Thursday, February 22, 2018
Business

Supreme Court weighs role of public advocate in rate cases

TALLAHASSEE — Florida's Supreme Court justices heard arguments Thursday in a case that could set the precedent for how much influence the state's consumer advocate will have in cases before the utility board.

At issue is the $350 million rate increase approved in 2012 by the Public Service Commission for Florida Power & Light.

The Public Service Commission circumvented a full rate hearing last year when it approved a settlement between FPL and the company's largest industrial users that allowed the company to charge customers higher rates in 2013 and automatically increase rates again in 2014 and 2016 when new power plants come online.

The agreement was approved by regulators despite the objections of the Office of Public Counsel, the legislatively appointed lawyer whose office represents customers in rate cases. Public Counsel J.R. Kelly had opposed the rate increase, saying that FPL's financial projections indicate that rates should be reduced not increased. He also objected to the settlement because it allowed the company to receive a future automatic boost in revenue without having to immediately justify its expenses.

It was the first time the PSC had approved a settlement without the public counsel's consent, so Kelly, and his office, filed suit. They are asking the court to invalidate the rate increases and require the PSC to start over.

They say state law gives the public counsel the same veto authority over a settlement agreement that a utility has, and that the settlement set a bad precedent and hurt customers. They also claim that the due process rights of more than 99 percent of FPL's 4.6 million customers were violated when regulators gave the advantage to the company's commercial users, who comprise less than 1 percent of the customer base but use a proportionately higher amount of electricity.

"We believe the public counsel is necessary to the approval for a settlement, based on the court's previous decision," said Joseph McGlothlin, associate public counsel. He cited a 1976 court case, Citizens v. Mayo, which said the role of the public counsel was essential to the representation of the public in rate cases.

Lawyers for FPL joined with the PSC's staff to argue that the public counsel had plenty of opportunity to challenge the settlement agreement last year and address the many related financial issues. They said if the court throws out the settlement it will give the public counsel virtual veto power of future settlements.

But McGlothlin told justices that, under the current situation, the PSC has given utilities the veto power over future settlements and the public counsel should be treated the same.

Justice Barbara Pariente noted that regulators appeared to move ahead without giving both sides equal treatment. "How can we have a settlement agreement if you don't have all the parties that have an interest?" she asked.

Justice R. Fred Lewis questioned why regulators would allow FPL to add issues to the settlement when it wasn't part of FPL's original request.

He compared it to saying, "I want a rate hike for my cup of coffee and, while we're fussing about that, I want an additional rate increase for my microphone."

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