October 11, 2016

FPL agrees to settle rate increase for $881 million, down from its $1.3 billion ask

FPL power linesAs Hurricane Matthew bore down on South Florida last week, Florida Power & Light’s executives agreed to back off the $1.3 billion rate increase it was seeking for the next four years and instead signed off on a $811 million settlement.

The deal, signed by FPL CEO Eric Silagy and the lawyer who represents the public in rate cases, J.R. Kelly, must be approved by the state’s Public Service Commission. If regulators agree, FPL would start charging customers $400 million in additional base rates beginning in January and at least $411 million in additional rate increases over the remaining three years of the settlement.

After the first year, rates would rise $211 million in 2018, and another $200 million in 2019, when a new power plant in Okeechobee comes on line. The monthly increase at the end of the four years for a customer that uses 1,000 kilowatt hours a month would be would be about $9.48, starting with $5 more next year. It is less than the $13.23 increase the company initially projected.

Story here. 


September 16, 2016

Scott picks Tampa water utilities veteran as the next PSC commissioner

Donald PolmannA water utilities veteran who has spent a career navigating the water wars of Tampa Bay was named Florida's next public service commissioner late Thursday by Gov. Rick Scott.

Donald Polmann, 59, who has twice been on the short list of nominees to come before the governor, will replace Lisa Edgar for the four-year term on the state utilities board beginning Jan. 2. Edgar, 53, is retiring after 12 years on the board.

Polmann is Scott's fourth appointment to the influential five-member panel that has the power to raise or lower customer utility bills. The four-year term pays $131,000 a year.

For the first time, the governor did not select a legislative insider or incumbent to the post, as he did when he reappointed Edgar in 2012 and subsequently reappointed PSC Commissioners Art Graham and Ron Brise to second terms, and named former state House Rep. Jimmy Patronis to an open seat. All were candidates preferred by the state's politically powerful utility giants which were among the largest contributors to Scott's re-election bid in 2014.

Polmann, was one of the finalists recommended in 2012 when Scott reappointed Edgar and again in 2013 when the governor reappointed Brise and Graham.

Polmann received his bachelor’s degree from Rensselaer Polytechnic Institute, his master’s degree from the University of Florida, and a doctorate in civil engineering from Massachusetts Institute of Technology. Polmann served as director of science and engineering at Tampa Bay Water, a regional water supply authority. He has spent most of his 30-year career focused on drinking water regulation and protection and is currently self-employed as a consultant in civil and environmental engineering.

Polmann, who is currently self-employed as a consultant in civil and environmental engineering, has the support of Sen. Jack Latvala, R-Clearwater. In a letter of recommendation on Polmann's behalf, Latvala said he had known Polmann, a constituent, for 15 years and that Polmann "was a major player in the transformation of Tampa Bay Water from the previous agency, the West Coast Regional Water Authority."

Latvala was an outspoken critic of Edgar's, who was first appointed to the post by former Gov. Jeb Bush in 2004, reappointed by former Gov. Charlie Crist in 2007 and by Scott four years later.

Scott choose Polmann over two other candidates, Gainesville City Commissioner Todd Chase and Florida SouthWestern State College professor Cynthia Wilson Orndoff. He must be confirmed by the Florida Senate for his term to be official.

In his interview before the PSC Nominating Council on Aug. 18, Polmann said his "family heritage in construction and blue collar work" as well as his experience as a water manager will inform his outlook.

"On one hand, I've witnessed the struggles of making ends meet, both at home and in the family business, in a tough economy,'' he said. "How can we possibly raise utility rates with those conditions prevalent in so many places in our communities? On the other hand, we find infrastructure in our cities and towns throughout our state sorely in need of repair, replacement, upgrade, and yes, expansion, as our state's economy grows."

"...We've been seeing more and water breaks, sewer plant overflows, power outages, etc. -- quality of service -- and reliability must be addressed,'' he said.

He added that his expertise in water and environmental resource management; operations research, risk and uncertainty; regulatory and policy compliance; quality assurance and strategic planning and the state's Sunshine law will serve him well to find the balance between competing issues.interests, including utility investors.

The five-member PSC is in the midst of a controversial $1.3 billion rate case with Florida Power & Light.

The PSC is an agency that reports to and is funded by the Legislature, but commissioners are appointed by the governor after receiving a list of recommendations from the PSC Nominating Council, which is dominated by legislators.

August 30, 2016

Week 2 of FPL's rate case: Is the rate hike an unwanted tax or a needed investment?

State regulators began the second week of testimony this week in Florida Power & Light’s quest to obtain a $1.3 billion rate increase and the focus remained: How much profit should the state’s largest electric utility be allowed to make from customer bills?

The company concluded the first phase of its rate case before the Public Service Commission, proposing that its rates should be increased over three years as the company is rewarded with $360 million in higher profits for its “superior performance.” The request includes giving FPL the ability to earn a bonus of $120 million, a so-called “incentive adder” that would be on top of the additional $240 million a year in allowed profit the company is asking regulators to approve over what is currently allowed.

As a regulated monopoly, FPL faces no natural competition for its giant fleet of nuclear, gas and solar energy production and most of its 9 million customers have nowhere else to go for electricity. So the Public Service Commission plays the role as surrogate, imposing financial limits and performance incentives that competition might naturally create.

But opponents argue that the company should not be allowed to make higher profits as a “reward” for good performance but instead should be required to give customers a refund in return for the favorable terms they have enjoyed since the last full rate hearing in 2009. Read more here.

August 21, 2016

FPL rate case: Should customers be treated liked shareholders and get refunds? Or charged $1.3 billion

IMG_IMG_FPL.jpg_2_1_T73I_6_1_R95NM0B9_L153998187Florida Power & Light’s proposal to increase customer rates $1.3 billion over three years will be on trial starting Monday as the state’s largest electric company asks permission to raise customer bills and be rewarded for “superior service” with the ability to earn higher profits.

But more than rates will be challenged as a long list of opponents ask state regulators to reject the rate increase and order FPL to refund at least $800 million a year, arguing that the company has earned excessive profits and should be returning cash to customers.

The opponents — from the AARP and the Sierra Club to the military, industry groups and the office that represents the public in rate cases — also want the Public Service Commission to stop allowing FPL to have customers pay for pipeline purchases, natural gas deals and other business decisions that they say investors should finance. And they want regulators to order the company to diversify its fuel mix to be more climate-friendly and less dependent on natural gas.

FPL is “asking for too much money,” said J.R. Kelly, head of the Office of Public Counsel, which represents the public in rate cases. “The bottom line is, they are asking to increase their profits at the expense of ratepayers.” More here.

August 10, 2016

Who pays for shuttered Duke nuclear plants? Customers do, PSC says: $51.7 million next year

Duke Energy power plantvia @JStockfischTBT

The average Duke Energy customer in Florida will pay roughly $1.57 a month next year in costs relating to the shuttered Crystal River nuclear power plant.

The state Public Service Commission agreed at its annual Nuclear Cost Recovery Clause hearing Tuesday that a request for $51.7 million by the utility was "reasonable and prudent." The money was spent on planned upgrades to the plant before damage was discovered in 2009 and the plant was shut down in 2013.

The nuclear cost recovery tab is just one element of the total rates charged to electric customers. Several other parts, including fuel — the largest component — will be filed with the commission in late August and early September.

The PSC meets in early November on those components, and after its decision, the total bill for 2017 will be known.

Duke customers are currently paying $1.76 on the average 1,000-kilowatt-hour bill for Crystal River costs. Last year, the PSC approved $56.5 million in costs. Next year, customers will be paying about 19 cents a month less. Story here.

Photo: Duke Energy nuclear power plant, Tampa Bay Times

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:

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

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."