Florida's investor-owned electric utilities have lost $6.1 billion in bad bets on the cost of fuel since 2002, a river of cash deep enough to build at least three natural gas power plants from scratch.
But Florida regulators Thursday unanimously rejected a bid by the office representing customers before the Public Service Commission to have the agency make those bad bets a central issue in proceedings that help determine what Floridians pay for their electricity.
The Office of Public Counsel argued the PSC should make a special determination during future proceedings on what utilities have lost when they "hedge" the future price of fuel, mostly natural gas.
In a hedge, a utility agrees to buy a volume of fuel in the future at a fixed price. If they agree to buy 1,000 gallons of oil to be delivered next year at $100 a barrel, utilities win if the market price climbs above $100. They lose if it falls below that.
By making hedging a bigger focus of proceedings, the OPC said, greater public attention would be drawn to the issue.
But commissioners said the OPC can still freely present evidence on hedging during PSC proceedings later in the year when the OPC is expected to argue for a halt to all hedging activities by Florida utilities. But without a focus on hedging costs, the OPC said, the issue is essentially lost in the weeds.
Erik Sayler, associate public counsel, told commissioners that the OPC still expected to present evidence to support its request "that the commission stop the bleeding and stop the utilities from wasting the public's money in their zombielike automatic hedging programs."
Commissioner Lisa Edgar took exception to the term "zombielike."
"This may be a first that we've actually heard the term zombielike as a descriptor of these proceedings," Edgar said. "I am not sure I appreciate it, quite frankly."
Hedging losses since 2002, plus forecast losses for 2015, are jaw-dropping, the counsel's office says: $1.4 billion for Duke Energy Florida, $390 million for Tampa Electric, $4.1 billion for Florida Power & Light and $171 million for Gulf Power. (Duke disputes the numbers and said its losses are $1.1 billion.)
The main reason for those losses has been that natural gas prices have fallen in recent years.
Utilities argue that hedging is still a good deal for customers because it limits volatility in fuel prices and wide swings in electric bills, which they said is especially important for those living on a budget or businesses that need to accurately forecast future costs.
Utilities, which insist hedges are not bets, say they do not profit when the hedges lead to savings. Customers pay all losses via higher electric bills, but they also reap any savings.
Public Counsel J.R. Kelly said in an interview that commissioners, by refusing to make a special determination of hedging losses, are essentially sweeping it under the rug.
"It's really disheartening from the public's standpoint that the commission will not consider these issues in the public eye," Kelly said.
Contact William R. Levesque at firstname.lastname@example.org. Follow @Times_Levesque.