While Florida Power & Light's proposed settlement in its rate increase request addresses one of the key issues -- the huge cost to big electrical consumers -- the burden unfairly shifts to residential customers and other businesses as a result. The Office of Public Counsel rightly rejected the proposal but the Public Service Commission can overrule the consumer advocates' office during hearings.
This settlement, proposed just last week, calls for automatic rate increases that could reach $1 billion over four years, according to the consumer office -- far in excess of FPL's original request for an additional $690.4 million annually. The deal either reduces or flattens rates for large commercial users, hospitals and federal agencies. It boosts the discounts for reduced power usage during peak demand. Only three of the eight parties in this rate case are part of the settlement.
Residential and business consumers should not bear such a disproportionate cost shift. Besides the Office of Public Counsel, which speaks on behalf of FPL's 4.6 million customers, vocal opposition is coming from the Florida Retail Federation and AARP.
On Monday, the three tried but failed to get the PSC to rule out any discussion of the settlement during the hearings or delay the proceedings, which are expected to last the next two weeks. The commission is expected to issue a ruling in the fall with new rates taking effect in January.
This is a more utility-friendly commission than the one that spurned FPL's $1 billion rate increase request three years ago, only approving $75 million. That consumer-oriented panel lost four of five members in a legislative coup. The new PSC staff director is a former commissioner whose law firm once represented FPL. That does not bode well for the vast majority of consumers.
FPL's initial request sought a base rate increase of $7.09 a month on a typical residential customer current $96 average. But with fuel cost decreases, the net increase on a bill would be $1.41.
The net monthly increases under the settlement proposal would be 93 cents on Jan. 1, another 28 cents in June 2013 and more increases in 2014 and 2016 as new power plants begin operations. The utility did not announce estimates of the later hikes. But with the Office of Public Counsel estimating an overall $1 billion rate increase over four years, this deal becomes highly objectionable.
Under either FPL rate request, business, school and government consumers would suffer big hits to their budgets. As we noted in June after the PSC held a public hearing in Sarasota, a Charlotte County School Board member estimated the FPL rate increase would take an extra $276,000 out of education spending.
School districts, other public entities and the business community are still suffering from the aftereffects from the recession and need more time to recover. The PSC should take that into account and only grant a far smaller base rate increase.