July 07, 2016

Regulators give FPL approval to take a 1-year break from charging customers up front for nuke plant

Fpl plantThe Florida Public Service Commission on Wednesday unanimously approved a request from Florida Power & Light to take a one-year break from charging customers in advance for planning and construction of its proposed new nuclear power plant. 

The decision is expected to save customers $22 million in nuclear cost recovery fees that regulators typically approve to allow  the company FPL to charge customers for planning and construction of the company's proposed nuclear units at its Turkey Point site on Biscayne Bay. Since 2008, FPL has charged customers $282 million in advance for the construction, under the advanced nuclear cost recovery fee it helped to push through the Legislature in 2006.

The change translates to a savings of about 34 cents a month for customers that use 1,000 kilowatt hours a month, beginning on the January 2017 bill. Those savings, however, will be offset, if the commission approves a $1.33 billion, 26 percent increase, in base rates beginning in 2017, as FPL has requested.
 
The rate increase hearing is scheduled to begin in August. If approved, the customer who uses 1,000 kilowatt hours a month will see the base rate portion of his bill rise by $14.67 a month to $71.67, according to documents submitted to the PSC.

The decision to stop charging customers follows the decision by FPL to delay nuclear plan construction. After eight years of planning, FPL announced in April it was postponing construction on units 6 and 7 of its nuclear fleet until at least 2020. It said, however, it would continue to pursue a federal license that would clear the way for construction. The company has yet to receive federal approval to construct the plant. 

The delay means two next-generation reactors initially projected to go online as early as 2018 and 2020 likely would not fire up for perhaps another decade.

 

July 05, 2016

What percent of the electricity customers in the Sunshine State own a renewable system? Think tiny

Solar panels
Only one tenth of one percent of all Florida utility customers owned a renewable generating system in 2015, according to new data released Tuesday by the Florida Public Service Commission.

That number -- .11 percent -- while modest, is something to brag about -- according to a news release by the Florida Public Service Commission released on Tuesday. The commission touts the fact that of the 7.9 million utility customers in Florida, 11,626 of them operated customer-owned renewable energy systems -- a 36 percent increase over the 8,571 users in 2014. Those users include customers like Whole Foods,  Florida Museum of Natural History, Ace Hardware, and IKEA which have installed their own solar photovoltaic panels.

Solar PV panels continue to be the most popular renewable choice, the PSC said. Also increasing is the use of wind turbines and anaerobic digestion -- a multi-step process that uses microorganisms to break down organic material to form methane and carbon dioxide gases, which are then used to generate electricity.

According to the Solar Energy Industries Association, installed solar PV system prices dropped by nearly 12 percent in 2015 as utility companies and customers installed 41 megawatts of solar electric capacity in Florida last year. If you combine the solar PV systems owned by customers with the majority that is owned by the state's utilities, Florida ranks the state 14th in the country in installed solar capacity, the group said.

The PSC's policy has given the utility industry the advantage over customers and competitors when it comes to installing renewable systems. In December 2014, the PSC slashed its energy-efficiency goals by more than 90 percent at the behest of the utility industry, which argued rewarding customers to save energy was too expensive. The commission also ended the solar rebate program at the end of 2015.

The utilities sought the cuts to energy efficiency and the solar rebate programs by arguing that, with the decline in natural gas prices, it was cheaper for them to produce a kilowatt of electricity than to save it. As a regulated monopoly, the utilities are allowed to profit off the energy they produce, but they cannot make a profit if customers don't use their electricity.

Although Florida lags behind nearly a dozen smaller states in renewable generation, the PSC boasted about the increase in customer-owned utilities in a press release on Tuesday which said that "since 2008, the number of renewable systems has increased more than twenty-fold."

“Our rules assist customers who want to use renewables, and who also want to be connected to the grid,” said PSC Chairman Julie Brown, who was one of two votes against reducing energy efficiency goals. “We’ve helped accelerate renewable energy use without compromising service reliability.”

Here's how the numbers break down:

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June 27, 2016

Panel clears prison whistleblower of wrongdoing

Doug GlissonA Department of Corrections whistleblower who was demoted after accusing his bosses of covering up inmate abuse and agency corruption was cleared of wrongdoing Monday as a panel of law enforcement officers unanimously ruled he was wrongly targeted.

Doug Glisson, a senior investigator at the Department of Corrections, is now seeking reinstatement to his position as a supervisor in the agency’s Office of Inspector General, after a five-member Complaint Review Board concluded that the complaint against him was “unfounded.”

Glisson was demoted and docked pay by the agency in April after six internal investigations were launched against him on Feb. 3, 2015 — a day after his former boss, Inspector General Jeffery Beasley, was grilled by a Senate committee about allegations of cover-up and corruption. Three of those investigations were sustained, without interviewing Glisson, two were dismissed and one he challenged as violating his rights under the “Officers’ Bill of Rights.”

Glisson was accused of hearing a complaint from an inmate who alleged officer-on-inmate abuse at the Franklin Correctional Institution but failed to investigate — in violation of agency procedure. He sued after the agency refused to provide a hearing, as required by law, to allow him to bring forward his allegations that the investigation was biased against him. Story here. 

June 23, 2016

FPL offers to forgo 34-cent nuke fee for a year but really wants the $14.67 rate increase

Fpl plantWith its future nuclear construction plans on hold, and plans to seek a major rate increase, Florida Power & Light has asked to take a break from charging customers for nuclear plant development next year.

In documents filed with the Public Service Commission on June 17, FPL said it is “willing to defer consideration” of its request to charge customers $22 million in 2017 and instead will take a one-year break from collecting the “nuclear cost recovery" fee until 2018. If approved, the change could save customers who use 1,000 kilowatt hours a month 34 cents on their monthly bill in 2017.

Meanwhile, FPL is asking regulators to look favorably on two other proposals that will cost customers considerably more than the nuclear cost recovery fee.

State regulators on Tuesday gave the company 10 years to clean up a massive underground plume of saltwater threatening drinking water well fields near its Turkey Point plant. The company has said that the clean-up efforts could cost about $50 million in the first year alone and could increase the typical customer bill 25 to 50 cents a month.

In August, the company will also ask state regulators to approve a $1.33 billion rate increase over the next three years that could increase customer bills by 27 percent. According to documents filed with the PSC, FPL not only seeks to increase customer base rates, it also wants to raise fees on things like connection charges and late payments for delinquent customers.

If the PSC approves the full rate increase, a customer who uses 1,000 kilowatt hours a month will see base rates increase by $14.67 a month to $71.67 by June 2019. Story here. 

 

June 09, 2016

Their customers overpaid $6.6 billion in fuel bills, so utilities scale back failed hedging program

Under fire for overcharging Florida customers $6.6 billion in fuel costs since 2002, Florida's largest utilities agreed to reduce their fuel hedging program Thursday for the first time since the program began. 

The decision by the Florida Public Service Commission allows the company to reduce the program that allows them to lock in fuel prices in advance by 25 percent but regulators rejected calls to eliminate the failed program.

The program, known as fuel hedging, has been a bad bet for customers since it began in 2002 after significant fluctuations in natural gas and oil prices led to unexpected increases in customers' utility bills.

Over that time, Florida Power & Light, Duke Energy of Florida, Tampa Electric Co. and Gulf Power Co. locked in future fuel prices at high rates but then the market price dropped, leading customers to pay an estimated $6.6 billion more than the market costs.

In 2015, utilities charged customers $820 million more than the market cost for natural gas, according to PSC staff because of the hedging program and they are expected to lose another $560 million this year. FPL customers lost $504 million in hedging costs in 2015, Duke Energy of Florida customers lost $226 million, Gulf Power customers lost $50 million and Tampa Electric Co. customers lost $39 million.

The program was designed to allow companies to enter into fuel hedging contracts, essentially betting on a fixed price and agreeing to pay it whether the price rises or falls. The expectation was that the companies would offset the losses with gains when the price of natural gas rose.

But with the advent of new extraction technology, such as fracking, the price of natural gas has dropped in recent years and companies have overpaid on their fixed fuel costs.

Lawyers representing utility customers urged regulators to discontinue the hedging program but the utilities argued they should only be required to reduce the program by 25 percent.

"The suggestion by the utilities is putting a Band-Aid on a gaping gunshot wound and we would ask you to go further than what the utilities propose,'' said Jon Moyle of the Florida Industrial Power Users Group. "It's not working well for consumers. It's a big loser for consumers...Stop the bleeding."

"The cost of financial hedging activities still greatly outweigh any potential benefits that the companies may receive,'' said Eric Sailer of the Office of Public Counsel, which represents the public in utility matters.

Three PSC members said they would have preferred to see the company reduce the amount they hedge by 50 percent but innstead agreed to the utility's request and approved the 25 percent reduction nonetheless.

James Beasley of Tampa Electric said the utilities decided that reducing their hedging contracts by 25 percent seemed "a reasonable judgment call."

"We are hedging now for 2017 and we are already pretty deeply into it,'' said John Butler, lawyer for FPL.

Commissioner Art Graham applauded the utilities for coming forward with the proposal and said he had hoped they would have asked for 50 percent reduction.

"I know it's not easy for you to come together,'' he said. "Maybe we could have done more but overall this is better than not."

May 23, 2016

Utility regulators reject request from public's lawyers for more time in FPL rate case

Lisa Edgar via PSCThe Florida Public Service Commission offered a glimpse into how bitter, and potentially personal, the high stakes debate over Florida Power & Light's request to raise its rates $1.3 billion may become later this summer.

On Monday, the PSC voted unanimously to reject a request from the Office of Public Counsel, the lawyers who represent the public before regulators, who want more time to prepare their case.

The OPC had asked the panel to reconsider a May 4 order by hearing officer and PSC Commissioner Lisa Edgar who ruled that the public counsel would have just over four weeks - until May 31 - to file its testimony in two parts of the rate case. She gave FPL just over five weeks - until July 5 -- to file its rebuttal.

It was a timeframe that Public Counsel J.R. Kelly considered unprecedented, unworkable and unfair so, rather than file a motion with Edgar for more time, he and his staff asked for a full vote of the PSC.

It backfired.

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May 19, 2016

NextEra rejects call to report risk of sea level rise to its waterfront nuclear plants

NextEra EnergyIn a swift 17-minute meeting held in a Oklahoma City hotel Thursday, NextEra Energy successfully won shareholder approval of a $31 million compensation package for its five top executives, and defeated two proposals aimed at increasing transparency over how the company is handling sea level rise and political contributions.

"The company you own had a very strong 2015,'' declared NextEra president and CEO Jim Robo as he called the quick meeting to order at the Embassy Suites hotel in downtown Oklahoma city.

He is among the company’s five top executives who, shareholders agreed will be paid $31 million in performance pay and stock because of the company’s strong financial performance in the last year. Robo alone earned at least $15.2 million in compensation in 2015, according to the company proxy statement.

The Juno Beach-based company is the parent of Florida Power & Light and one of the nation's largest utility conglomerates. The audio cast of the annual meeting for company shareholders is available on the company’s web site.

Robo cited NextEra’s better than average reliability, its lower than average customers bills, its satisfaction among business customers, its acquisition of a Texas pipeline, and its expanding wind and solar market as evidence of “the whole company delivering outstanding financial performance for our shareholders.”

Robo did not make note of the troubles ahead, such as the federal and state orders for FPL to clean-up its leaking cooling canals in order to stop a plume of saltwater from migrating into South Florida’s drinking water supplies and leaking into Biscayne Bay or the resistance the company faces in its bid to purchase Hawaii Electric.

Robo recognized a representative for Coral Gables activist and NextEra shareholder, Alan Farago and his wife Lisa Versaci, to present their shareholder proposal to require the company to report each year on the risk its faces from sea-level rise, under a range of scenarios and according to the best available science.

Farago has argued that FPL's position as the supplier of electricity to Florida's east coast is "extraordinarily vulnerable to the financial disruptions of climate change."

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Supreme Court rejects Florida Power & Light's attempt to make customers pay for fracking

In a rebuke to Florida Power & Light, the Florida Supreme Court on Thursday ruled that state regulators exceeded their authority when they allowed the company to charge customers for its speculative investment into an Oklahoma-based fracking company.

In June of last year, the Public Service Commission rejected its staff recommendation and unanimously approved guidelines that gave FPL the right to charge its customers up to $500 million a year for speculative natural gas fracking activities without oversight from regulators for the next five years.

In a 6-1 opinion, written by Justice Ricky Polston, the court concluded that the PSC did not have statutory authority to authorize the charge and called its decision "overreach."

"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," Polston wrote. Justice Charles Canady dissented with an opinion, arguing that the PSC did have the authority to allow the costs of the investment to be recovered under the FPL fuel clause.

Here's the ruling: Download SCOFLA Woodford case

The proposal, called the Woodford Gas Reserves Project, is a joint venture between FPL with Oklahoma-based PetroQuest Energy, Inc. which develops and operates the natural-gas wells. FPL has earned profit off the investment -- about 11.3 percent -- and claimed that it would provide a long-term hedge against volatile fuel costs and should therefore be charged to customers under its fuel cost-recovery clause. 

Update: As of April 30, 2016, FPL has recovered $21.9 million through the Fuel Clause related to the Woodford Project, the PSC said Friday. 

The court disagreed with FPL and ruled that the investment was a risk that should be charged to shareholders, not ratepayers. It said PSC's ability to allow FPL to recover costs "is permissible only for costs arising from the 'generation, transmission, or distribution' of electricity','' while "the exploration, drilling, and production of fuel falls outside the purview of an electric utility as defined by the Legislature."

"It is undisputed that FPL is an electric utility,'' Polston wrote. "It is also undisputed that the PSC’s ratemaking authority encompasses the authority to examine fuel cost expenditures and approve cost recovery to compensate for utilities’ fuel expenses through the fuel clause...However, the PSC does not have the statutory authority to approve cost recovery for FPL’s investment in the Woodford Project."

The court's ruling was hailed by the Office of Public Counsel, which represents the public before the PSC, the Florida Retail Federation, and the Florida Industrial Power Users Group, which opposed the PSC's decision because it gave FPL unprecedented permission to use ratepayer dollars to finance an energy exploration and production business.

"This is a great victory for ratepayers and will prevent them from having to bear the cost of some very speculative risk,'' said JR Kelly, the head of the Office of Public Counsel. 

FPL, a regulated monopoly and Florida's largest utility, entered into the $191 million joint venture with PetroQuest Energy of Oklahoma to explore for natural gas, including using a process known as hydraulic fracking. The process involves injecting large volumes of water, sand and chemicals at high pressures to release oil and natural gas from rock caverns deep underground.

FPL used the investment as a guaranteed new source of revenue that allowed it to increase its rate base in the face of increasing competition from solar and other alternative energy sources. As an investor-owned utility, the PSC allows FPL to earn a guaranteed profit -- return on investment -- of up to 11.5 percent of its rate base. By allowing the company to increase that by $750 million a year, FPL and its parent company, NextEra, were guaranteed higher profits.

The return on investment for customers, however. At its hearing on its fuel costs last year, FPL revealed that the Woodford project had customers about $5 million, rather than save them in fuel costs. 

According to an analysis by the PSC’s staff, FPL was the first utility in the nation to be allowed to use ratepayer money for such an “non-regulated risk.” 

The court called out that strategy as an inappropriate use of the fuel cost-recovery clause which is intended to be used to hedge against price swings.

"Permitting advance recovery of FPL’s investment in the Woodford Project’s exploration and production of natural gas will not pay for the costs of actual fuel,'' Polston wrote. "It will provide recovery, instead, for investment, operation, and maintenance and operation of assets that will provide access to an unknown quantity of fuel in the future."

The court said that because it "is impossible to know what the costs of the natural gas will be until it is actually produced. There is more uncertainty from this investment rather than less" and therefore the investment " cannot be characterized as a physical hedge."

Polston said that the Woodford Project "is a guaranteed capital investment for FPL; it is not a hedge to stabilize fuel costs."

Polston added that while the speculative capital investments in gas exploration and production by an electric utility "may be a good idea,'' whether it is in the public interest "is a policy determination that must be made by the Legislature."

Last year, the PSC staff drew a similar conclusion, which the PSC rejected, saying the project was untested, a risky investment in a volatile energy market, and had the potential to benefit FPL’s shareholders more than its customers.

Canady, however, disagreed, scolding the court's majority for overturning the PSC. 

"...the majority is merely substituting its judgment for the PSC’s judgment and expressing disagreement with the PSC’s factual findings,'' he wrote. "The testimony and exhibits presented at the evidentiary hearing provide competent, substantial evidence to support the PSC’s conclusion that the Woodford Project acts as a long-term physical hedge.

Kelly, the public counsel, said the next step will be “to go back and figure out how to undo the portion of the commission's order than the court has now overruled,’’ he said. “It will certainly come in the form of some refund to the FPL ratepayers.”

Bev DeMello, PSC spokeswoman, said Friday that "as with all costs recovered through the Fuel Clause, the final amount is subject to true-up.  The actual amount, if any, that FPL will be permitted to recover related to the Woodford Project will be the subject of an evidentiary hearing held in November."  

 

May 17, 2016

FPL delays nuclear expansion as it deals with canal clean-up, but wants to charge customers for expansion anyway

FPL salt at turkey point

Florida Power & Light has told state officials that it will put a four-year pause on its construction plans for two proposed nuclear power plants at its troubled Turkey Point site but it wants the state to waive the requirement that it show the project is still "feasible" in order to charge customers in advance for it. 

"The analysis would impose a substantial hardship upon FPL and violate principles of fairness," FPL wrote in an motion filed April 27 with the Florida Public Service Commission.

This week, the City of Miami, consumer groups, environmental advocates and some of the state's largest electric power users, urged utility regulators to reject that request, saying FPL should be required to justify whether it is allowed to continue charging customers for a project that may be on the skids.

"If a project is no longer feasible or practical, then the costs incurred are not prudent,'' wrote City of Miami attorney Victoria Mendez in a motion filed with the PSC on Tuesday. "...Since FPL plans to continue recovering costs pursuant to section 366.93 while doing no additional work towards the completion of the project, it is imperative that FPL demonstrate the project is still economically feasible and practical.'' 

Since 2008, FPL has charged customers $281 million for the planning and licensing costs of two new nuclear power units -- Units 6 and 7 -- at its Turkey Point site on Biscayne Bay. It now wants to be able to charge customers another $22 million in the coming year.

The co-called "nuclear cost recovery" fee has been controversial since lawmakers created it in 2006. In 2013, after Duke Energy customers spent more than $1.5 billion financing a failed nuclear project, the Florida Legislature revised the law to require utility companies to prove that a nuclear project is feasible before the Public Service Commission gives the company permission to move into the "preconstruction" phase of the project.

"This annual feasibility analysis serves to safeguard customers from potentially paying millions of dollars over numerous years on a project when the long-term feasibility analysis may show that it is no longer viable going forward, and, accordingly, may be abandoned,'' wrote the Florida Office of Public Counsel, which represents the public in rate cases in its motion filed Monday.

The future of FPL's planned nuclear expansion project has become inevitably tied to the clean-up of a massive underground salt water plume that is migrating towards South Florida's water supply. The plume is expected to have been caused by the utility company's 2013 nuclear plant expansion, intended to increase power output by 15 percent, which forced the canals to become dangerously warm. Story here. 

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May 03, 2016

Jeffrey Bragg, rejected as insurance commissioner, applies for the Public Service Commission

Gov. Rick Scott's top choice to become insurance commissioner, Jeffrey S. Bragg, is among the 11 candidates who have applied to become Public Service Commissioner, the powerful board that regulates utilities.

Bragg, a Palm Harbor resident and former executive director of the U.S. Department of the Treasury's Terrorism Risk Insurance Program under Presidents George W. Bush and Barack Obama, previously applied to become insurance commissioner and was the governor's top choice. But his nomination was rejected by Chief Financial Officer Jeff Atwater, who preferred state Rep. Bill Hagar for the job, and their impasse led them to agree to an alternate, David Altmaire, a deputy insurance commissioner.

Reached by phone late Tuesday, Bragg would not say if he had been recruited for the powerful PSC post by the governor.

"I'm just looking for a good fit and hope this will be it,'' Bragg told the Herald/Times. "I do want to get back in the game in some meaningful way." 

The post is being vacated by for the position being vacated by Lisa Edgar, the longest serving member of the PSC who confirmed Tuesday that she will not seek a fourth term to the commission. She served three four-year terms and had been appointed by Govs. Jeb Bush, Charlie Crist and Rick Scott

The other candidates applying to fill Edgar's post include: Johnnie E. Cooper. John R. Coleman, Albert E. Martin, Dennis E. Shannon, Jeffrey S. Foster, Cynthia J. Wilson Orndoff, Donald J. Polmann, Thomas P. Brantley, Stuart W. Pollins and Todd N. Chase. No additional information was made available late Tuesday. 

The Public Service Commission Nominating Council, a 12-member panel controlled by legislators, will interview the candidates in Tallahassee on Thursday and recommend three names to be submitted to the governor. Scott will then select his appointee from the list. 

Times report Steve Bousquet contributed to this report. 

Here is Edgar's statement: 

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