January 15, 2016

Update: FPL seeks 24 percent increase in electric rates; public counsel vows to fight it

Florida Power & Light on Friday asked the Public Service Commission to allow it to raise rates on 4.8 million Florida customers by 23.7 percent by 2019, a $1.3 billion increase that is also designed to reward its shareholders with substantially higher profits.

FPL argues that while it has delivered stable and low-cost power to customers since its last rate case in 2009, it must charge customers more to offset the increase in expenses and accommodate the growth in population.

“We are committed to delivering our customers exceptional value for their money and will continue to make smart investments that will further improve service for customers and help keep costs down,'' said Eric Silagy, FPL president and CEO, in a press release.  Download 2016 Rate Proceeding - News Release (TYL) - FINAL

If approved, the increase will lock in base rates for four years and the typical residential customer bill of 1,000 kilowatt hours would increase by about $13 a month — with $8.50 imposed in 2017, another $2.50 in 2018 and $2 more in 2019. The current base rate imbedded within a customer’s overall bill is $54.86 per 1,000 kwh. Other charges are added to every bill, and the current total for 1,000 kwh is $93.38.

The request comes on the heels of the company spending more than $3.4 million in campaign funds to stave off competition from the solar industry by mounting a campaign to keep a constitutional amendment off the November ballot that would have opened the door to a competitive solar market in Florida.

The PSC has the final say over the rate request but the current panel of governor-appointed commissioners has consistently-sided with FPL on its controversial requests. The company is the third largest utility in the nation and one of the most active campaign contributors in the state.

Despite that record, J.R. Kelly, the lawyer who represents ratepayers in utility cases, said Friday he will "fight the good fight" and argue that FPL's rate hike should be rejected. FPL is earning profits at the top end of the rate allowed under the current agreement with the state, and Kelly said, the company can afford to make the investments it needs to continue to operate an efficient and reliable system without a rate increase..

"I  know why they want the money. They want to continue to earn all they can for their shareholders and earn at the top of their range,'' Kelly said. "If  they are earning like that, they don't need that $1 billion."

Under state law, the utility is allowed to earn a return on equity of between 9.5 percent and 11.5 percent without having to justify its profits before regulators. Kelly said for every 100 basis points, or each percentage point of ROE, FPL earns about $165 million in profit.

Continue reading "Update: FPL seeks 24 percent increase in electric rates; public counsel vows to fight it" »

August 13, 2015

Consumer advocate asks court to reverse FPL gas fracking fee

Florida's consumer advocate in utility cases said Thursday he will ask the state Supreme Court to reverse a decision by state regulators to allow Florida Power & Light to charge customers for exploratory drilling for natural gas. 

The Florida Public Service Commission last December gave approval to FPL's plan to ask customers to finance a venture into the controversial natural gas fracking business in Oklahoma. FPL  plans to invest $191 million in a joint venture with PetroQuest Energy, Inc.

In July, regulators gave FPL permission to enter into agreements with other gas fracking companies and charge customers for their investment of up to $500 million a year, without seeking regulatory approval.   

FPL argues the investments will help stabilize volatile future energy costs, saving customers about $100 million over 30 years or two cents a month for the average 1,000-kilowatt-hour bill.

But the Office of Public Counsel, which represents the public in utility rate cases, as well as the Florida Industrial Power Users Group, oppose the ruling and each filed a notice of appeal with the high court.

They argue there is no guarantee that the risk of shouldering the costs gas drilling in an uncertain regulatory environment will produce benefits for ratepayers. They also say the decision gives the state’s largest utility unprecedented permission to use ratepayer dollars to finance an energy exploration and production.

The PSC overruled its own staff when it approved the FPL request, allowing the company to become the the nation’s first utility to use ratepayer money for what the staff called a “non-regulated risk.”

June 18, 2015

PSC rejects staff, sides with FPL, votes to have ratepayers finance fracking projects

Millions of homes and businesses who are customers of Florida Power & Light will be financing as much as $500 million a year in unregulated natural gas fracking projects conducted by the state’s largest utility, state regulators decided Thursday. 

The Florida Public Service Commission sided with FPL and against consumer advocates and unanimously approved guidelines that give the company carte blanche approval to charge its customers for natural gas fracking and “wildcatting” activities without oversight from regulators for the next five years.

The decision gives the state largest utility company unprecedented permission to use ratepayer dollars to finance an energy exploration and production business. According to an analysis by the PSC’s staff, FPL will be the first utility in the nation to be allowed to use ratepayer money for such an “non-regulated risk.”

FPL spokesman Mark Bubriski disputed the characterization that the projects are not regulated, arguing that the guidelines "nsure the PSC has the power to monitor project costs through the required independent audit."

But PSC spokeswoman Cindy Muir said that while FPL will now "have the opportunity to recover non-regulated investments through regulated rates...this should not be considered regulation." 

The decision also gives the company, a regulated monopoly, a guaranteed new source of revenue that will allow it to increase its rate base for the next several years in the face of increasing competition from solar and other alternative energy sources.

Continue reading "PSC rejects staff, sides with FPL, votes to have ratepayers finance fracking projects" »

PSC rejects staff, sides with FPL to have ratepayers finance fracking projects

Millions of homes and businesses who are customers of Florida Power & Light will be financing as much as $500 million a year in unregulated natural gas fracking projects conducted by the state’s largest utility, state regulators decided Thursday. 

The Florida Public Service Commission sided with FPL and against consumer advocates and unanimously approved guidelines that give the company carte blanche approval to charge its customers for gas fracking and “wildcatting” activities without oversight from regulators for the next five years.

The decision gives the state largest utility company unprecedented permission to use ratepayer dollars to finance an energy exploration business. According to an analysis by the PSC’s staff, FPL will be the first utility in the nation to be allowed to use ratepayer money for an “unregulated risk.”

The decision also gives the company a guaranteed new source of revenue that will allow it to increase its rate base for the next several years, in the face of increasing competition from solar and other alternative energy sources.

Continue reading "PSC rejects staff, sides with FPL to have ratepayers finance fracking projects" »

June 17, 2015

FPL ask regulators to have customers finance the expansion of its fracking business

Fpl plantState utility regulators will decide Thursday whether Florida Power & Light’s 4 million customers — or its shareholders — will finance the company’s expansion into oil and natural gas reserves.

The Florida Public Service Commission gave the company approval to get into the controversial fracking business in December. It now must decide whether to approve guidelines proposed by FPL that would let the company spend up to $750 million a year more on gas exploration without regulatory approval.

In a rare pushback to the powerful utility, PSC staff members recommended against having customers foot the bill for the untested venture.

Their argument: the success of FPL’s natural gas exploration — including gas fracking and “wildcatting” in untested territories — is risky because it depends on the ability of the state’s largest utility to do something no utility company has ever done at a time when natural gas prices are volatile.

“The distribution of benefits to FPL and its customers is not equitable,” the staff concluded. While customers have to wait decades to see any drop in fuel costs resulting from the investment, there would be an immediate benefit to the company and its shareholders because it would “grow earnings” by expanding the rate base.

FPL counters that the risk is worth the reward.

“The guidelines we proposed are designed to enable us to take advantage of future opportunities to obtain more essential clean natural gas directly from the source, generating additional savings for our customers and helping protect them from the risk of fuel market volatility,’’ said Mark Bubriski, FPL spokesman.

More here.

May 04, 2015

Court rebukes Public Service Commissioners for 'ill serving' rate payers

In a rebuke to the Public Service Commission, a state appellate court ruled Monday that the utility regulator hurt utility customers when it refused to explain why it banned the public’s lawyers from asking questions in certain rate cases. 

The ruling by the First District Court of Appeal in Tallahassee ordered the PSC to explain why it refuses to allow the Office of Public Counsel to conduct discovery in pending rate cases as had previously been the tradition. 

The Office of Public Counsel is the agency whose lawyers are charged with representing the public in rate cases. They argued the PSC was inviting lawsuits from them by refusing to explain why they refused to allow the public's lawyers from asking questions and seeking discovery in rate case proceedings known as “proposed agency action" or PAA.

The cost of those lawsuits are borne by the public. In a 3-0 decision, the appellate court agreed.  

“The PSC ill serves rate payers by insisting that utilities incur the expense of litigating and re-litigating this issue in a piecemeal manner before pre-hearing officers in individual PAA rate cases,’’ wrote Chief Judge Robert T. Benton of the First DCA.

Public Counsel J.R. Kelly said the PSC ruling “severely undercut our ability to represent ratepayers” because the PSC, unlike the lawyers for the public counsel, “don’t ask questions like we do because they don’t represent the ratepayers.”

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January 27, 2015

Facing down a constitutional amendment, FPL plans three new solar plants

By Ivan Penn, Tampa Bay Times @Consumers_Edge 

Florida's largest investor owned utility announced plans Monday to build three new solar farms that would nearly double the state's solar capacity.

In its announcement, Florida Power & Light said it had found a "cost-effective" way to expand solar power in Florida and proposed to install the systems at three sites in its service area. The utility proposes to add 225 megawatts of solar to the state's current 229 megawatts by the end of next year in Manatee, DeSoto and Charlotte counties.

FPL is still refining the details of the project so the utility did not provide cost estimates. But the company said there would be no significant impact on customer rates.

"Over the past decade, we have continuously focused on advancing reliable, affordable, clean energy for our customers," said Eric Silagy, president and CEO of FPL. "In particular, we have been working especially hard to find ways to advance solar energy in Florida without increasing electricity costs, and we have developed what we believe will be a cost-effective plan.

But FPL utility noted in a news release that "solar power — even the most economical large-scale installation — is generally not yet cost effective in FPL's service area."

Continue reading "Facing down a constitutional amendment, FPL plans three new solar plants" »

December 18, 2014

Regulators give FPL approval to charge customers to invest in fracking

The Public Service Commission gave approval Thursday to a request by Florida Power & Light to charge customers for its exploration of natural gas using fracking technologies.

The panel concluded that the project, which allows the company to invest $191 million in a joint venture with PetroQuest Energy, Inc., would help to stabilize volatile energy costs and save customers more than $100 million over 30 years – about two cents a month -- and stabilize a fraction of the company's energy costs. 

The measure was opposed by the lawyers who represent the public in rate cases, as well as the state’s largest industrial energy users, the Florida Retail Federation and several environmental groups. The PSC postponed a decision until March on the question of whether FPL will be allowed to charge customers up to $750 million a year in similar projects without PSC approval.

The opponents argued that there was no guarantee that the risk of shouldering the costs of oil and gas drilling in an uncertain regulatory environment would produce benefits for ratepayers and could backfire in higher costs. They argued the decision to allow the company to use customer dollars for speculation was something that should be left to the Legislature.

“FPL will shift all risks of investing in gas reserves to the customers in exchange for promises of potential customer fuel savings and guaranteed trued-up profits (or returns) for shareholders,’’ the public counsel said in its brief. It noted that it is not opposed to guaranteeing fuel savings to customers however, "FPL simply cannot guarantee those savings to customers over the next 50 years.”

The ruling could be the beginning of a trend as Duke Energy, the largest utility in the Tampa Bay market, said it is also considering asking for permission to charge its customers for fracking exploration.

Continue reading "Regulators give FPL approval to charge customers to invest in fracking" »

December 03, 2014

FPL parent, NextEra, buys Hawaiian Electric for $4.3 billion

Florida Power & Light's parent company, NextEra Energy, announced Wednesday it has reached a $4.3 billion deal to buy Hawaii's largest utility, Hawaiian Electric Industries.

The transaction includes the assumption of $1.7 billion in HEI debt and excludes HEI's banking subsidiary. 

"NextEra Energy and Hawaiian Electric share a common vision, a more affordable clean energy future for Hawaii," said Connie Lau, Hawaiian Electric's president and chief executive. "While our goals are among the most ambitious in the nation, including increasing renewables to 65 percent, tripling solar and lowering customer bills 20 percent by 2030, we are confident that by leveraging both NextEra Energy and Hawaiian Electric's expertise and the additional financial resources that NextEra Energy brings, we can meet these targets even sooner."

The merger raises lots of questions about what this means for the Juno Beach-based company. Hawaiian law requires utilities to meet get 70 percent of their supply from clean energy by 2030 and, in Florida, NextEra's largest subsidiary, FPL, has aggressively fought off attempts to establish a similar clean energy goal here.

NextEra has also effectively blocked the emergence of competitive distributive energy generation in Florida with a dominant, take-no-prisoners approach to regulation and politics, while Hawaii has merged as one of the nation's top one of the markets where competitive distributive generation is becoming a reality.

Forbes contributor William Pentland points out that "Hawaii has become a flash point in the battle over the future architecture of the electric grid. The relentless rise of power prices in the state has accelerated customers’ adoption of distributed generation."

That's in stark contrast to Florida where FPL and its parent, NextEra, has kept wholesale competitors out by controlling access to the transmission grid except for incumbent utilities.

"NextEra’s expansion into Hawaii is likely a mixed blessing for the distributed generation business,'' Pentland wrote.

NextEra's press release didn't offer too many answers.

“NextEra Energy shares Hawaiian Electric’s vision of increasing renewable energy, modernizing its grid, reducing Hawaii’s dependence on imported oil, integrating more rooftop solar energy and, importantly, lowering customer bills,” it said.

The transaction is subject to approval by regulators and Hawaiian Electric shareholders. 

Here's the investor presentation.

Here's the joint press release:

Continue reading "FPL parent, NextEra, buys Hawaiian Electric for $4.3 billion" »

December 02, 2014

FPL wants to get into the gas drilling business -- and add costs to base rate

Florida Power & Light wants to get into the natural gas fracking business and it wants its customers to pay for it.

At a hearing on Monday, the state’s largest utility asked regulators for permission to charge customers up to $750 million a year to form a partnership with an Oklahoma oil and gas company because, it argues, the investment would help FPL stabilize fuel prices and save customers money.

How much? Estimates indicate the savings would be between $51 million and $107 million over the life of the project — or a total of 50 cents to $1 for the average customer over several years. In addition to the savings, FPL argues that customers also will benefit from less volatility in fuel prices.Similar projects would be sought to reach the annual $750 million investment cap.

In tapping a well that already produces gas, FPL argues, customers are unlikely to see price increases because exploration costs will be offset by savings from the investment — the first time any utility has asked to have its customers pay for gas exploration.

Opponents, representing the state’s largest commercial electricity users and the general public, had a simple response to the question before the Public Service Commission: “No thank you.”

They argued at a day-long hearing that the risks of operating the hydraulic fracturing, or fracking, outweigh the rewards. They said FPL can’t be sure that the natural gas wells will produce enough gas to meet its needs and customers will shoulder the costs of dry wells, environmental impacts and market changes for the next 50 years.

“Fifty years is a long time to receive guaranteed profits on something that’s not guaranteed,’’ said Eric Sayler, an attorney for the Office of Public Counsel, which represents the public in cases before the Public Service Commission.

He said the idea is an attempt by FPL to earn a guaranteed profit on the investment and have the risk borne by customers, not shareholders.

“No other utility has attempted to put this in its base rate,” he said. Story here.