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Florida regulators allow utilities to collect more from customers for economic development

TALLAHASSEE — Florida utility customers could pay more for their utilities' economic development expenses beginning in 2020.

State utility regulator the Florida Public Service Commission approved an update Tuesday to a 24-year-old rule that allows all public utilities in the state to charge their customers for economic development expenses, such as marketing.

Under the revised rule, public utilities can now collect 95 percent of economic development costs from customers up to either $10 million annually or .225 percent of the utility's gross revenues, whichever is greater. After $10 million is reached, the utilities can charge customers for 93 percent of economic development costs, with the remaining 7 percent picked up by shareholders.

Previously, utilities could collect 95 percent of such costs up to either $3 million or 0.15 percent of gross annual revenues, whichever was smaller. Florida Power & Light — which serves much of South Florida — as well as Tampa Electric Co. and Gulf Power requested the cap be increased to account for inflation.

The new rule would have the greatest effect on Florida Power & Light and Duke customers, as they are the two largest public utilities in the state, though the commission said the increase is expected to be "minimal."

The approved iteration was proposed at the Tuesday hearing by Commissioner Gary Clark, who said he composed it with his staff in recent weeks. Clark said he considers the utilities' contribution to economic development significant, especially in rural areas. Those contributions can include efforts such as marketing and rate reduction programs for businesses, for example.

"Without the investments the utility companies have put into economic development in rural areas," he said, "so many of these projects that have resulted in positive economic growth in the state of Florida would not have occurred."

The benefit, he said, comes from utilities using the economic development budget to attract more commercial customers, which use larger amounts of energy and pay more for it, eventually driving down the cost for all customers.

But Patty Christensen, a lawyer representing utility consumer advocate the Office of Public Counsel, cautioned that the commission should revisit the issue when the utilities ask for rate increases down the line.

"We appreciate, Commissioner Clark, that if you can bring on these (commercial customers) you can have an overall reduction effect to all consumers' bills," she said. "But we think at some point you need to prove that up and show that's actually what's happening with this economic development money."

Before Clark's proposal was revealed, Christensen urged the commission to "take a more conservative and measured approach that assures a return to the customers on their money." The Office of Public Counsel, she said, considers Clark's rule as "positive forward momentum," though she recommended that "some of that should be more vetted in a rate case setting."

At the same hearing, commissioners voted to allow Duke to use savings from the 2017 tax reform to cover the $223.5 million in storm recovery costs from Hurricane Michael, waiving what would have been an extra $6.95 per month on customers bills for a 12-month period.

Contact Malena Carollo at mcarollo@tampabay.com or (727) 892-2249. Follow @malenacarollo.

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