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As Florida electric rate hikes loom, lawmakers to choose utility watchdog

Under state law, the Office of Public Counsel serves as the voice of consumers in electric, water and natural gas cases that relate to consumer finances. Lawmakers consider two new candidates.
TECO power plant at Port Sutton
TECO power plant at Port Sutton [ CLIFF MCBRIDE | Tampa Bay Times ]
Published Feb. 4
Updated Feb. 4

TALLAHASSEE — As Florida’s largest electric utility company positions itself for a $1 billion increase in its base rates, a legislative committee will decide who to hire as the watchdog to protect residential customers from being overcharged by the monopoly utility companies.

The Joint Committee on Public Counsel Oversight will meet Thursday in what is scheduled to be the first of two meetings to fill a vacancy at the Office of Public Counsel, the legal office created to protect customers from excess utility profits in rate cases before the Florida Public Service Commission. But on Thursday, one of the two remaining candidates withdrew, leaving only one applicant, Richard Gentry, a 70-year-old veteran lobbyist who last year lobbied for a utility-backed non-profit, Floridians for Government Accountability.

Three other applicants have also withdrawn their names.

In January, J.R. Kelly, a 14-year veteran of the job, resigned after he was pushed out by legislative leaders who required him to reapply for his job as director of the office in March of this year. That same month, Florida Power & Light is expected to begin its rate case in which it is asking for about $2 billion increase in base-rate revenues over the next two years. In 2022, FPL is asking for $1.1 million, that would be followed by a $615 million increase in 2023, a $140 million increase in 2024 and a $140 million increase in 2025 to pay for solar-energy projects, the News Service of Florida reported in January.

TECO also has a rate case, asking to charge customers between $280 million and $295 million starting in 2022.

Kelly, who has been a thorn in the side of the utility companies for years and effectively fought against FPL requests, decided that instead of going through the motions to appease legislators he would resign effective Jan. 14 and allow the legislative committee to appoint his successor. He did not comment for this story but told the South Florida Sun-Sentinel that “it was clear that the Legislature’s preference was that someone not serve more than 12 years.”

Under state law, the Office of Public Counsel serves as the voice of consumers in electric, water and natural gas cases that relate to consumer finances.

While the utilities have a team of lawyers and experts to make their case on behalf of their investors, the OPC has a smaller group of state-paid lawyers working on behalf of customers. Unlike many states where the consumer advocate is independent, Florida’s OPC works for the Legislature, which in the last election cycle received more than $4 million in campaign contributions from the utility industry.

The applicants

Four people applied to replace Kelly, but three withdrew their applications. On Thursday, Michael Barry, a staff lawyer in the Florida House of Representatives, was the last to withdrawn. He had been recommended by PSC Commissioner Michael La Rosa, a former legislator appointed to the PSC by Gov. Ron DeSantis with the backing of the utility industry.

La Rosa’s relationship with Barry, and a letter he wrote criticizing the Office of Public Counsel last year has raised questions about whether La Rosa supports the independent analysis of the OPC and its staff.

Before he was appointed to the PSC in August, La Rosa joined with Senate President Wilton Simpson, R-Trilby, in a letter to the commission supporting FPL’s “Solar Together” program.

FPL was asking the PSC to allow it to charge customers $1.8 billion to add 20 solar-power plants. Customers were expected to enroll to voluntarily pay more on their electric bills to finance the solar projects. In return, they would receive credits that are expected to result in them getting a “payback” in about seven years.

However, both Kelly and the PSC staff urged commissioners to reject the program because they said it unfairly put the costs and financial risks on the vast majority of customers who choose not participate.

In the Jan. 9 letter to commissioners, La Rosa and Simpson wrote: “Ironically, the principal opponent in this docket, based on the testimony filed in the case, is the legislatively appointed representative of utility ratepayers, the Public Counsel.

“There is little doubt in our mind that the Public Counsel has a direct conflict in opposing the customers who wish to subscribe to this program. Moreover, the evidence filed in the docket and reviewed by our staff clearly indicates that this voluntary, customer-driven community solar program will also provide long-term benefits for those ratepayers who do not wish to subscribe to the program.”

A month later, Simpson filed legislation targeting Kelly by imposing 12-year term limits on his job and requiring him to reapply. In March, the PSC approved the Solar Together expenditure, despite the opposition. And in December, Kelly submitted his resignation.

What consumer advocates say

Now, consumer advocates and legislators are raising questions about whether the office will remain independent enough to push for lower rates in the face of industry pressure.

“This is a result of the direct relationship to the political power of the investor-owned utilities in Florida,’' said Layne Smith, associate state director of AARP Florida which has represented customers before the PSC.

“It’s no secret the substantial amount of money spent to support candidates, political parties, various amendment and ballot initiatives by Florida’s investor-owned utilities has been on full display. That ultimately can hurt consumers,’' she said. “I hope whoever is appointed as the new public counsel will be an ally for consumers and we will be able to work with them.”

In the last election cycle, Florida Power & Light was among the largest contributors to legislative campaigns with $3.1 million in donations, according to reports filed with the Florida Division of Elections. Included in the 2020 contributions was $1.5 million to the Florida Republican Senatorial Leadership Committee, headed by Simpson, who was tasked with securing the Republican majority in the Senate.

“Anyone who follows this should be very concerned,’' said Rep. Ben Diamond, a St. Petersburg Democrat on Wednesday. “As a lawyer I believe in the adversarial system of justice. We have a consumer advocate whose job it is is to go before the Public Service Commission and fight for consumers. But because of the term limits, I’m concerned the pool of candidates who can do this job effectively is going to be very small.”

He said the Public Service Commission, which is supposed to serve as an independent arbiter in rate cases, has consistently sided with the electric utility industry and has shown “it is not exactly a neutral judge.”

“There have been too many examples of the Public Service Commission not asking the tough questions of the utilities and I have real concerns about that,’' he said. “We need an advocate who will go in there and make the arguments. Hopefully ,the next person that is appointed is going to be up for the task.”

Utilities’ profits

Florida Power & Light, a regulated monopoly with more than 10 million customers in Florida, is currently making profits at about 11.6 percent, the most allowed under current law. But the company’s rate agreement ends this year, and it is now are asking to be allowed profits of between 11.5 percent and 12.5 percent. Tampa Electric Company, which also has a rate case this year, is asking for 10.75 percent.

And on Kelly’s last day on the job, he completed a settlement agreement with Duke Energy to lock in rates that would give the company profits of 9.85 percent return on equity. That agreement must still be approved by the Public Service Commission.

“The public counsel really needs to be someone who cares about saving consumers money,’' said Smith of AARP. She said that Kelly demonstrated he could do that.

Between 2012 and 2017, the Public Service Commission sided with utilities in every major case, prompting Kelly and his staff to take some issues to court. In 2014, for example, after the Public Service Commission allowed Florida Power & Light 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 Public Service Commission.

Last year, when the Public Service Commission voted to let Florida Power & Light use a $772 million in tax refunds to pay for hurricane recovery costs instead of refunding the money to customers, Kelly took the case to the Florida Supreme Court. The court, which is now dominated by Republican appointees, dismissed the case. Florida Power & Light kept the tax refund.