FPL agrees with Progress and TECO and locks in the rate freeze
Remember all those protestations that the 10 percent earnings rate allowed by the Public Service Commission will be devastating for Florida Power & Light? Remember CEO Armando Olivera claiming the PSC's decision was political and wrong? Remember FPL's threats of bringing it to the Florida Supreme Court or seeking a another rate hike in the next year? Never mind.
“We think this agreement is in the best interest of all of the parties involved, especially our customers,” said FPL President and CEO Olivera in a statement released by the company. Story here.
The company has agreed in a settlement with the Office of Public Counsel, the industrial power users group and the Florida Retail Federation, to not only embrace the rate decision and not challenge it, but to leave it in place to 2013. That means rates will be frozen for 2.5 more years.
The parties negotiated similar rate freezes for Progress Energy and Tampa Electric. The TECO decision included withdrawing their challenge of their rate decision to the Florida Supreme Court. It was just approved of by the PSC on Tuesday, which included giving customers a one-time $25 million refund.
Despite settling on the rates the PSC set for them, the utility companies have succeeded in persuading legislators to oust all but one of the commissioners who made the decisions. On Thursday, the PSC nominating council sent a final list of names to the governor to replace the final two of commissioners up for reappointment, Nancy Argenziano and Nathan Skop. Earlier this summer, it sent him names to replace the two governor's appointees which the Senate refused to confirm.
Here's the FPL release:Florida Power & Light reaches agreement on rates with Office of Public Counsel and other parties
Base rates will be frozen through the end of 2012
JUNO BEACH, Fla. – Florida Power & Light announced today that it has reached an agreement with the Florida Office of Public Counsel, Florida Attorney General and intervenors in the company’s rate proceeding that would freeze base rates paid by customers through the end of 2012.
“We think this agreement is in the best interest of all of the parties involved, especially our customers,” said FPL President and CEO Armando J. Olivera. “Our typical residential customer bill is already the lowest of all 55 utilities in the state of Florida, and with this agreement, base rates will remain flat until 2013. We appreciate the willingness of those who represent Florida’s electric consumers to work with us on an agreement that will help provide financial stability for customers and the company alike.”
The settlement agreement resolves all outstanding issues related to Florida Power & Light’s recent rate proceeding. The key elements of the agreement are as follows:
· Base rates will be frozen through the end of 2012.
· Cost recovery for a new combined-cycle natural gas unit at Florida Power & Light’s West County Energy Center will be limited to the projected fuel savings for customers during the term of the agreement.
· Costs for storm damage would be recoverable beginning 60 days from the filing of a petition but capped at $4 for every 1,000 kilowatt hours of usage during the first 12 months. If storm restoration costs exceed $800 million, the company may request cost recovery above the cap, and any additional costs would be recoverable in subsequent years.
· The company’s target midpoint for return on equity (ROE) will remain 10 percent. If the allowed ROE falls below 9 percent, the company may seek rate relief. If the ROE rises above 11 percent, the intervenors may seek a rate reduction.
· The company can vary the amount of surplus depreciation taken in any one year up to a cap of $267 million in the first year, provided its ROE remains within the range of 9 percent to 11 percent. Earnings will be calculated using an actual, non-weather-adjusted basis, and the company may use up to a maximum of $776 million in surplus depreciation over the course of the agreement.
· All motions for reconsideration, including FPL’s, will be withdrawn, and the company has agreed to not appeal the PSC's previous rate case decision.
“Our ability to invest in Florida’s electrical infrastructure has provided significant benefits for our customers. Our bills are 18 percent lower than the national average, our reliability is 46 percent higher, and our power generation fleet is 35 percent cleaner. Today’s agreement is a reasonable compromise that will still enable us to maintain high-quality service for our customers,” Olivera said.
The settlement agreement is subject to approval by the Florida Public Service Commission (PSC). The parties jointly filed the agreement with the PSC today and have asked the commission to vote on it at the August 31 meeting.
Florida Power & Light Company
Florida Power & Light Company is the largest electric utility in Florida and one of the largest rate-regulated utilities in the United States. FPL serves approximately 4.5 million customer accounts in Florida and is a leading employer in the state with more than 10,000 employees. The company consistently outperforms national averages for service reliability while customer bills are below the national average. A clean energy leader, FPL has one of the lowest emissions profiles and one of the leading energy efficiency programs among utilities nationwide. FPL is a subsidiary of Juno Beach, Fla.-based NextEra Energy, Inc. (NYSE: NEE). For more information, visit www.FPL.com.
Cautionary Statements And Risk Factors That May Affect Future Results
In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (Reform Act), NextEra Energy, Inc. (NextEra Energy) and Florida Power & Light Company (FPL) are hereby providing cautionary statements identifying important factors that could cause NextEra Energy's or FPL's actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) made by or on behalf of NextEra Energy and FPL in this news release, on their respective websites, in response to questions or otherwise. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions, strategies, future events or performance (often, but not always, through the use of words or phrases such as will, will likely result, are expected to, will continue, is anticipated, aim, believe, could, should, would, estimated, may, plan, potential, projection, target, outlook, predict and intend or words of similar meaning) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could have a significant impact on NextEra Energy's and/or FPL's operations and financial results, and could cause NextEra Energy's and/or FPL's actual results to differ materially from those contained or implied in forward-looking statements made by or on behalf of NextEra Energy and/or FPL.
Any forward-looking statement speaks only as of the date on which such statement is made, and NextEra Energy and FPL undertake no obligation to update any forward-looking statement to reflect events or circumstances, including unanticipated events, after the date on which such statement is made, unless otherwise required by law. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement.