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State utility advocate sues PSC over FPL's proposed settlement

The lawyer who represents the public in state utility cases on Wednesday sued the Public Service Commission claiming the proposed settlement agreement between Florida Power & Light and the state's largest utility users violates the constitution. Download OPC_Petition_for_Writ

"We feel it is an invalid settlement agreement because our office did not sign onto it,'' Public Counsel J.R. Kelly told the Herald/Times. The petition asks the Florida Supreme Court to halt the efforts of FPL to push through a settlement of its rate case that could cost customers more than its original rate request.

The state's largest utility offered up the deal just days before the Public Service Commission was expected to begin a hearing on its request to raise rates and collect an additional $690 million next year. Kelly and other lawyers representing all ratepayers immediately objected to the plan and urged the PSC to dismiss it, arguing it is a new petition that deserves a separate hearing.

Instead, PSC Chairman Ron Brise ordered a special hearing to discuss the settlement before the commission decides whether to accept or reject the rate case. The public counsel has said the offer is worse for residential customers than the company's original plan, even though it would cut the total cost collected from ratepayer by $138 million next year.

Kelly said the public counsel is "vehemently opposed" to the settlement because he believe it shifts $50 million of utility costs from the large utility users, hospitals and military bases who agreed to the deal and puts it onto residential customers and small businesses. The proposal would also raise late fees $10 million a year and gives FPL $1 billion in additional rate hikes through 2016, more than the original rate case to pay for new power plants

Signing on to the proposed agreement was the Florida Industrial Power Users Group, which represents large companies and has been one of the most vocal opponents of the rate increases of the past, the South Florida Hospital and Healthcare Association and the Federal Executive Agencies. They praised the proposal as a way to offer stability during a tough economy.

FPL spokesman Mark Bubriski released the following statement: “We haven’t received anything from Public Counsel but a press release. Inexplicably, the Public Counsel steadfastly refused to participate in the negotiating process that led to this fair and reasonable settlement. Regardless, we believe the PSC is well within its rights to conduct a hearing to gather all the facts and to consider this thoughtful compromise that provides benefits for all customers. Compared with current rates for Florida's 55 electric utilities, our residential customer bill is projected to continue to be the lowest in the state under the proposed four-year settlement agreement.”

From the Public Counsel's press release:

TALLAHASSEE - Today, Public Counsel J.R. Kelly asked the Florida Supreme Court to take the extraordinary step of halting the Florida Public Service Commission’s consideration of FPL’s efforts to ignore the Public Counsel’s role as the statutory representative of Florida’s ratepayers in FPL’s current rate case.  In his petition, Kelly asked the Court to use a rarely invoked power provided by the Florida Constitution to prohibit the Commission from allowing FPL to use a controverted settlement proposal to bypass the rigorous ratemaking process established by state law. 

The target of Kelly’s filing was a purported settlement agreement filed on August 15, 2012, that was entered into by FPL and 3 parties (representing hospitals, military installations, and industrial customers).  The 3 intervener parties total significantly less than 1% of FPL’s 4.6 million customers.  Generally, the proposal would immediately give FPL about $500 million more in annual revenues than the Public Counsel’s experts recommend, and would add an additional $450-plus million in previously unrequested rate increases cumulatively in 2014 and 2016, and in the absence of any proceeding to gauge whether FPL would need the increases to earn a fair return in those years. 

Under the proposal, FPL would make rate concessions to the 3 signing customer groups and shift the cost of those reductions to other customers, including residential customers.  The remaining 4.599 million customers are represented by the Office of Public Counsel and the Florida Retail Federation, who refused to sign the FPL proposal and strongly oppose it as excessive and invalid without the signature of the customers’ statutory representative.

In asking the Court to issue a Writ of Quo Warranto (which is an extraordinary remedy used to prevent a public official or state agency from acting without authority), Kelly seeks to have the Commission make a decision on the case that FPL filed in March 2012 and that the Public Counsel and other parties litigated and briefed fully – rather than the self-negotiated proposal that FPL unveiled on the eve of the rate case hearing.