State regulators began a tense hearing Monday about whether Florida Power & Light should be able to raise base electric rates by as much as $690.4 million next year, with a proposed settlement roiling the case, reports Jim Saunders of the News Service of Florida.
FPL attorney R. Wade Litchfield told the state Public Service Commission during opening arguments that the utility would continue to have Florida’s lowest residential electricity bills if rates increase. He said it needs the hikes, in part, to help attract investors who finance costly improvements — and said calls by some opponents to cut base rates would hurt FPL’s performance.
“What we are doing at Florida Power & Light is working very well,” Litchfield said.
But the Office of Public Counsel, which represents consumers, and the Florida Retail Federation said FPL’s base rates should be slashed by as much as $253 million next year. Robert Scheffel Wright, an attorney for the retail federation, said FPL doesn’t need the rate increases to continue meeting the needs of customers.
“Does it need more money to do its job to provide safe, adequate and reliable service?” asked Wright, whose 9,000-business group frequently intervenes in utility issues.
The Public Service Commission has scheduled a two-week hearing on the highly technical rate case. As signs of the complexity, 36 witnesses are expected to testify, and Litchfield said the case has involved 349,000 pages of data and information.
Base rates are a major part of customers’ monthly electric bills, though they don’t reflect costs such as fuel for power plants. If regulators approve FPL’s request, residential customers who use 1,000 kilowatt hours of electricity a month would see their total bills go from $94.62 this year to $96.49 in January 2013 and $96.80 in June 2013, when a new Cape Canaveral power plant starts operating, according to information presented Monday during the hearing.
But a large part of the hearing’s first day was dominated by a proposed settlement that FPL announced last week with three groups that represent large power users. That proposal would reduce the overall rate increase next year to $548 million and help shield large users, such as industries, hospitals and government facilities, from the hikes.
The Office of Public Counsel and the retail federation did not agree to the settlement and tried a series of moves Monday to suspend the hearing or to prevent the proposed settlement from being considered.
Deputy Public Counsel Charles Rehwinkel said FPL “dropped the bomb” of filing the proposed settlement last week, which he likened to starting a new rate case after the parties have spent months preparing for the hearing. He argued that the settlement would taint consideration of the case, and he also raised the possibility of taking the dispute to an appeals court.
“We ask you to put an end to this and to do it emphatically,” Rehwinkel told regulators.
But Litchfield and attorneys for other groups said the proposed settlement is not a new rate case and that such agreements also have happened in the past. Jon Moyle, an attorney for the Florida Industrial Power Users Groups, which also is a frequent intervener in utility cases, said his group thinks the settlement is a “fair deal.”
“Public counsel is saying, ‘We have veto authority over any settlement,’ ” said Moyle, whose group opposed FPL’s original rate request but agreed to the settlement proposal.
PSC Chairman Ronald Brise issued an order Friday refusing to suspend the hearing, and the rest of the commission backed that position Monday.
Brise said the commission should go through the hearing on the original rate request and then deal with the proposed settlement, a process that likely will be made clearer Thursday. The PSC is expected to make a decision later this year about setting the utility’s rates.
“I view the settlement agreement and the rate case as two completely separate issues,” Brise said.
In both the original rate filings and the proposed settlement, a key issue centers on what is known as the “return on equity” — a closely watched measure of profitability — that FPL would be able to earn.
In the original filings, FPL asked for a return on equity of as much as 11.5 percent, though the target in the settlement agreement is 10.7 percent. The Office of Public Counsel, however, contends the return on equity should be about 9 percent.