Committee postpones plan to make it easier to raise rates for power plants
A Senate committee postponed a vote on plan to restructure the way electricity customers pay for new power plants when the author of a late-appearing amendment, Sen. Bill Montford, D-Tallahassee, withdrew it.
The amendment, proposed to be tucked into a clean energy bill, would make it easier for Florida's electric companies to raise rates to pay for modernizing or building their power plants. Florida Power & Light currently has a proposal before state regulators to allow it to spend $1.1 billion to modernize its Port Everglades power plant.
"There's been a lot of mischaracterization and that has caused some confusion,'' said Mike Sole, lobbyist with Florida Power & Light, after the Senate Agriculture Committee postponed a vote on the amendment.
The proposal would allow utility companies to bypass the traditional rate case before the Public Service Commission for certain construction projects, and instead receive an "incremental adjustment to base rates."
The process would require the state Public Service Commission to add the cost of construction for the power plants to utility bills without a full rate-case review. Currently, companies must undergo the broad scrutiny of either a full or limited rate case to recover the construction costs of their improvement projects.
Sole, a former secretary for the Department of Environmental Regulation, argues it will ultimately save customers money because it streamlines the oversight process and will avoid the $4 million cost of putting on a rate case. "There still will be rate cases,'' he said. "The question is, should we mandate rate cases?"
But Jon Moyle, a lawyer and lobbyist for the Florida Industrial Power Users Group, disagreed that the new method will save customers money because it would "limit the ability of the commission to consider all relevant things."
"We see the amendment as a one way street to a rate increase,'' he said, noting that it will prevent regulators from exploring all expenses and revenues, especially those the companies wants to keep out of the limelight. "When you're asking for $1 billion, the $3-5 million in rate case expenses -- that's worth it."
During the 2009-10 rate case, for example, Moyle successfully forced the commission to examine the FPL's executive compensation package, use of private airplanes and helicopters and other costs. The PSC ultimately rejected FPL's request for a $1 billion rate increase that year.
Sole said that if the PSC agrees there is a need for the new plants, it will pass along the cost to customers anyway. "The controversy is with all these other issues,'' he said.
Moyle said the other issues won't get the attention they deserve because this will "make rate cases very few and far between."
The bill next moves to the budget committee and Sole left open the possibility that FPL will continue to pursue the amendment. "I still think it's a smart proposal,'' he said. "This proposal legitimately saves customers money, and it saves taxpayers money.''