said they wanted to look at how potential losses to customers might be minimized.

FPL’s 4.8 million customers have borne the greatest share of the losses at more $4.2 billion, since the utility is much larger than Duke Energy Florida, Gulf Power and TECO.

FPL had been projected to incur hedging losses of $490 million in 2015, but instead lost $504 million. The company buys about 60 percent of its natural gas through hedging. It uses the fossil fuel to provide 71 percent of  the fuel to run its power plants.

FIPUG attorney Jon Moyle told the commission, “The facts today are much different than they were in 2001 and 2002. We think it’s time to do away with hedging. It is not working well for consumers. It’s a big loser for consumers.”

There’s an abundance of cheap natural gas available today. Moyle said that the plentiful supply plus the losses make a compeling argument as to why the commission should simply order natural gas hedging to stop.

Associate Public Counsel Erik Sayler said that this year  the four companies  are projected to lose another $560 million due to hedging, which will bring the losses to more than $6.6 billion.

Sayler reiterated the position the OPC took last year that hedging should be discontinued  due to the enormous losses the utilities have incurred and passed on to ratepayers.

Moyle said that in 2015 the utilities lost $820 million due to hedging, and if that had been reduced by 25 percent, losses would have been $615 million.

Commission chairwoman Julie Brown and Commissioners Art Graham and Ronald Brisé asked whether a 50 percent hedging reduction might work.

FPL attorney John Butler said, “I am not in a position to agree to 50 percent sitting here at counsel’s table. We are hedging now for 2017, and we are already pretty deeply into it.”








Florida Supreme Court says FPL can’t charge customers for gas drilling


Shale rigs similar to this one are used to drill for gas in Oklahoma.
Shale rigs similar to this one are used to drill for gas in Oklahoma.

In a win for Florida Power & Light customers, the Florida Supreme Court today reversed a Florida Public Service Commission decision that allowed FPL to charge ratepayers for an oil and gas exploration and drilling venture in Oklahoma.

The PSC exceeded its statutory authority when it approved recovery of FPL’s costs and investments in the Woodford Project in Oklahoma’s Woodford shale region,  the court said.

» Read the Florida Supreme Court’s decision

The court said in its decision that the PSC considered the  recovery of costs of the drilling venture through fuel charges paid by FPL customers to be a long-term physical hedge.

“Treating these activities as a hedge requires FPL’s end-user consumers to guarantee the capital investment and operations of a speculative oil and gas venture without the Florida Legislature’s Authority. Accordingly, we reverse,” the court wrote in its 20-page decision.

FPL officials did not immediately respond to a request for comment.

In December 2014 the PSC approved FPL’s request to collect the cost of its $191 million gas drilling venture with PetroQuest in Oklahoma’s Woodford Shale region from its 4.8 million customers through fuel charges on their bills.

Then in June 2015 the PSC gave FPL the go-ahead to invest as much as $500 million a year in natural gas drilling operations —effectively making the utility and its customers partners in what can be a risky business. FPL uses natural gas to provide 72 percent of the fuel to run its power plants.

Three of the PSC’s orders on the issue were appealed by the Office of Public Counsel, the Florida Retail Federation, and the Florida Industrial Power Users Group.

“It is a good day for FIPUG members and other consumers. They will not be forced to pay for risky oil and natural gas ventures in Oklahoma and elsewhere,” said Jon Moyle, a Tallahassee attorney who represents FIPUG.

The court also said that statutes allow utilities to charge customers only for costs arising from the “generation, transmission or distribution” of electricity, and the Woodford project falls outside of the purview of an electric utility.

Whether advance cost recovery of speculative capital investments in gas exploration by an electric utility is in the public interest is a policy determination that must be made by the Legislature, the court said.

In rendering the decision, six justices agreed with the reversal and Justice Charles Canady dissented.






Groups object to FPL seeking waiver of nukes feasibility analysis

FPL's Turkey Point nuclear plant is shown here. The company is seeking to add two more nuclear reactors at the site.
FPL’s Turkey Point nuclear plant is shown here. The company is seeking to add two more nuclear reactors at the site.

Florida Power & Light Co. wants to charge customers another $22 million next year for two new nuclear reactors that might never be built, and but doesn’t want to do an analysis of whether the proposed $20 billion project still makes economic sense.

Attorneys for the Office of Public Counsel, the Florida Industrial Power Users Group, the Southern Alliance for Clean Energy and the city of Miami have asked regulators to deny FPL’s request for an exemption from the required analysis. FPL has provided such analyses in the past.

By the end of this year, FPL customers  will have paid $282 million in pre-construction and pre-licensing costs for the proposed reactors known as Units 6 and 7,  which, if approved, would join two existing nuclear reactors at the plant near Homestead.

If the additional $22 million is approved, FPL customers will have paid more than $303 million by the end of next year toward financing the reactors. The reactors have yet to be licensed and might never be built.

FPL said in a filing with the Florida Public Service Commission that  an annual feasibility analysis at this stage would serve no meaningful purpose because FPL plans to only incur costs associated with obtaining and then maintaining its license, permits and certifications from 2017 to 2020.

Performing the extensive economic analysis would be a “substantial hardship and violates principles of fairness,” FPL said in the filing. It anticipates receiving its combined licensed from the Nuclear Regulatory Commission and its wetland permits from the U.S. Army Corps of Engineers by 2017.

Monday, attorneys for the four groups filed objections to FPL’s request for a waiver.

“Depriving the Commission, the Office of Public Counsel and other parties of the feasibility study while simultaneously asking the Commission to allow FPL to recover millions upon millions of dollars from ratepayers is unfair to the Commission and the parties,” FIPUG attorneys Jon Moyle and Karen Putnal wrote.

“The regulator, the Commission, is put in the untenable position of being asked to impose rates for a project unsupported by evidence that the project remains feasible,” FIPUG stated.

Instead, FIPUG suggests that FPL consider withdrawing its request to charge customers for costs associated with the planned reactors. If the PSC grants the waiver, it should require FPL, not FPL ratepayers, to fund the permit and licensing activities.

SACE attorney George Cavros stated in the filing that there is great uncertainty and risk surrounding FPL’s proposed Turkey Point 6 and 7 reactors, and all the financial risk is being borne by its customers.

The in-service dates have been moved three times, most recently to the 2027-28 timeframe.

Public Counsel J.R. Kelly said that the annual  feasibilty analysis serves to safeguard customers from potentially paying millions of dollars over numerous years on a project when the analysis may show it is no longer viable and may be abandoned.