A rate increase settlement between Florida Power and Light, Florida’s consumer advocate, and several intervenors would result in an increase in customer bills over the next four years and fund investments in fossil gas infrastructure.
The settlement would guarantee a 10.6% return on equity for the utility, a measure of profitability that would be the highest of any utility in the state. The Florida Public Service Commission (PSC) will review the settlement later this week, which Florida Power and Light (FPL) reached with the state’s Office of Public Counsel, which is charged with representing utility consumers’ interests.
FPL and its subsidiary Gulf Power also included approximately $20 million in industry association dues in the rate increase settlement, effectively requiring customers to pay for almost all of these membership costs with their monthly bills.
The trade association costs included nearly $3 million to the Edison Electric Institute (EEI), a utility trade group that has played a key role in FPL’s attack on rooftop solar. The Florida PSC approved similar pass-throughs for trade association dues during FPL’s previous rate case, as reported by Palm Beach Post and analyzed in a 2017 report from the Energy and Policy Institute. EEI ran a training camp last December to teach lobbyists and executives from the nation’s utilities how to run winning political campaigns, using as case studies some of the most controversial efforts by utilities to defeat clean energy policies in recent years. The association gave an award to FirstEnergy for its lobbying to pass House Bill 6, the Ohio law now at the center of a growing bribery scandal.
The Center for Biological Diversity filed a petition with the Federal Energy Regulatory Commission asking for that agency to change the accounting system that utilities use in ways that would require utilities like FPL to prove to regulators how trade association dues are used for the benefit of customers.
Settlement would greenlight new gas
FPL’s proposal to the Florida PSC indicated that about 15% of the nearly $2 billion rate increase request “would go toward expanding the natural-gas burning capacity at several plants,” as first reported by the Miami Herald. The settlement would not reduce FPL’s proposed gas investments, despite the Southern Alliance for Clean Energy having agreed to the settlement. Other environmental and customer advocates such as the CLEO Institute, Florida Rising, and Vote Solar did not sign onto the proposed settlement. NextEra continues to be the only utility with no absolute carbon emissions reduction goals, instead committing only to a reduction of carbon “intensity.”
When asked during his deposition, FPL President and CEO Eric Silagy attempted to explain the utility’s lack of an absolute carbon emissions target, despite his admission that climate change was a significant risk to Floridians. Silagy stated that FPL would continue to “do what we can” to reduce carbon emissions “but it is not based on any specific goal or commitment to do so.” When asked directly if the rate case included proposals for new gas investments, Silagy initially said “No.” FPL lawyers reversed that answer days later in a filed correction, providing the opposite answer: “Yes. We are proposing investments in generation upgrades that will provide long-term customer benefits, and we are also proposing to construct the highly-efficient Dania Beach Clean Energy Center, projected to enter service in 2022 and previously approved by the Commission as needed generation.” Silagy said new gas investments are being made in the Gulf Power service area to replace previous coal capacity, although ratepayers will still continue to bear the cost of the old coal investments. Regulators have begun to increasingly deny new gas proposals and grapple with the potential of gas plants to become stranded assets. In Alabama, the Attorney General’s office asked the Alabama PSC to shift 50% of the stranded asset risk onto Alabama Power instead of customers.
The settlement includes investments in solar and electric vehicle infrastructure as well. The utility forecasts its fuel mix to be 61.4% fossil gas in 2030, according to its Ten Year Site Plan filed with the PSC.
FPL supporters did not disclose financial relationship to the utility, new consumer advocate silent
During the public service hearings held by the Florida PSC, the Office of Public Counsel (OPC) did not cross-examine speakers as it has traditionally done in past rate cases. In the 2016 rate case, the OPC asked speakers if FPL supported their organization financially or had asked them to testify in support of the rate increase. In the absence of those questions from the current OPC, Richard Gentry, or from any of the Commissioners, it was up to speakers to identify any financial or other connection with FPL or Gulf when speaking on their behalf.
Richard Gentry was appointed to the Office of Public Counsel by the Florida Legislature’s Joint Committee on Public Counsel Oversight earlier this year, after new legislation led to the resignation of utility critic J.R. Kelly. Gentry has a long history of lobbying, and last year represented the utility-backed group called “Floridians for Government Accountability,” as reported by the Miami Herald. Floridians for Government Accountability donated over $61,000 to the utility-led attack on rooftop solar in 2016 via “Consumers for Smart Solar,” the name of the utility-led front group. Gentry was previously general counsel for the Florida Home Builders Association, which lobbied in support of state legislation to preempt local regulations aimed at phasing out the use of natural gas.
The virtual sessions included comments in support of FPL’s rate increase from individuals with connections to the utility, many of whom appeared at the June 21st public hearing. Bob Swindell, President and CEO of the Greater Fort Lauderdale Alliance, an “economic development organization” that FPL regularly sponsors and collaborates with on community events, stated that he supported the rate case and FPL’s “continued investment.” Audubon, an environmental group that received substantial financial support from FPL, had multiple employees speak in support of the rate hike. Douglas Young, Chief Operating Officer of the Southern Florida Audubon Society stated, “We have a great relationship. They [FPL] really help out in the community and, as I said, I support this rate increase.” Julie Wraithmell, executive director of Audubon Florida, voiced her support for the rate increase at the June 30th hearing. The National Audubon Society received over $166,000 from the NextEra Energy Foundation in 2019.
Another pro-FPL comment came from, “PK” Kapur, who was recently embroiled in a vote-buying scandal in Palm Bay, Florida that led to investigations by the Federal Bureau of Investigations and the Florida Department of Law Enforcement. Kapur is alleged to be the middleman in a bribery scheme that involved a local developer attempting to buy a city council member’s vote of support to rezone the developer’s property. Kapur resigned from his role as an executive at the Space Coast Office of Tourism but appears to serve on the Melbourne Chamber of Commerce Board of Directors alongside FPL employee Darryl Gilbert.
PSC decision expected soon, intervenors file opposition
In a response to the settlement, intervenors League of United Latin American Citizens of Florida (“LULAC”), Environmental Confederation of Southwest Florida (“ECOSWF”), and Florida Rising objected to the content of the settlement and the process by which it was completed, stating that FPL and the other signatories, “failed to consult with Florida Rising, ECOSWF, and LULAC in their motion as required by Florida Administrative Code Rule 28-106.204(3).” The groups stated, “By deliberately ignoring the requirements of this rule, the signatories ensured that no party representing residential customer interests was invited, much less present at the negotiating table.” The opposition also said that the rates proposed in the settlement result in subsidization by residential customers to the benefit of commercial and industrial customers. The Florida Retail Federation and Florida Industrial Power Users Group, two intervenors who represent many commercial and industrial FPL customers, signed on to the settlement.
FPL, along with the settlement signatories, requested that the proposal be approved as soon as possible, which would close further debate. LULAC, ECOSWF, and Florida Rising have requested additional time, citing the need for a reasonable discovery period and evidentiary hearings on the 1,803 pages included in the settlement filing.
The Florida PSC is expected to make a decision in the next several weeks.
Image credit: FPL YouTube Channel