News & Updates


Can FPL make $1.3 billion case for rate hike?


Palm Beach Post Staff Writer

Pinched consumers say they can barely pay their bills now, and layoffs and foreclosures are rampant. So why is Florida Power & Light Co. seeking a $1.3 billion rate increase when many consumers and businesses are cutting expenses every possible way?

FPL says it’s about keeping the power grid up to date and the company profitable. Objectors say the monopoly has hoarded customer money and is being excessive in its projections for future needs.

Final vote due Nov. 13
The Florida Public Service Commission is scheduled to begin hearing 10 days of testimony on the proposed increase in August and September with a final vote due on Nov. 13. More than 500 documents have been filed in the case. Tune in at

FPL bill breakdown

The base rate the company is seeking will cost the cheapest residential customer an extra $12.40 a month in 2010. But for businesses, the base rate will go up at least 30 percent to as much as 57 percent for large industrial users.

Florida Power & Light officials assert the proposed increase in rates and service fees that would take effect in two phases is softened by its projections of lower fuel costs next year. The second phase that takes place in 2011 will add more to the base rate even as fuel costs are projected to rise again.

Major issues in this month’s Florida Public Service Commission hearings involve FPL’s request of a rate of return on equity of 12.5 percent, and its over-collection of depreciation, which it owes back to customers.

As the state’s largest electric utility, Juno Beach-based FPL serves 4.5 million customer accounts in 35 counties from north of Jacksonville to Miami and on both coasts.

"FPL’s bills will actually decline next year. We are projecting that lower fuel costs will more than offset the cost of our request. The result: a $5 reduction on the typical bill," said spokeswoman Jackie Anderson.

Customers such as Jupiter resident G.W. Drowne, 69, retired from the U.S. Navy and Publix, think the timing could not be worse.

The Drownes have a disabled son who lives with them. Recently, their daughter and her three children, ages 9, 14, and 16 also moved into the Drownes’ three-bedroom house after she lost her job at a veterinarian’s office, so their electric usage is up.

"My wife and I are retired," Drowne said recently. "We are on a fixed income. The country as a whole is having a problem. Give us a break. Give the people who are out of work a break."

At 3,000 kilowatt hours a month of usage, the Drownes’ base rate will increase by $42 a month by 2011. The bottom line is it will cost $300 a year more out of their pockets, if fuel costs come in lower as projected.

Drowne’s reaction to the proposal?

"They just talk gibberish. If fuel costs are going down, our bills should go down."

FPL points out its rates are lower than national and statewide average utility rates, and that the base rate hasn’t been raised in 24 years. Officials say they need the increase to earn a fair rate of return on the company’s investment and to cover increasing operating costs.

"Our request relates to the fact that over the next five years, we need to invest $16 billion in our infrastructure, so we can continue to deliver reliable service," Anderson said.

Officials, groups line up in opposition

The Office of Public Counsel and a host of intervenors beg to differ.

In fact, the public counsel is recommending a base rate decrease that would amount to $4.50 a month for a 1,000-kilowatt hour user. Fuel costs are not relevant to the proposed rate increase, Public Counsel J.R. Kelly said.

More than 500 documents have been filed in the case.

"They knew fuel was going down. They could wrap the rate hike into a fuel decrease and could spin it like they are doing," Kelly said. "FPL pays $1 for fuel; you pay $1 for fuel. You pay whatever they pay. No one can predict the price of fuel. If it skyrockets, you will pay higher fuel prices.

"If FPL were not asking for a rate increase, your cost would be going down."

FPL touts the fact it had no increase in the base rate since 1985.

While that’s true, Kelly said, some charges that were once included in the base rate are now charged separately, such as environmental fees.

Ken Wiseman, a Washington-based attorney representing the South Florida Hospital & Healthcare Association, said, "Our main objection is that FPL is seeking to increase rates by over a billion dollars in an economy in which housing starts are down, and there’s unemployment. The economic downturn is continuing."

For some hospitals, the rate increase will be 50 percent, Wiseman said.

Only one intervenor supports charging customers more.

Associated Industries of Florida, which calls itself "The Voice of Florida Business Since 1920," asserts that reliable electric service is essential for much-needed economic growth and development. State corporate records show that FPL General Counsel/Vice President Ed Tancer is on its board of directors.

Planning for investments, projects

FPL’s Anderson said the company has filed many volumes of detailed financial data that support its request.

The company will continue to invest in essential infrastructure and develop more efficient fuel sources, Anderson said. It’s investing more than $200 million this year alone to make the system stronger.

FPL Group, the utility’s parent company, last week reported a 77 percent jump in second quarter profit over the same period last year. And utility officials were in Tallahassee arguing FPL Group’s case to build a $1.5 billion pipeline to control its natural gas supply, which customers would pay for beginning in 2014.

Also, fees for a new plant in western Palm Beach County will be added to bills no matter whether the base rate increase is included: $2.69 each month for a 1,000-kilowatt customer.

"But here’s the bottom line," Anderson said. "Our customer bills are already among the very lowest in Florida. And they will go down in 2010 based on projected fuel prices and as a result of our success in improving fuel efficiency through investments in our power plants."

Three-part series on FPL’s base rate increase

Today: FPL says operations, investment driving base rate increase.

Aug. 10: FPL asks for highest rate of return in state for utilities.

Aug. 17: Businesses to be hit harder by rate increase. Who pays?