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FPL goes to bat today for 30% rate increase

TALLAHASSEE — When Florida’s largest electric utility goes to state regulators today to ask for permission to dramatically raise rates, it will have recent history, powerful supporters and financial clout on its side.

Florida Power & Light, whose electric grid serves 4.5 million households in the state, wants the Public Service Commission to approve a 30 percent increase, saying it needs the money to prepare for future growth.

Missing from the discussion will be a previously powerful consumer voice, the AARP, which says it can’t afford to hire a lawyer this time to speak on behalf of the utility’s customers.

FPL’s timing is awkward: The state economy is in tatters, unemployment stands at 10.7 percent and consumer pocketbooks are stretched thin. On top of that, just last week FPL flouted the commission’s unanimous decision to force the company to disclose how much its top executives make. The utility said it will challenge the ruling in court.

“We are in the middle of the worst recession in decades, and people are losing their jobs and their homes,” said state Chief Financial Officer Alex Sink, who opposes the FPL rate increase. “We shouldn’t be making matters worse.”

Attorney General Bill McCollum agrees. He has lent his lawyers to help the Office of Public Counsel, which represents consumers, oppose the request.

But FPL says it is taking consumers into account, and that planning ahead will help them in the long run by providing for future electricity, attracting investors at lower costs and making its system more efficient and less reliant on fossil fuels. The company says it needs to construct and operate two nuclear power plants to meet future demand, as well as upgrade its existing power plants to make them cleaner and more efficient.

“FPL is seeking a base rate increase at this time to support this investment — and to retain investor confidence despite the most uncertain and volatile capital markets that this country has experienced since the Great Depression,” FPL President Armando Olivera said when he filed the rate request in March.

But opponents argue FPL is making enough money to reach those goals now. They point to the $1.2 billion the company has accumulated from depreciation and argues that instead of raising rates, FPL should reduce them.

The panel of five commissioners on the PSC will sort out their claims and analyze every facet of FPL’s business — from its request to spend thousands of dollars to maintain the atrium at its Juno Beach headquarters to the $2.5 million spent in three months this year for a corporate jet and helicopter. A similar case will be played out again in late September, when Progress Energy Florida offers similar arguments for its request for a 31 percent rate hike.

Working in FPL’s favor are its strong political connections, its long record of campaign contributions and a recent decision by the PSC that favored another state utility in a similar case.

In January, the PSC, which has authority to set profit margins on regulated utilities, rejected a request by the Office of Public Counsel to lower Tampa Electric’s profit margins and reduce rates. The commission instead agreed to allow Tampa Electric a higher profit margin — 11.25 percent — than even the PSC staff recommended.

FPL will argue that it deserves a rate increase and a profit level even higher than Tampa Electric — 12.5 percent, compared to its current 10.7 percent — because it runs one of the most efficient and cost-effective power plant operations in the country and its rates are 17 percent below those of other electric companies in Florida.

And that point worries opponents.

“We’re hoping this is not a precedent for FPL,” said Leslie Spencer, advocacy director for AARP of Florida.

AARP, however, won’t be at the table to represent the consumer as it has in previous years, when it hired former PSC lawyer Mike Twomey to speak for customers. “Budgetary decisions” prevented the association from formally joining the case this year, Spencer said.

By contrast, FPL’s influence before the PSC is broad and strong. Former PSC commissioners Terry Deason and Susan Clark represent the company in the case, and Chris Kise, the lawyer who negotiated the last rate case settlement on behalf of then-Attorney General Charlie Crist, has also been hired as a consultant.

Meanwhile Crist, who aggressively opposed the rate increase FPL sought in 2005 and allowed Kise to negotiate a settlement that kept rates flat, but gave the company more financial flexibility, has remained virtually silent on the rate increase.

“I think they will do the right thing,” Crist said recently.

FPL has traditionally been one of the most generous campaign contributors in the state.

It has given more than $250,000 to state political parties and candidates for the 2010 elections, and state records show it gave at least $5.7 million over the past 15 years. It became a major sponsor of Crist’s two climate change summits, then successfully worked to stop legislators from imposing deadlines for the use of alternative energy.