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FPL doubts whistleblowers' authenticity, defends tax set-up

Florida Power & Light accounting chief responded to allegations that the company used the tax credits of its non-regulated utility, NextEra, to benefit the parent company while charging FPL customers at a higher tax rate. Download Davis response to December 2009 FINAL

Mike Davis, vice president of accounting, said in a letter to Public Service Commissioners that the allegations show that the letter-writer or writers are misinformed because all Florida utilities and "the overwhelming majority of the electric utilities in the country" use that same tax calculations for ratemaking purposes.

He said the same allegations have been made before and dismissed by the PSC staff and by the Third District Court of Appeal and speculated that the "true intent" of the inflammatory letter is to "be yet another effort to deceptively incite negative media coverage in order to distract from the facts of FPL's base rate proceeding.''

The PSC will vote on FPL's request to raise its rates by $1.3 billion a year at its Jan. 13 meeting.

"I strongly doubt that this letter in fact was authored by anyone at NextEra,'' Davis wrote. "It contains so many misstatements and fundamental misunderstandings of NextEra's and FPL's businesses, and the tax laws and regulation applicable to those businesses, that it is hard to believe anyone working at NextEra -- senior management or not -- could be so misinformed.''

Davis referred to a September 2006 PSC hearing on storm costs in which he was questioned by Chris Kise, then counsel for Attorney General Charlie Crist, over the fact that FPL was charging its customers 10 percent more for taxes than its parent company, FPL Group, was paying. Davis said FPL Group was able to lower its tax bill because of huge federal tax credits offered to NextEra, its unregulated subsidiary, because of NextEra's wind generation division.

Kise, who now represents FPL as a lawyer in private practice, said Tuesday that he pursued that line of questioning in cross examination during the storm cost case to raise doubts about FPL's the storm recovery numbers, not because he believed there was a substantial tax issue involved. "It really was a non-issue, incidental to the purpose, and a rabbit trail,'' he said. He commended then-chairwoman of the PSC, Lisa Edgar, for giving him "extraordinary latitude on cross-examination" that allowed those questions to be pursued.

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