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POWER OVER YOUR POCKETBOOK

The scene: Day 2 of the Public Service Commission hearing on a Florida Power Corp. rate increase request. The PSC is rehashing a decision from the day before:

Commissioner Betty Easley: "I was not that uncomfortable with what we did yesterday because of the discussion concerning weather versus economics. My reasons were a little more complicated than just splitting the baby, but I tend to agree with the bottom line decision from yesterday."

Commissioner Luis Lauredo: ". . . I didn't vote yesterday to split the baby. And I mean _"

Chairman Thomas Beard: "Let me stop both of you. No. I said that we all arrived for five different reasons at the same point."

Lauredo: "All of us have been using the words "splitting the baby,' and we ought to stop using it."

Beard: "You did not use it. Commissioner Easley did, in fact, say it."

Easley: "I sure did."

Beard: "And that is her option if that's her reason. And Commissioner (Susan) Clark was emphatic that is what she was not going to do. We all had four different reasons for getting to a positive vote and one reason for getting to a negative vote. Okay?"

Clark: "I appreciate the clarification _ "

Beard: "Now let's _ "

Easley: "But I've got the gavel."

Beard: "Oh, that's right. . . . Hoisted on my own petard."

This is your Public Service Commission at work.

Inane conversation? Maybe. But commissioners were about to make a $40-million decision. Their conclusions on Florida Power's sales forecast dramatically increased the potential revenue the utility can collect during the next two years.

The PSC makes decisions that dip straight into your pocketbook. The five commissioners decide how much monopolies are allowed to charge you _ for services you depend on.

Juice to keep the lights burning. Gas to fire your heater. Cables to make your telephone ring. Water and sewer service.

The prices the PSC sets become a fixture in your household and business budgets. Those prices don't change often. You are stuck with them.

For many of us, utility bills are the second biggest monthly expense. If your mortgage or rent is small, your utility bills might rank first.

Last year, PSC-regulated utilities raked in revenues of $12,609,338,000.

Linger over that number a moment: Twelve billion, six hundred and nine million, three hundred thirty-eight thousand.

The total will rocket higher. This year, every major Florida utility wants to raise rates. It's all up to the PSC.

"People have no idea how important the Public Service Commission is, or the power and authority it has over their finances," says Public Counsel Jack Shreve, who represents Florida consumers in utility cases.

It is Shreve who shows up in news stories about rate requests, invariably making a case that consumers are getting a raw deal. Over the years, Shreve has successfully saved consumers millions of dollars. But sometimes his arguments are futile, as in the most recent case.

Shreve calculated that not only should Florida Power not get a rate increase, it should have its rates cut by $36-million. The PSC signed off on an $85.7-million increase.

It was a dollars and cents verdict for 1.1-million Florida Power customers. By the end of next year, they'll pay 8.1 percent more for electricity, about $70 a year for an average customer.

More big cases are coming up. Monday, the PSC will begin public hearings on the $97.9-million increase Tampa Electric Co. wants and the $66-million boost GTE is after. Next month comes the massive water and sewer case of Southern States Utilities Inc. and Deltona Utilities Inc.

The PSC sets hundreds of other rates, including charges for 550 companies that provide pay telephone services and more than 800 water and wastewater systems.

Another day, another rate case.

Mining for gold

The PSC walks a fine line. It is supposed to make sure customers get good service at the lowest possible rates, but at the same time make sure utilities get adequate financial returns.

The consumer wants low rates _ low, low rates. But if the PSC cuts a company's profits too much, the customer still can end up getting stuck. Here's why: Analysts may lower the utility's bond rating. That would drive up the cost of money the company borrows for construction projects. To make up the difference, the utility increases its rates.

The PSC sets rates for a captive audience, a formula sure to create resentment.

"People feel like they're not guaranteed a certain amount of income and here these people are sitting with a built-in gold mine," said Sen. Curt Kiser, R-Palm Harbor, a member of the commission that nominates PSC members.

"It's never really a question of "Are they going to make money,' but "How much are they going to make?' "

The PSC is a little bit of everything. It's quasi-legislative, quasi-judicial and quasi-executive.

On the legislative side, the PSC sets the price of electric, gas, water, sewer and phone rates, and makes rules that govern utility operations.

On the judicial side, the PSC decides complaints and issues decisions akin to court orders. PSC decisions can be appealed to the Florida Supreme Court.

On the executive side, the PSC enforces state laws that affect utilities.

Commissioners are paid $90,000 a year. They endure endless hours of technical and duuuuull testimony.

They recently devoted several days to a "Report on Cost-Effectiveness of Underground Electric Distribution Facilities."

A PSC economist with a Ph.D. pedigree set the tone for the hearing: "The externalities really are only a small portion of the cost differential. . . . There is a difference to make between the research effort and promulgation of the rules."

Get the picture?

About that image

PSC commissioners take money out of your pocket. You don't like them already.

Then there are the indiscretions. Not everybody on the commission takes freebies from utility executives and lobbyists. But when one member strays, the image of the entire commission takes a beating.

Former PSC chairman Michael Wilson and current chairman Thomas Beard took a junket in 1989 with a telephone industry lobbyist who bought them ski-lift tickets and wined and dined them.

Beard has been criticized for touring a Florida Power plant with a principal witness in a pending case and for making dozens of calls to a communications executive while a case was pending.

State law now forbids PSC members from discussing cases before a final vote is taken.

The two friends, Beard and Wilson, have repeatedly denied any wrongdoing.

Beard says his critics and the negative PSC image are unfair. "That image comes from reporters who have unfairly labeled us," he said. "I make a lot of trips. If it's worth my going, it's worth taxpayers' paying."

Shreve, the consumer watchdog who usually takes a beating before the PSC, says commissioners should know better.

"When they accept that job, they accept all the responsibilities that go with it," he said. "And one of those responsibilities is keeping the appearance of impropriety out of it."

Commissioner J. Terry Deason, who worked with Shreve in the Public Counsel's office before being appointed to the PSC, says he has worked to change the PSC's negative image.

"In the past, some commissioners have not used their best judgment," Deason said. "It's unfortunate that happened. . . . I think one of the No. 1 goals this commission needs to pursue is to maintain their credibility and improve it."

Wilson resigned from the PSC last year and immediately went to work for an affiliate of a utility he had been regulating. Sen. Kiser then filed a bill that would prohibit a PSC commissioner from going to work for a utility for two years after leaving the commission. The bill died. Kiser said he will try again next session.

The PSC image also was tainted by the illegal legislative campaign contributions funneled through Gulf Power Co. during the 1980s and the illegal gifts from Gulf Power and other utility lobbyists to legislators. Remember, it is the Legislature that makes the laws that govern the PSC.

The current PSC, which includes three members appointed after those controversies, wants to change the commission's reputation. It's slow going.

Commissioner Easley says the PSC gets an unfair rap.

"Because we've been portrayed for quite a number of years as being in the pockets of the utilities," she said, "the media generally tends to lay the blame on us for any increases that may or may not be justified."

The legacy

The PSC wasn't always the PSC. The Legislature created it in 1887 as the Florida Railroad Commission, which regulated railroad passenger and freight rates. Telephone and telegraph company regulation was added later.

It became the Railroad and Public Utilities Commission, then the Public Utilities Commission. In 1965, it became the Public Service Commission.

Before 1978, its three members were elected. The last elected PSC included a used-car salesman, a real estate agent and a self-described "housewife." Hoping to attract better candidates, the Legislature made it a five-member board appointed by the governor.

Today, the PSC annual budget is $22.9-million. The staff numbers nearly 400.

Yet the PSC has a long track record of not following its own staff's advice, much to the public's chagrin. For Florida Power, the PSC granted an increase nearly $20-million higher than its staff recommended.

"This calls into question why the Public Service Commission has such a highly paid professional staff if they're going to turn around and ignore their recommendations," sniped Monte Belote of the Florida Consumer Action Network in Tampa. The consumer group represented 20,000 customers who objected to Florida Power's rate increase.

Complained Belote: "It looks like it's more the Utility Service Commission than the Public Service Commission."

1992 PSC rate cases

Most of Florida's major utilities have filed rate cases with the Public Service Commission this year. Others, including Florida Power & Light of Miami, are expected to file within the next year:

United Telephone Co: Wanted $55-million increase. PSC awarded $431,000.

Florida Power Co: Wanted $145.9-million increase, reduced request to $131.9-million. PSC awarded $85.7-million in September.

Tampa Electric Co: Wants $98-million increase. PSC hearings begin this week. Final decision in January.

GTE Florida Inc.: Wanted $111-million increase, reduced request to $66-million. PSC hearings begin this week. Final decision in December.

Southern States Utilities & Deltona Utilities: Wants $18-million water rate increase and $10.9-million wastewater increase. PSC hearings begin in November. Final decision in January.

Central Telephone Co. of Florida: Wants $18-million increase. PSC hearings begin in December. Final decision in February.

Southern Bell Telephone & Telegraph Co.: Wants to reduce customers' rates in 1993 by $60.8-million and has proposed permanent revenue reductions of approximately $47.5-million. PSC hearings scheduled in January. Final decision in March.

Warning: PSC has its own language

If you're thinking about attending a rate hearing, you might want to take along an interpreter to translate the PSC's technical babble. Short of that, here's a glossary of some common utility jargon and acronyms:

POTS and PANS _ Plain old telephone service and pretty advanced new stuff.

PATS _ Pay area telephone service, a company that offers pay telephone service, such as telephone booths.

QF _ Qualifying facilities, an industrial customer that produces electricity by using the excess heat from its operations; often known as co-generators.

IPP _ Independent power producers, a non-utility-built power plant that is not a QF; it has no stream of waste heat.

Tap _ An individual service line _ electric, telephone or water _ that runs to your house.

View _ A budget.

Agenda _ A PSC public hearing at which decisions are made.

Current diversion _ Stealing electricity and rigging a meter so it doesn't show.

Universal service _ Philosophy that everyone should be able to afford basic utility services.

Equal Access _ Consumers should have a choice of long-distance telephone companies.

Decoupling _ A new philosophy to encourage energy conservation by separating traditional rates from a power company's revenues.

DSM _ Demandside management; utilities can alter the demand in consumer energy consumption by offering energy efficiency programs.

CIAC _ Contribution in aid of construction; customers help pay for the cost of new utility facilities provided for them. Most commonly used for water and sewer hookups.

LEC _ Local telephone exchange company.

LD _ Long distance telephone company.

Main line feeder _ the big power lines that feed electricity to smaller lines.

Rate base _ the estimated value of a utility company's plant and facility.

Load forecast _ Long-term sales forecast for electric companies.

Kilowatt _ The amount of energy consumed within a given amount of time. One kilowatt hour equals one thousand watt hours or a 100-watt bulb burning for 10 hours.

Evidentiary hearings _ a PSC public hearing at which witnesses testify, such as a service hearing for customers or a technical hearing for a rate case.

Rate of return _ the earnings allowed in the rate base including payment of interest from bonds and return on equity _ profits to shareholders.

What they do

5 investor-owned electric companies, including Florida Power Corp. of St. Petersburg and Tampa Electric Co. of Tampa.

9 investor-owned gas utilities, including People's Gas System of Tampa.

13 local exchange telephone companies, including GTE Florida Inc. of Tampa.

More than 150 long-distance telephone companies.

More than 550 companies that provide pay telephone services such as booths.

More than 800 water and wastewater systems. Cities and counties either can run their own utilities or turn regulation over to the PSC.

THOMAS BEARD

The chairman of the PSC offers this self-assessment: "I'm more shoot from the hip with both guns blazing."

Nobody could accuse Beard of being shy. He attacks issues with bulldog tenacity.

"I think I'm fairly intense, and sometimes that gives the wrong impression," Beard said. "I expect people to read my lips and not my mind."

At 43, he is the PSC veteran. A Tampa native and son of Sen. Malcolm Beard of Seffner, he was appointed by Gov. Bob Martinez in March 1987. Martinez reappointed him to a term that expires in January 1994.

He is the most controversial PSC member. He and a friend, former PSC member Michael Wilson, have been criticized for socializing and accepting gifts from utility lobbyists on a Utah ski trip in 1989.

Consumer advocates have accused Beard of improper communications during PSC cases. He toured a Florida Power plant with a key company witness while an important case was pending before the PSC. More recently, Beard made more than 60 calls to a communications executive with a company involved in a case pending before the PSC.

Beard has consistently denied any wrongdoing. He says reporters have unfairly characterized the incidents.

The frequent trips Beard takes to attend various state and national utility functions are not junkets, he said: "I don't let utilities pay my way."

He is respected for his grasp of the complex and rapidly changing telecommunications industry. He serves on several national boards.

As a member of the National Guard and a single parent, Beard spends more time out of the office than the other commissioners. He is not sure if he'll seek reappointment.

"That's something I'm thinking about, politically, whether it's expedient," Beard said.

"I love this job. I'll never have another one as good as this."

SUSAN CLARK

Susan Clark brings an insider's perspective to the PSC.

Before joining the commission in August 1991, Clark spent nearly 11 years working on the PSC's legal staff. Most recently, she was the PSC's general counsel, representing the PSC in state and federal courts.

Clark said it is the PSC's job to substitute for the marketplace competition that the legalized utility monopolies don't face.

"We're the substitute and, I'll acknowledge, a very poor substitute, because sometimes it involves us making choices for people when I'd rather have them making their own choices," Clark said.

"It's our job to make sure price does follow cost."

Clark, 43, frequently defends the utilities' point of view. She is particularly interested in telecommunications.

She clearly understands the process of setting utility rates.

Despite her unimposing demeanor, Clark isn't afraid to go out on a limb and say what she thinks. During Florida Power's recent rate hearing, she became exasperated during several debates.

Her term expires in January 1995.

The job frequently demands more than a 40-hour week, but Clark said the educational rewards are worth the time.

"You have experts in their field wanting to educate you," Clark said. "It's like going to school where you have the best professors. It's a fabulous job."

The worst part of the job, she said, is knowing that her personal life is fair game for public scrutiny.

Part of the PSC's image problem stems from people's general distrust of public officials, Clark said.

"It's also a sense of powerlessness on the parts of the ratepayers to not be able to compete with power companies," Clark said.

"Ultimately, ours is a no-win situation."

J. TERRY DEASON

Serious and deliberate, J. Terry Deason isn't known for long-winded opinions or rancorous debate.

An accountant who speaks with the deliberateness of a judge, Deason, 38, picks his battles and stands firm. He is frequently in the minority on PSC votes.

"I've not hesitated when I think it's appropriate to cast a dissenting vote," Deason said.

A West Point graduate, Deason worked as the chief regulatory analyst for the Public Counsel, which represents consumers before the PSC. Before that, he worked as an aide to a PSC commissioner. Deason was appointed to the PSC in February 1991. His term expires in January 1995.

He enjoys the intellectual challenges that go with the job.

"The pure volumes of information to look at is difficult," Deason said. "Sometimes it's thankless. . . . But I do like it."

The public often doesn't realize how far-reaching the PSC's duties are, Deason said. Besides setting rates, the PSC tries to make decisions that will provide adequate utility services in the future.

Deason says one of his top priorities is to improve the PSC's image.

"My goal," Deason said, "is we'll get to a point where the public may not always agree with our decisions, but they will agree our decisions are fair. With no favoritism."

A recent state law forbidding commissioners from discussing cases before a vote is helping the PSC's credibility, Deason said.

The PSC is prohibited from accepting most gifts and can't accept anything from parties that have pending cases.

Commissioners routinely are invited to attend social events, Deason said.

"If it's utility sponsored, I respectfully decline," he said. "I think our credibility is improving."

To get his nose out of utility files, Deason spends time with his family, and he hunts. Deer hunting is his passion.

BETTY EASLEY

During a recent rate hearing, Betty Easley said she wanted to sponsor a vote on the power company's fossil fuel expenses.

As the PSC's self-described "fossil," Easley, 63, joked she should have first dibs on moving for the vote.

When it comes to humor, Easley doesn't have much competition. The PSC is a pretty humorless bunch.

The PSC staff see Easley as the commission's anchor, the voice of reason when debates become too obscure or stray way off base.

Her need for a regular nicotine fix prompts welcome breaks in the laborious commission hearings.

The former Republican state legislator from Largo was appointed to the PSC by Gov. Bob Martinez. Her four-year term expires in January. Easley is one of six finalists for the job.

"Let me point out that after over 20 years in public life, my integrity and honesty have not been questioned," Easley told the PSC's nominating council.

"You have not seen, nor will you see, my name in the papers in an embarrassing way."

She served on the PSC through its ethical lows of 1989 through 1991. But Easley stayed home while Chairman Thomas Beard and former commissioner Michael Wilson jetted off to socialize with utility lobbyists at a ski resort.

Easley hopes to be reappointed to maintain the PSC's stability as it takes on an unprecedented number of major rate cases in the coming year.

Before her term expires, Easley will have presided over rate cases worth more than $236-million that won't be decided until next year.

The most frustrating part of the job?

"People don't understand our role," Easley said. "My role is to listen, to weigh and to decide.

"I think the public perception is that we're here to just represent them. That's what the Public Counsel does."

LUIS LAUREDO

PSC-Speak drives Luis Lauredo crazy.

No wonder people don't like the PSC, Lauredo says. The technical jargon that mires every issue the PSC considers is mind-boggling. Wouldn't it be simpler to just speak English?

"There's absolutely no need to speak in PSC-lingo _ it's its own language," Lauredo said. "What's the bottom line? Let's cut through the rhetoric."

Lauredo, 42, is a classic frustrated freshman PSC member, his fellow commissioners say. Unfortunately, they say, the rhetoric goes with the territory. It is the language utilities speak.

As he struggles to translate the technical jargon and understand the issues, Lauredo is asking questions that sometimes add hours to PSC hearings.

His frustration is contagious. The tension level between commissioners during the recent Florida Power Corp. hearings was high.

"What I do is unsafe," Lauredo said. "I ask questions and make a fool of myself. I tend to be outspoken and emotional. It helps me focus on where the truth lies."

Gov. Lawton Chiles appointed Lauredo to the PSC in January to serve an unexpired term that ends in January 1994. A native of Cuba, he adds an international flair and a businessman's perspective to the commission.

Lauredo is president of the Occidental Group, a Miami-based aviation and international trade company. In the late 1980s, he served as president and chairman of the board of Bank M of Miami.

He also has worked as director of international commerce for the Florida Department of Commerce and as a senior vice president for the Export-Import Bank of the United States.

His major goals for the P

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