A new law requires Florida public utilities to strengthen their infrastructure against storms, and that means state regulators are hammering out a major change to customers' bills.
"This is one of the most significant changes in rate-making I think in decades," said Charles Rehwinkel, lawyer for the Office of Public Counsel. Rehwinkel's office represents utility customers before the Florida Public Service Commission. "It could have a moderate to significant impact on (customers') bills."
The law passed in June requires utilities to make improvements to existing electrical infrastructure to make it more resilient and reliable during and after storms, particularly by moving outage-prone portions underground. It also requires public utilities to submit a 10-year plan for storm hardening.
Customers, the law says, will foot the bill for these efforts. But how big that bill could be — and how it's calculated — is in the hands of the Florida Public Service Commission. Regulators will decide how transparent utilities must be about that process and what they can charge customers.
A draft of the commission's rule discussed at a June workshop called for an unprecedented level of specificity for each utility's 10-year plan.
Currently, utilities are not required to tell the Florida Public Service Commission what specific projects they complete for storm hardening, the estimated and actual costs and whether any projects were delayed or fell through. Instead, they report largely aggregate cost estimates.
That means customers currently have no way of knowing whether such projects are completed and when or if the projects came in over budget (and by how much).
The draft rule would require utilities' storm protection plans to lay out a project from its expected time frame and cost estimate to how it will impact the grid's reliability and why this project was chosen over other storm-hardening alternatives.
At the workshop held in late June, utilities pushed to limit that specificity, arguing it was unreasonable to plan so granularly over a decade. Florida Power & Light, Duke and Tampa Electric urged the commission to make a distinction between a "project," as the law says, and a "program." A project, they said, could include moving a particular stretch of power lines underground, but that project could be part of a larger program to move many stretches of power lines in an area underground.
"(We) would hope that we're not expected to project out individual small (electric) line segment projects over a period of years, as opposed to including those within particular programs that encompass many smaller projects," said Jim Beasley, a lawyer representing Tampa Electric.
Customer advocates argue that being as specific as possible, especially in the short term, is vital for accountability and understanding the rate impact.
"These are largely construction projects. They don't get done in a week. They don't get designed in a week. It takes months and months to get a binding cost estimate for an undergrounding project," Robert Scheffel Wright, attorney for the Florida Retail Federation, said at the workshop. "Utilities should be able to provide highly granular data."
Customer advocates also want the commission to ensure that any plans for moving infrastructure underground that customers were already charged for are not moved over to the storm protection charge, effectively charging customers twice for the same project.
"That's easier said than done," the Office of Public Counsel's Rehwinkel said. "There's not a ledger (of current projects) somewhere that the commission has."
While the exact impact on rates won't be clear until the commission finishes its rule-making process, an early analysis by state House staff shed some light.
Duke and Florida Power & Light both began projects in 2018 to move their most outage-prone infrastructure underground. Duke did not submit a cost estimate for its plan to move 1,200 miles of overhead power lines underground over a 10-year period. But Florida Power & Light projected that for its plan to put 158 miles of lines underground over three years, it would need $100 million. That amounts to about $632,911 per mile.
House staff estimated that if the South Florida-based utility moved just 4 percent of its total overhead lines underground, it would cost $577 million per year.
Those figures will likely be somewhat different for other utilities, as Florida Power & Light has a much more rural territory than the largely urban areas Tampa Electric and Duke cover.
It will be up to state regulators to decide if there is an upper limit to what the utilities will be allowed to collect from customers in a given year, as the law does not specify a ceiling.
The commission has until Oct. 31 to propose a rule. While the rule could be finalized as early as the end of the year, depending on the language, customers might not see a rate increase until 2022.
Contact Malena Carollo at email@example.com or (727) 892-2249. Follow @malenacarollo.