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It's time for big PSC rulings on FPL, Progress rate increases

This is the big enchilada, this is championship season. This will be one of the biggest weeks ever for the Florida Public Service Commission — and electric customers.

This week the PSC will decide the rate increases requested by our state's two biggest electric companies.

On Monday, it'll be Progress Energy Florida, which is asking for another $500 million a year.

On Wednesday it's the turn of Florida Power & Light, which is asking for $1.3 billion. That's b-billion.

Even in normal times this would be a big deal. But times are not normal. Things have been weird lately:

• The "Kentucky Derby scandal," involving a top PSC staffer who attended a party at the home of an FPL executive.

• The "PIN scandal," in which we learned that utilities were given the codes to send electronic BlackBerry messages privately to the PSC.

• New scrutiny of how PSC members associate with the companies they regulate at conferences and events.

• The resignation of one of the five PSC members and the replacement of a second by Gov. Charlie Crist. That means two of the current five are brand-new rookies.

Let's see, what else? An ethics complaint against one of the commissioners, Lisa Edgar, ruled unfounded. Internet attacks staged by the pro-utility side against the PSC's new chairman, Nancy Argenziano, probably the most consumer-friendly of the bunch. Staff turnover.

Meanwhile, at least in FPL's case, we learned that the company stacked the deck during public hearings with "citizens" who, by an amazing coincidence, sure liked the electric company.

Now there are bills in the Legislature to reform the PSC. One, by Sen. Mike Fasano and Rep. John Legg of Pasco County, would limit contacts between the PSC and regulated companies except in official proceedings. Another filed by a South Florida lawmaker would require witnesses at PSC hearings to reveal whether they have financial ties to utilities.

Man!

• • •

Oh, right. The rate cases.

Here is a tough truth. The PSC's decision cannot be based merely on whether "times are hard" or "we can't afford it" or similar things, even if they are true.

The legal question is: What is a fair rate of profit for the companies? What is enough to let them attract investors so they can keep growing to meet the needs of Florida?

Both companies have asked for a rate of return (the correct term is "return on shareholders' equity") of about 12.5 percent.

Twelve-dot-five! Who is gettin' that these days?

The recommendation of the PSC staff is 11-ish. The national average is 10-something. The Office of Public Counsel, which represents customers, is looking for 9-plus, which would allow just a fraction of an increase.

There is one other big issue in this case that involves depreciation. If you really want to know the details, give me a call. Let's just say it is another issue on which the PSC could do a big favor for the utilities, or stick them.

Really, this is kind of exciting. Will Argenziano lose her consumer-friendly label? Which way will newcomers David Klement and Ben A. Stevens lean? What about Edgar and the fifth member, Nathan Skop?

We PSC groupies are all tingly.

It's time for big PSC rulings on FPL, Progress rate increases 01/08/10 [Last modified: Saturday, January 9, 2010 5:45pm]
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