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Calls grow for changing how Florida regulates utilities

TALLAHASSEE — Faced with an edict from Gov. Charlie Crist to "clean house" at the troubled Public Service Commission, Senate President Jeff Atwater says he'll hold hearings during the next two months to change the way the utility regulator does business.

"What we have at the moment is a collapse of the integrity of the whole system," Atwater told the Times/Herald, a reference to recent revelations of cozy relationships between commissioners on the panel and the utilities they regulate.

"It is poor judgment and may in fact be worse than poor judgment," he said.

Attitudes toward the PSC have shifted in Tallahassee, where the agency has mostly operated out of the public spotlight. In addition to the proposed hearings, two senators are writing bills to reform the process for selecting commissioners. And the commission itself has scheduled workshops to rewrite its rules for communicating with utilities.

But critics say it will take more than rule changes to reform the state utility board.

For years, commissioners and staff members have left the PSC to work for the utilities they regulate, and documents show that behind-the-scenes communications between utility officials and commissioners on issues before the PSC are customary and frequent.

The Times/Herald also has reported that commissioners and staff members have socialized with utility executives, conferred with them daily or shared their private messaging codes from their state-paid BlackBerrys.

"Based on the current events, I think you're going to see some changes, but how far those changes go remains the question," said J.R. Kelly, the head of the Office of Public Counsel which represents consumers in PSC cases. "We have to restore the public's confidence."

Last month, the Florida Department of Law Enforcement launched an investigation into whether any of the PSC-utility communications were illegal. The agency says it expects to issue a report shortly. The Leon County state attorney is considering whether to call a grand jury to investigate.

In the midst of the turmoil, the PSC conducted weeks of rate hearings into requests by Progress Energy and Florida Power & Light to raise their base rates for electricity by about 30 percent.

The stream of unflattering news about the PSC prompted Crist to call for a more consumer-oriented approach by the commission. Rather than reappoint two sitting commissioners to four-year terms, the governor named two outsiders to the panel: former Bradenton newspaperman David Klement and former Escambia County sheriff's finance director Steve Stevens.

Legislators have taken note. Sen. Mike Fasano, a New Port Richey Republican and vocal critic of the PSC, said he is drafting legislation to address a shelved 1992 grand jury report on the PSC that would have put an end to undocumented communications between staff members and utility representatives.

His bill would require all PSC commissioners and staff members to put all communications in writing and provide copies to the public counsel's office.

Sen. Dan Gelber and Commissioner Nancy Argenziano argue that the Legislature is also part of the PSC's problem. The PSC is an arm of the Legislature; its commissioners are appointed by the governor from a list compiled by a nominating council. The council is made up of six legislators and six private citizens — who are appointed by legislators.

Gelber, a Miami Beach Democrat, is proposing a law to change the appointment process by giving the job to the governor and Cabinet. He also wants the PSC to handle communication the way courts do, putting everything in writing and keeping a public record.

"It's a no-brainer," he said.

Argenziano, a former state senator who was appointed by Crist to the PSC, doubts that legislative leaders have the will to make the changes needed to remove the influence of the utilities because they rely on the utility industry for campaign cash.

"We can't say we want to clean up something and only blame the PSC," she said, adding that utility companies contribute large sums of money to legislators' campaign committees in an attempt to influence the PSC.

FPL, for example, is one of the most generous campaign contributors in the state. Since 2002, the company and its employees have spent $9.8 million on state races.

The largest donation — $1 million — went to Crist's 2008 "Yes on 1" campaign to roll back property taxes. The next largest recipients were Florida Democratic Party groups, which received more than $3 million through various committees, and the Republican Party of Florida, which received at least $2 million.

The talk of reform has Florida utility companies nervous. Both FPL and Progress testified during their rate cases that they will be wounded financially if most of their requested increases are not approved.

Last week, FPL circulated a research letter from Moody's Investors Service that called the environment surrounding the rates cases "highly politicized" and warned that it could lead to a drop in the credit ratings for Florida utilities.

The commission will decide at the end of this month whether to follow a request from Crist that the PSC delay decisions on the rate cases until his two new appointees take office in January.

Times/Herald staff writer Shannon Colavecchio contributed to this report. Mary Ellen Klas can be reached at meklas@MiamiHerald.com.

Calls grow for changing how Florida regulates utilities 10/10/09 [Last modified: Saturday, October 10, 2009 8:52pm]
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