Tallahassee, FL - With Gov.-elect Rick Scott promising to save businesses a stunning $3.2 billion on their electric bills, consumer groups are bracing for a fight, fearing his plan will push higher costs onto residential customers.
Scott’s advisers are already floating the idea of an “economic development rate,” for corporations that agree to relocate to Florida or expand businesses within the state. The level of utility cost savings would be tied to job creation, under the plan.
But Florida’s four big investor-owned utilities would not have to absorb the rate reduction – or ask investors to pick up the tab, said those familiar with the proposal. Instead, rate reductions given these companies would be offset by higher charges imposed on a utility’s overall rate base – with residential customers shouldering most of the costs.
“What’s good for businesses is going to be too bad for consumers,” said Bill Newton, executive director of the Florida Consumer Action Network. “The only thing we can hope for is that a rate increase can backfire on legislators, and they may not want to get involved in it.”
With Scott still almost two weeks from taking office, communications director Brian Burgess wouldn’t comment on the rate plan. But utility industry officials briefed on the plan by members of Scott’s economic development transition team say the proposal is designed to help him reach a central goal of his campaign: creating 700,000 jobs over the next seven years.
It also would help Scott meet a campaign pledge to “address Florida’s relatively expensive electricity costs so businesses could save approximately $3.25 billion,” part of the Republican candidate’s regulatory reform platform.
Tampa Electric Co., (TECO) and Florida Power & Light, two of the state’s largest publicy-held utilities, were among the top contributors to Florida political campaigns this fall, with each giving more than $1.2 million, according to the National Institute on Money in State Politics.
While offering an economic development rate could help Scott meet his business cost-cutting goal – some steps also are likely to emerge to help existing Florida companies that can’t offer the lure of job creation.
“We’ve got to come up with some ways to incentivize businesses,” said Rep. Clay Ford, R-Gulf Breeze, chairman of the House Energy and Utilities Subcommittee. “But we also know that we’ve got to be able to afford them.”
Mark Wilson, president of the Florida Chamber of Commerce, said he is familiar with the concept behind the economic development rate, but had not been briefed by Scott’s team. Wilson, though, said the idea of asking residential customers to pay more, while reducing costs for businesses, was defensible.
“If we find out that residential customers pay lower rates and businesses pay more – that’s not fair,” Wilson said. “But if they pay a little more and that contributes to their community and brings jobs that generate revenue….then it could benefit everyone.”
Such an approach seems to be at the heart of the recommendations released Wednesday night by Scott’s transition advisers. State utilities, particularly Florida Power & Light, emerged as some of the biggest winners in the economic development push.
Scott advisers said FPL and other utilities should be free from regulatory limits to significantly generate more power from renewable energy. FPL’s Sam Forrest, vice-president of energy marketing and trading, helped craft the recommendations, which borrow heavily from the company’s own push to expand its use of solar and other alternative energy sources.
The transition team cited an industry report that claims 700 megawatts of additional renewable power could yield $8.1 billion in economic activity and 40,000 new jobs. Homeowners, though, will likely be asked to pay more for this increase.
Advisers said a survey conducted in association with Florida TaxWatch, the business-backed advocacy organization, found “more than 70 percent of Floridians believe that paying a dollar or more on their monthly utility bill is reasonable for renewable energy generation.”
“It could really attract industry,” Mark Bubriski, an FPL spokesman, said of the expanded renewable effort. “You could bring costs down for the solar industry and for companies. And it would eventually lower costs for homeowners, too.”
The economic development rate being shopped around could pit residential customers against businesses. But with Scott, businesses appear likely to get an edge because they carry the added political muscle of creating jobs.
“There’s a lot of money, potentially, on the table if this goes statewide,” said Barry Moline, executive director of the Florida Municipal Electric Association. “Sure, residential customers may pay a little bit more money. But in the end, they also might have the benefit of more jobs.”