The Florida Retail Federation, after publicly rejecting a settlement offered this week by Florida Power & Light, on Friday proposed its own suggestion for the company's $690 million rate case.
The Retail Federation, which represents about 7,000 retailers throughout the state, said the Public Service Commission should delay by six months FPL's rate increase -- thereby assuring most customers lower bills for the first part of next year as lower fuel prices kick in -- but allow the company a partial rate increase beginning in June 2013.
“While FPL would not get the immediate rate increase it had been seeking, the company will continue to enjoy a generous profit and more than enough revenue to continue providing the safe and reliable service we expect,” said Rick McAllister, president and CEO of the Florida Retail Federation.
The state consumer advocate, J.R. Kelly, director of the Office of Public Counsel, said he was still reviewing the offer but believed "it will be much better received than what FPL has filed."
On Wednesday, FPL filed a proposal to lower its rate case request for next year in return for a plan to allow it three years of automatic rate increases as each of three new power plans goes into operation. The agreement, between FPL and the state's largest commercial power users, military establishments and hospitals, also gave large electricial users a larger credit for agreeing to let their electricity generation be interrupted. Those credits would be offset by charges paid by residential customers.
Kelly and the Retail Federation flatly rejected the offer as bad for consumers, warning it could raise customer bills more than FPL's original rate case proposal.
Sole said the Retail Federation and Office of Public Counsel were invited to join settlement talks months ago "and they declined to do so" and defended the company's proposal as "a fair and balanced solution for all customers."
A key component to the Retail Federation's offer is the proposal to limit FPL's return on equity, the measure of profit it allows to be spent on shareholders, to 9.75 percent or 10 percent, which would reduce the base rate by millions. The company currently is allowed a 10 percent ROE and would raise that to 10.7 percent under the settlement it reached with the large electricity users.
Kelly and the Retail Federation argue that FPL, which operates as a monopoly, also subsidizes the stock value of its parent company, NextEra. They argue that the company's request to retain even more profit for shareholders is excessive.
FPL responds that its customers pay lower-than-average bills, that it makes constant improvements in its fleet of power plants, and should be able to receive the same profit level as comparable utilities in the state. "We're asking to be treated fairly when our performance is compared to the other investor-owned utilities in this state. Nothing more,'' the company states on its web site.
Sole said the retailers' ROE offer of 8.5 percent "would be the lowest for any electric utility in the United States of America."
Here's the Retail Federation news release:
FRF rejects FPL rate increase, offers proposalto hold base rates steady in January
TALLAHASSEE -- The Florida Retail Federation, a trade association representing more than 7,000 businesses, today filed a response with the Florida Public Service Commission to the Florida Power and Light Co. proposal to increase base electric rates. Full technical hearings on the FPL rate increase are scheduled to begin on Monday in Tallahassee. Under the FRF’s Offer of Settlement, there would be no base rate increase in January, as FPL had previously proposed. Further, FPL would be allowed to increase base rates when new plants in Cape Canaveral and Riviera come online in mid-2013 and mid-2014.
The Florida Retail Federation’s Notice of Offer of Settlement can be downloaded at the http://www.psc.state.fl.us/dockets/cms/docketFilings3.aspx?docket=120015 or by visiting http://www.psc.state.fl.us/dockets/cms/ and entering the docket number 120015.
“Under our proposal, FPL customers will most likely see a decrease in their utility bills next year because of lower prices for the fuel that FPL uses to power its generators. In this difficult economy, allowing those customers to enjoy some relief from constantly increasing bills is the right thing to do,” said Rick McAllister, president and CEO of the Florida Retail Federation. “While FPL would not get the immediate rate increase it had been seeking, the company will continue to enjoy a generous profit and more than enough revenue to continue providing the safe and reliable service we expect.”
The FRF’s Offer of Settlement would allow FPL a return on equity of at least 9.75 percent, and as much as 10 percent if the company signs on to a four-year agreement. FPL this week proposed a settlement for a 10.7 percent return on equity.
Hundreds of individuals, including small business owners and retirees, have appeared before the Public Service Commission to oppose the FPL rate increase in public hearings around Florida.
These businesses and residents, along with the Florida Retail Federation, AARP, and the Office of Public Counsel, continue to advocate for the countless thousands of FPL’s customers who were not able to travel from their homes to the public hearings. The Florida Retail Federation is the statewide trade association representing Florida’s second largest employment industry. Florida retailers pay more than $49 billion in wages annually, provide one out of every five jobs in the state, and collect and remit more than $20 billion in sales and retail-related taxes for Florida’s government each year. For more information, visit the FRF website, and follow FRF on Facebook and Twitter.
Here is Mike Sole's complete statement:
Mike Sole, FPL Vice President of State Governmental Affairs:
“We invited the Florida Retail Federation and Office of Public Counsel to join settlement talks many months ago, and they declined to do so. In fact, it’s unfortunate that the Retail Federation said very publicly in January that it was not interested in a settlement. We were disappointed, but we moved forward with a constructive and collaborative agreement with the three other major intervenor groups.
“That agreement represents many months of hard work and give and take by all parties involved, all of whom strongly believe it represents a fair and balanced solution for all customers, who will continue to receive typical bills that are the lowest in the state and well below the national average.
“For the Retail Federation to submit an offer that, among other things, provides for a zero increase is nothing more than political theater for public relations purposes. When you actually do the math, it represents an 8.5 percent ROE offer, which would be the lowest for any electric utility in the United States of America. “We plan to be before the Commission first thing Monday morning prepared to move forward in whatever manner the PSC desires.”