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FPL takes $37 million in exec raises off the table

by Dara Kam | October 21st, 2009

Florida Power & Light Co. made a second multi-million dollar concession this morning in hopes of nailing down a $1.3 billion rate hike.

The state’s largest utility is scrapping about $37 million in executive pay from its proposed base rate increase, letting customers off the hook for the pay.

FPL already backed off $16 million in aviation costs this morning, lowering its $1.3 billion rate hike by about $53 million.

The company is challenging in court the PSC’s demand that the names of the 440 employees earning more than $165,000 per year be made public.

Read FPL attorney Susan Clarke’s statement at the hearing after the jump.

“The issue of executive compensation has received considerable attention. We certainly agree that it is an important business matter since we believe in competitive pay for top performance. For our customers, that performance has meant typical bills that are the lowest in the state, reliability that is 47 percent better than the national average and a cleaner environment in Florida as a result of our clean energy profile. As evidenced by national benchmarking data, our overall compensation and benefits packages represent very reasonable and prudent operating expenses when compared to the market for similar services, duties and responsibilities.

However, as a practical matter, compensation costs represent only a small fraction of FPL’s overall rate request and we’re concerned that they have the potential to become a very time-consuming distraction from the many other important issues that still remain to be addressed in this proceeding.

Therefore, FPL is taking the following actions with respect to executive compensation costs. OPC has taken the position that 50% of the incentive compensation for FPL’s executives should be borne by shareholders rather than customers. There also have been suggestions at certain points in these hearings that there should be no increases in executive compensation from 2009 to 2010 under the current economic conditions. Accordingly, FPL is reducing its 2010 and 2011 test year O&M expenses by an amount equivalent to making shareholders responsible for 50% of all executive incentive compensation AND equivalent to eliminating all executive raises for 2010 and 2011. Together, those adjustments will reduce test year O&M expenses by approximately $17.2 million in 2010 and $19.3 million in 2011. That is a total reduction for the two test years of approximately $37 million. These reductions will be one-time, lump-sum adjustments to the overall 2010 and 2011 test year O&M expenses.

This approach does not come without a price that has the potential to impact investors and consumers alike. Carried out over the long term, we believe this could hinder our ability to recruit, retain, and benefit from the brightest minds and hardest workers in the energy field. But given today’s unfortunate economic climate, we made the decision to prioritize investing in reliability and efficiency for our customers above all else.

We believe this is an appropriate action that accommodates the views of OPC and others while providing flexibility for changes in the marketplace over time. As I noted previously, we’re also hopeful it will allow us to spend time on this and other matters that is proportionate to their relative size and scale in the context of the total rate request.” — Susan Clark, FPL lawyer.

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11 Responses to “FPL takes $37 million in exec raises off the table”

  1. Bruce4041 Says:

    How can I get a job at FP&L?
    I want some of that money.
    FP&l can do whatever they want and
    no one is going to stop them.

    People and cry about the rate increase,
    but they will get what they want in the end.

  2. frances snoot Says:

    Oh Goody. We don’t have to pay for the executives’ salary hikes. Will OPC protect the utility consumer’s interests when it come to paying lobbyist fees for the cap-and-trade legislation set to be voted for in Congress? The topic has not been mentioned during the process. Well, good lobbyists are expensive. How else will FPL Group sign on to the big profits coming from the 30% rate hike boost from cap-and-trade? It was worth proferring the 37 million to stay viable in a carbon-credit-exchange economy planned for US citizens.

  3. frances snoot Says:

    However, as a practical matter, compensation costs represent only a small fraction of FPL’s overall rate request…

    Do you think Susan Clark knows the money will go to pay lobbyist fees? Is she part of the Team America set to pull down our economy and living standards for corporate profits? Does Susan know about the Cap-and-Trade legislation’s role in the Copenhagen Treaty world carbon credit exchange? Of did she miss the party at the FPL Group villa where the matter was laughed over?

  4. Arrogance Says:

    Yeah, I think the president only makes 7 million dollars a year and won’t move to juno beach headquarters so he commutes by helicopter.

    But …they thought he needed a raise?

    And they are buddies with the people that regulate them………partying together and such…

    We are screwed again.

    Arrogant….SOB’s….

    GIVE THEM NOTHING!

  5. Thomas Saporito Says:

    The corruption is pervasive in the State of Florida. Please visit http://www.governorsaporito.com and download a voter petition to have my name placed on the ballot. I will bring needed change to clean-up and rid our state of corruption.

    Thank you!
    Thomas Saporito

  6. Energy Says:

    Okay the airplanes and executive salary have been removed from the rate hike discussion. Now what will everyone complain about?

  7. kevin Says:

    The rate increase wouldn’t be so painful if FPL promoted more energy efficiency for its customers. Efficiency can substantially lower bills, even if rates go up. But FPL won’t do it because we would lose less of what they sell – electricity.

  8. Utility regulators deal blow to FPL | Post on Politics Says:

    [...] plane. FPL also cut in half the amount of executive pay and bonuses it was asking customers to pay. Customers would now pay only $37 million of the execs extras under the [...]

  9. my Says:

    Where are the consumer advocates? Christ and all political figures are in the pockets of FP&L. It is a sad state that we are having to deal with. I ask again, who is protecting the consumer???

  10. my Says:

    How much is your electric bill? Our household averages about 345.00 a month in WPB for 1800 square feet of house. It is all because of the FP&L increases. We have an elderly gentlemen living with us and can’t be w/o electricity or else we would have it disconnected. He needs to have something to do (watch TV) for entertainment. We should not be forced to pay these steep rates. FP&L needs competition in FL. Oh yeah, they said that we will have to pay a new deposit if we did not let them attach to our checking account because we were late most months and could not afford the extreme cost. The common sense part of it is, what makes them think that we could afford a new deposit if we can’t afford to pay the monthly on time – Daaaaaaaaaaah? Again, who is out there to help the consumer? This just does not seem fair to me. And now, they have the nerve to ask us to pay for executive salaries. How arrogant is that? That is the straw to break the camel’s back. The small people just don’t have a chance. It’s about who can make the most money off of you and the state reps aren’t doing anything to help.

  11. ReadTheWholeThing Says:

    You people realize that those execs are still going to get their greed money one way or another. What they call O&M is just a big bucket of money that includes payroll. And who controls the bucket? Get it now? This just means that the regular employees will get smaller raises and there will be less money available to make badly needed reapairs to the plants.

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