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Regulators start FPL rate case and dust up by allowing settlement talk

Florida’s consumer advocate tried and failed to get state regulators to postpone the hearing on a $690.4 million rate increase request by Florida Power & Light Monday, arguing that a last-minute settlement deal threatens to taint the proceedings.
FPL last week proposed to settle its rate case before the Public Service Commission by agreeing to keep flat or reduce the rates for large industrial users, hospitals, NASA and military operators but raise rates for residential customers and other businesses over the next four years.
The agreement was rejected by the Office of Public Counsel which represents all 4.6 million of FPL’s consumers and opposed by the Florida Retail Federation and AARP, saying it was a bad deal for most of the company’s customers because it would allow for automatic rate increases of up $1 billion over four years. They argued that by allowing the company to discuss the proposal during the two-week long rate case gave the company an unfair ability to introduce new issues that haven't been tested in pre-trial proceedings. 
 “The FPL document is the elephant in the room and we’re asking you to remove that elephant before proceeding,’’ said Charles Rehwinkel, a lawyer with the Office of Public Counsel. 

FPL is “trying to have it both ways,” he said, and asked the PSC to either reject the settlement offer, postpone the hearing until the settlement was rejected, or refrain from discussing the settlement during the rate case.
FPL’s lawyers forcefully disagreed, suggesting that it’s common practice for parties in a rate case to attempt to reach a settlement
“Nothing could be further from the truth in terms of it being a separate or new proceeding,’’ said Wade Litchfield, attorney for FPL.
Commissioner Eduardo Balbis compared it to the prosecution agreeing to a settlement with the prosecution. But PSC Chairman Ron Brise urged the panel to reject the public counsel’s request to delay the proceeding and trust him not to allow the settlement discussion to come up. “I think the chair is quite capable of limiting the questions,’’ he said.
Balbis then joined the other PSC commissioners and voted unanimously to reject the public counsel’s requests, giving Brise the authority to referee any disputes.
It was a short-lived promise. By afternoon, as lawyers for each of the parties made their opening statements, the issue of the settlement emerged again.
Jon Moyle, attorney for the Florida Industrial Power Users Group told regulators that his clients want the settlement so that they can increase the discount they get for agreeing to shut down their power usage during peak demand.
Lawyers for the Office of Public Counsel and the Florida Retail Federation objected to the comments, and asked Brise to strike the statements from the record. Brise overruled them.
The rate case is the second request in three years by Florida Power & Light to raise customer bills to pay for new investment. It says it needs the additional money to draw capital to open new, more fuel-efficient power plants.
Since the last rate increase in 2009, the Public Service Commission has undergone a political and ideological overhaul. Three years ago, the hearings dragged on for months as then-Gov. Charlie Crist replaced two of the commissioners for being too close to the utilities they regulated. With two new commissioners, all but $75 million of FPL’s $1 billion rate request was rejected.
State legislators ousted four of the five commissioners who rejected the FPL rate increase and the new commissioners installed a new staff director, Braulio Baez, a former PSC commissioner whose law firm had FPL as a client.
This time, the company scaled back its request to $690.4 million and launched the surprise settlement offer with three of the eight parties in the case. The hearings are expected to continue for two weeks with a recommended order later this fall. The new rates would take effect in January.