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Florida's public counsel says contentious electricity rate case could set dangerous precedent

The state's consumer advocate says his office was frozen out of negotiations over what millions of people in South Florida will pay for electricity.

Florida Public Counsel J.R. Kelly said he's worried the move could mute consumers' top ally in future rate cases, including ones with Progress Energy Florida and Tampa Electric.

So Kelly took the unusual step on Wednesday of appealing to the state Supreme Court.

In his 39-page petition, Kelly told the court that the Public Service Commission is violating Florida law by considering a rate increase agreement without input from his office, which is designated by the Legislature to represent consumers.

If allowed to stand, the agreement would allow commissioners in all future rate cases to exclude the voice of the state's residential consumers, he believes.

"What would be the use of having an Office of Public Counsel?" he said.

The conflict focuses on a rate case involving the state's largest utility, Florida Power & Light, which supplies electricity to most of South Florida. At first the Florida Industrial Power Users Group, the Federal Executive Agencies and the South Florida Hospital and Healthcare Association contested what FPL wanted to charge for power. But in August, FPL and the three parties reached a compromise.

FPL agreed to give the parties $50 million in credits related to allowing the utility to turn off power during peak usage, an energy conservation measure. In return, the parties agreed not to stand in the way of FPL's request to increase rates.

In a statement about the case, FPL defended the agreement and the exclusion of the public counsel.

"Inexplicably, the public counsel steadfastly refused to participate in the negotiating process that led to this fair and reasonable settlement," said Mark Bubriski, a spokesman for the utility.

"Regardless, we believe the PSC is well within its rights to conduct a hearing to gather all the facts and to consider this thoughtful compromise that provides benefits for all customers," Bubriski said. "Compared with current rates for Florida's 55 electric utilities, our residential customer bill is projected to continue to be the lowest in the state under the proposed four-year settlement agreement."

The Public Service Commission has yet to sign off on the agreement. Even so, Kelly contends that the commission cannot legally consider such an agreement, since the public counsel was excluded.

Cindy Muir, a spokeswoman for the Public Service Commission, declined to comment because "our lawyers have not yet had an opportunity to review (the public counsel's) petition."

The case is the latest in a series of controversies surrounding utilities attempting to garner substantial rate hikes.

In 2010, members of the Public Service Commission unanimously voted down almost $2 billion in proposed rate increases. Four of the five commissioners were later removed from their posts.

Charles Rehwinkel, Kelly's deputy, said FPL later attempted to find support for rate increases from the Legislature, but lawmakers rebuffed the utility.

FPL's current case, Rehwinkel said, is another attempt to circumvent consumer protections to secure higher rates — only this time, it could set a precedent that would affect all of Florida's electric customers.

When Tampa Electric and Progress Energy Florida seek rate increases, Rehwinkel and Kelly worry they won't have a say then either. Kelly's office also represents consumers in matters involving the broken Crystal River nuclear plant and the proposed $24 billion Levy County nuclear project.

The three parties that agreed to the deal total less than 1 percent of FPL's 4.6 million customers, Rehwinkel said.

"It's the most egregious thing anyone has seen in the history of rate making," he said. "The goodies are paid for by the ones who aren't even signed onto the agreement."

Jon Moyle, a lawyer for the Industrial Power Users Group, said the $50 million annual credit was nothing new. He said the business already receive the benefit, but it has not been adjusted in years.

The adjustment would amount to about a 56 percent increase.

And while he agrees that residential customers outnumber the commercial customers, businesses use large volumes of electricity, which makes their voice significant.

"The people who have signed the agreement are significant entities in the fabric of Florida," Moyle said. "The military bases; large companies that employ a lot of people; the hospitals that treat people when they're ill . . . they represent a significant group."

Ivan Penn can be reached at (727) 892-2332.

Florida's public counsel says contentious electricity rate case could set dangerous precedent 10/17/12 [Last modified: Wednesday, October 17, 2012 9:57pm]
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