The Florida Senate is advancing a bill that sets in motion a process that would allow legislators to remove the lawyer who has fought utility rate increases and kept consumers from financing fracking.
The measure, SB 7052 by Sen. Wilton Simpson, R-Trilby, is aimed at J.R. Kelly, the head of the Office of Public Counsel which represents the public in utility rate cases and other matters. The measure would require by March 1, 2021 — about the time the state’s largest utilities could be in the midst of a rate case — that the Joint Committee on Public Counsel Oversight would either re-appoint Kelly or replace him.
Kelly is appointed by the joint committee and has been serving at the pleasure of the Legislature since 2007. Even though the law requires a re-confirmation every two years, he has never been asked to be reconfirmed. But the bill, which won approval of the Senate Innovation, Industry and Technology Committee by a 6-3 vote on Monday, would change that.
Several environmental and consumer advocates spoke up against the bill, warning that it is intended to intimidate the office that serves as a check against the power of the monopoly utilities. Bradley Marshall, an attorney with the public interest law firm Earthjustice, said the goal of the bill is to target Kelly in the middle of the rate case expected to be underway next year by Florida Power & Light and Gulf Power.
“It is vital for Floridians who care about utility bills to have a robust and independent public counsel like J.R. Kelly,’’ Marshall said. The Legislature created the Office of Public Counsel “so the citizens of this state could have a representative with the same institutional knowledge and ability as the counsel for utilities” and while the utilities won’t face term limits for their lawyers, the state will put consumers at a disadvantage.
He said that if Kelly is removed from the case there will be a calculable loss. “I’m afraid we will be able to calculate the loss by seeing how much Floridians’ utility bills go up as a direct result of losing J.R. Kelly,” Marshall said.
FPL could petition the PSC for a rate increase in 2021, while Duke Energy Florida and TECO Energy could petition for rate cases in 2022.
No one spoke in defense of the bill, and Simpson did not respond to a request for comment.
Sen. Lizbeth Benacquisto, R-Fort Myers, disagreed with Marshall, saying: “This is not about Mr. Kelly, particularly.”
Kelly would not comment on the legislation but said “it is the Legislature’s prerogative to define the parameters of the Office of Public Counsel. If they decide they want someone else to be public counsel, I’ll roll with the punches and abide by their wishes.”
However, the stakes are high for Simpson and other legislators. Florida’s electric utility giants have been among the largest contributors to legislative coffers this session, and Simpson, who is the incoming Senate president, is tasked with securing the Republican majority in the Senate.
So far this election cycle, Florida Power & Light has donated $3 million to 2020 campaigns and political committees, since the November 2018 election. TECO Energy has given almost $1.2 million and Duke Energy has spent about $800,000. Although contributions have gone to candidates and committees of both parties, the majority of the money went to Republican-controlled campaigns and dark money political committees run by business groups aligned with them. The totals are from the Division of Elections website as of Monday.
For years, Kelly has been a thorn in the side of the utility companies and the industry-aligned members of the PSC. Last session, the electric utilities persuaded legislators to let them bypass the rigorous rate review to get money for storm expenses and begin charging customers what is estimated to be as much as $50 billion to bury power lines to limit storm-related damage in the future.
During the PSC debate over implementing that law, Kelly’s office argued that the PSC’s rules lacked so much detail that utilities could bundle projects and double-bill customers. Regulators approved the rules, anyway.
The last time lawmakers made Kelly fight for his job was in 2010, in the midst of the last contentious rate case. During that time, legislators created a new committee called the Joint Committee on Public Counsel Oversight and convened its first meeting on the same day the PSC was voting on a Progress Energy rate case.
Progress Energy was seeking to raise base rates $500 million a year, and FPL was asking for a then-record $1.3 billion annual increase from its customers. But Kelly vigorously opposed both requests, arguing before regulators that the utility companies didn’t deserve a rate increase and, because they had collected more from customers than the law allowed, regulators should order them to reduce rates.
Then-Gov. Charlie Crist came to Kelly’s defense and the effort, led by the House, fizzled. The PSC rejected the bulk of the rate increases in 2010, setting the stage for legislators to replace four of the five commissioners with more utility-friendly regulators.
Two years later in 2012, with a new PSC nominated and confirmed by the Legislature, regulators granted FPL’s request to raise base rates by $358 million and be given additional rate increases when two new plants went online.
The deal was precedent-setting in that the PSC agreed to it without the consent of the public counsel. At that time, Kelly argued that FPL was making excessive profits and using its utility as a monopoly to subsidize shareholder earnings for its parent company, NextEra. FPL countered that the deal would benefit customers by locking in low rates.
Between 2012 and 2017, the PSC sided with utilities in every major case, prompting Kelly and his staff to take some issues to court. In 2014, for example, after the PSC allowed FPL to use customer dollars to invest in an oil and natural gas exploration company in Oklahoma, Kelly and the Florida Industrial Power Users Group sued the PSC.
They argued against allowing an electric utility to be permitted to recover non-regulated investments through regulated rates. The Florida Supreme Court agreed in 2016 and reversed the PSC orders. In the next legislative session, FPL sought legislation attempting to overturn that ruling. It did not pass.
A 2017 report by an ethics watchdog found that the Florida Legislature has routinely sided with utilities and against the Office of Public Counsel and has limited its budget. Compared to consumer advocate offices in other states, Florida’s has only 15 employees with a budget of $2.4 million, the report found. California’s consumer advocate office has 147 employees, and some smaller states — like Maryland, Michigan and Wisconsin — have offices larger than Florida’s. By contrast, the Florida PSC, whose staff is supposed to be independent, has a budget of $24.6 million and a staff of 277.
There is no House companion to Simpson’s bill.