PSC Approves Two-Year Rate Freeze for FPL

By: Keith Laing, The News Service of Florida
By: Keith Laing, The News Service of Florida

THE CAPITAL, TALLAHASSEE, December 14, 2010 --

Electric rates for the state’s largest power company will remain the same for two years under an agreement between the company and several consumer groups that was unanimously approved Tuesday by the Florida Public Service Commission.

With the approval of the settlement (Docket No. 080677-EI), which was held up for four months ago by a legal fight between Florida Power & Light and a lame duck commissioner, FPL will lock in rates until the end of 2012.

The deal will also hold the company's return on equity, or profit margin, at 10 percent. FPL will be able to ask the PSC to raise rates if the company's ROE dips below nine percent, while the consumer groups can initiate a rate proceeding if return on equity rises above 11 percent.

As part of the deal, FPL would drop its request that the PSC reconsider parts of its rejection of the company's request for a $1.25 billion rate increase earlier this year and wouldn’t appeal the overall decision.

Several groups that normally oppose rate increases - including the one that had been sought earlier this year by FPL - lined up Tuesday to urge the PSC to approve the deal. South Florida Hospital and Healthcare Association lawyer Ken Wiseman noted hospital had opposed previous FPL settlements, but was in favor of this one.

“From a societal perspective, and from a business perspective as well, the hospital industry is among the most important segments of the South Florida economy,” he said. “It’s extremely important for hospitals – whether they be large or small – to control their energy costs.”

The FPL settlement would help them do that, Wiseman said. “We think it’s a good deal - not just for hospitals, we think its good deal for rate payers in general,” he said.

Other parties to the settlement offered the PSC similar assessments.

The deal is “the culmination of lengthy negotiations,” Office of Public Counsel lawyer Joe McLaughlin told the PSC.

“The settlement agreement preserves the key provisions of the final order in the FPL rate case and adds to those provisions a framework designed to avoid base rate increases and provide certainty through the term of the agreement,” he said.

Outgoing Attorney General Bill McCollum’s office, the Florida Industrial Power Users Group, the Florida Retail Federation, the Federal Executive Agencies and Associated Industries of Florida also spoke in favor the deal.

FPL cheered the deal as well. “All of the interveners…were very active, very forceful, and very creative and ultimately very helpful in bringing this to a resolution we all were comfortable with,” FPL lawyer John Butler said.

The agreement “represents the collective effort of FPL and the interveners,” he added. “We think this agreement is in the best interest of all the parties involved, especially FPL’s 4.5 million customers.”

The PSC approved the agreement, which became wrapped up in protests from FPL over alleged bias by Commissioner Nathan Skop, with little debate.

The PSC had been originally scheduled to rule on the deal Aug. 31, but it was forced to put issues involving FPL on hold as the company sought to have a court force Skop to recuse himself from cases, which he refused to do on his own. The company, which provides service to South Florida and most of the Atlantic Cost, has said that public statements from Skop suggesting the utility played a role in the decision to reject his bid for a second-term on the panel showed he could not fairly rule on its cases.

There has been no resolution to that larger legal fight, but PSC Chairman Art Graham thanked the 1st District of Court Appeal Tuesday for allowing the panel to take up the settlement agreement. The PSC had requested emergency permission to move forward with the question on the condition that FPL didn’t object, and the utility didn’t.

“I want to thank all of you guys for all this hard work and I also want to thank the 1st DCA for letting this come out so we can have some security moving forward,” he said.

“You guys did the fighting before we had to be involved,” he said of the negotiations that led to the agreement.

Separately, another unrelated issue involving Skyland Utilities was deferred over Skop’s objection.

“I’m only one of two commissioners that proceeded to hear the entire testimony and entire record of evidence in that proceeding and I’m fully prepared today to decide the case in a fair and impartial manner,” Skop said. “My concern with (deferring) is a tremendous amount of taxpayer money has been absorbed in having me travel to Brooksville, Fla., to have me be in hearings for over 8 hours…”

But Graham said he was extending a “courtesy” to the company in giving them a delay it requested.

“There was a motion that came in from Skyland … they wanted to defer the item and they wanted the opportunity to come in and re-argue the case,” Graham said. “I’m denying the motion to re-argue the case, but… if they want some more time to figure out what they’re going to do next…that’s fine. I look at it as just being a common courtesy and I saw no harm in deferring this thing for one cycle.”

However, when the panel meets next on Jan. 11, Skop, who was denied even an interview for a second term by the PSC’s nominating panel, will be a former PSC Commissioner. Skop’s term is scheduled to expire Jan. 1.

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