Sink: FPL $900 million premature rate hike “outrageous”by Dara Kam | September 28th, 2009
Chief Financial Officer Alex Sink weighed in on Florida Power & Light Co.’s plan to implement a $900 million base rate hike before state regulators vote on the proposed increase.
“I’m opposed to the FPL rate increase. And FPL’s attempt to implement the rate increase before the Public Service Commission makes a decision is simply unnecessary and outrageous,” Sink, a Democrat who is leaving office after one term to run for governor next year, told The Palm Beach Post today.
A lawyer for the state’s largest utility told PSC Chairman Matthew Carter last week that FPL would impose the rate hike on Jan. 4, as permitted by state law. The Juno Beach-based company would have to refund any difference in the rates after the PSC makes its final vote on the issue, scheduled for Jan. 11.
The decision comes after the terms of two commissioners – Carter and Katrina McMurrian – end. Gov. Charlie Crist threatened not to reappoint them if they vote in favor of the rate hike, raising fears in the investment community about a shift in Florida’s previously utility-friendly regulatory environment.
FPL’s rate hearing has dragged on far beyond its originally slated two weeks. The hearing, its first base rate request in more than two decades, has been bogged down in staff firings and suspensions, revelations about coziness between the regulators and the utilities they oversee and secret messages exchanged between PSC staff and FPL lawyer Natalie Smith.
Critics have also attacked FPL for proposing to use some of the $1.3 billion-a-year rate increase to purchase new planes for its air fleet now comprised of three fixed-wing aircraft and two helicopters.
And FPL is now fighting in court an order from the panel to make the salaries of its highest-paid executives and engineers public. FPL officials agreed to give the data to the panel but wanted it kept secret from the public.
FPL maintains that customers’ bills will go down $9 per month even with the rate hike because fuel charges will go down.
Company officials had this response to Sink’s comments:
“Floridians should not allow political grandstanding to create further uncertainty for customers and for FPL projects that will bring a lot of value to Floridians, now and in the future. Because of the delay that politics have caused, there are two paths forward here: a knee-jerk, short-sighted political response, which puts at risk thousands of construction jobs, hundreds of millions of dollars in new revenue for Florida communities and billions of dollars in capital investment at a time when all of this desperately needed; or a prudent, responsible and timely deliberation based on the facts and the merits of the case and its long-term impact,” FPL said in a statement.
FPL’s goes on: “Like other companies, we are entering one of the most significant construction cycles in our history. As we go to the market for our capital needs, debt and equity investors are keenly focused on the Florida regulatory environment. A perception of greater regulatory risk means capital will be more expensive. On the other hand, constructive, responsible regulation will enable us to continue providing stronger, smarter, cleaner and more efficient power at a lower cost to customers over the long-term.
The fact is that FPL’s typical residential bill is the lowest of all 54 electric utilities in Florida, and including the proposed base rate increase, customer bills will actually decrease on Jan. 4, 2010. The combination of lower projected fuel prices for 2009-2010 and FPL’s investments in the fuel efficiency of our power plants means that FPL’s residential bills will be lower in 2010 regardless of the proposed base rate increase.
“Our request will support the company’s ability to continue investing in major projects that will make the electrical infrastructure stronger, smarter, cleaner and more efficient – $16 billion over the next five years – and the reality is that this can be accomplished with lower customer bills in 2010.
“As a result of the Commission’s delays and to eliminate the financial uncertainty that could ultimately have a negative impact on customers, FPL intends to implement the new base rate as proposed on Jan. 4, 2010. That means typical residential customer bills will go down about $9 a month.
“Customers can be assured they will not pay one penny more than they should because any amount that isn’t ultimately authorized will be refunded in full.”
The next round of hearings is scheduled for Oct. 21-23.