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Supreme Court weighs role of public advocate in rate cases

Florida's Supreme Court justices heard arguments Thursday in a case that could set the precedent for how much of a voice the office that represents customers in utility cases will have in influencing rate decisions before the state's utility board.

At issue is the $350 million rate increase approved in 2012 by the Public Service Commission for Florida Power & Light. The Public Service Commission circumvented a full rate hearing when it approved a settlement between FPL and the company's largest industrial users that allowed the company to charge customers higher rates in 2013 and automatically increase rates again in 2014 and 2016 when new power plants come online.

The agreement was approved by regulators despite the objections of the Office of Public Counsel, the legislatively appointed lawyer whose office represents customers in rate cases. Public Counsel J.R. Kelly had opposed the rate increase, saying that FPL's financial projections indicate that rates should be reduced not increased. He also objected to the settlement because it allowed the company to receive an automatic boost in revenue in the future without having to justify its expenses now. 

It was the first time the PSC had approved a settlement without the public counsel's consent, so Kelly, and his office, filed suit. They are asking the court to invalidate the rate increases and require the PSC to start over.

They say that state law gives the public counsel the same veto authority over a settlement agreement that a utility has and the settlement set a bad precedent and hurt customers. They also claim that the due process rights of more than 99 percent of FPL's 4.6 million customers were violated when regulators gave the advantage to the company's commercial users, who comprise less than one percent of the customer base but use a proportionately higher amount of the electricity. 

"We believe the public counsel is necessary to the approval for a settlement, based on the court’s previous decision,'' said Joseph McGlothlin, associate public counsel, citing a 1976 court case Citizens v. Mayo, which said that the role of the public counsel was essential to the representation of the public in rate cases. 

Lawyers for FPL joined with the PSC's staff to argue that the public counsel had plenty of opportunity to challenge the settlement and the many related financial issues.

Alvin Davis, attorney for Juno Beach-based FPL, said that state regulators had four months to review the settlement, conducted 10 days of hearings and had ample time to address all concerns raised by the public counsel. They said if the court throws out the settlement it will give the public counsel virtual veto power of all future settlements.

But McGlothlin told justices that under the current situation, the PSC has given FPL the veto power over future settlements and the public counsel should be given similar influence. "We seek an equal footing and equilibrium,'' he said. 

Justice Barbara Pariente showed concern that regulators moved ahead without giving both sides equal treatment. 

"How can we have a settlement agreement if you don’t have all the parties that have an interest,'' she asked.

Justice R. Fred Lewis questioned why regulators would allow FPL to add issues to the settlement -- such as the automatic rate increases in the future -- when it wasn't part of the original rate case.

He compared it to saying “I want a rate hike for my cup of coffee and, while we’re fussing about that, I want additional rate increase for my microphone...I’m trying to understand how you change what’s involved in the dispute while the dispute is pending.”

Davis responded that the PSC identified five additional issues, allowed for three months of discovery on those issues and then held a two-day hearing on them. 

“This was not sprung on public counsel at the last minute,” he said.

 

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