Thursday, June 21, 2018
Business

Romano: Want a sure thing? Bet with someone else's money

I need your help, dear readers.

I've just watched a bunch of state legislators hear evidence, analysis and reasoned pleas from consumer groups, environmentalists, retailers, the state's public counsel and even the AARP. One after another, they said it was a bad idea to let Florida utility companies play poker with your money.

To which the legislators replied:

"Pffft."

And so now I'm torn. What is the proper response to such contempt of common sense? Because I'm weary of shouting and feel guilty about laughing.

But the reality is your Legislature is selling you out.

I've written about this before, but it bears repeating. This legislation (HB 1043 and SB 1238) would allow utility companies to charge customers in advance for gas exploration ventures. The idea is that investing in out-of-state fracking adventures today will save Florida customers from rising costs in the future.

Skipping past all the technical arguments, here is the one thing you need to understand: Utility companies around here have wasted billions (and billions and billions) of your dollars in the name of saving you money in the future.

In other words, their track record on placing bets is not good.

J.R. Kelly of the Office of Public Counsel often points out that ratepayers have lost more than $6 billion since 2002 in risky gas hedges taken by utilities in Florida. Those bets were based on whether gas prices would rise or fall. This time around, the utilities want to bet on whether they can extract enough gas from the ground to make the investment worthwhile.

Even if you're a natural-born gambler, there is still a problem with this scenario.

The way the bill is set up, the utility company gets a guaranteed profit while gambling with your money.

If you win, they win, too. And if you lose, they win again.

"The bottom line is that utilities have lost more than 6.7 billion consumer dollars using financial hedges since 2002," said Jon Moyle, an attorney for the Florida Industrial Power Users Group. "So we are opposed to the prospect of subjecting captive utility ratepayers to more losses and more rate increases."

The utility companies like to portray this as a shrewd bet. A sure thing, as they say at the track. Except the utilities don't want to make the bet themselves. Unless the Public Service Commission can guarantee they will recoup their investment, they have no interest in this hedge.

"If this bill does not pass, is there anything that prevents (the utility Florida Power & Light) from doing this on their own?" Rep. Lori Berman, D-Boynton Beach, asked during Tuesday's Energy and Utilities subcommittee.

The answer?

Just fiscal responsibility.

As state-regulated monopolies, utilities have no incentive to gamble their own money. But the law guarantees them profits on capital expenditures, which means a fracking operation funded by customers is a certain money winner for them.

For you, not so much.

For the record, this legislation passed out of the House subcommittee on a 9-6 vote. Among local legislators, Rep. Kathleen Peters, R-South Pasadena, and Rep. Sean Shaw, D-Tampa, voted no. Rep. Jackie Toledo, R-Tampa, voted to approve the bill. The Senate version passed 8-0 a couple of weeks ago, with Sen. Dana Young, R-Tampa, voting in favor.

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