Utility regulators reject FPL profit-making request
by Dara Kam | January 13th, 2010The Public Service Commission dealt another blow to Florida Power & Light, this time unanimously rejecting a 12.5 percent return on equity sought in its $1.2 billion-a-year rate hike request.
The panel again went lower than their staff recommended, setting the return on equity - the amount of profit for shareholders - at 10 percent. PSC staff had recommended 10.75 percent.
FPL says it needs the higher return to allow it to borrow more cheaply to make investments in future projects.
But Commissioner Nathan Skop said this morning that the company already has other methods to recoup costs for construction and investment in power generation.
The commission has already slashed the staff’s recommended $357 million-a-year rate hike by more than half, cutting to nearly a tenth of what FPL had originally sought.
Commissioner Nathan Skop said the company could earn more than the 10 percent allowed if it “tightened its belt” elsewhere. The company also has very little risk because it is a geographic monopoly. And FPL also has a favorable debt-to-equity ratio, Skop said.
Finally, the bulk of what FPL charges its customers - more than 60 percent - come from other sources than the base rate, Skop said.
“Looking at that and looking at the current economic situation…utilities are just going to have to make due in these difficult economic times,” Skop said.
FPL says it needs the higher profit rate in part because the economy is continuing to deteriorate and it is getting more difficult to borrow money.
“In the midst of our rate proceeding, our ROE was 10.7% (May 2009) and since that time our ability to earn a fair rate of return on equity has continued to deteriorate. Our position is that the Commission should authorize 12.5% as the return on common equity. Granting FPL’s requested return on equity will appropriately take into account overall utility industry risks, as well as FPL’s need to invest $16 billion (investments) to provide service over the next five years. Granting FPL’s common ROE is critical to maintaining FPL’s financial strength and flexibility and will help FPL attract the large amounts of capital that are needed to service its customers,” FPL spokesman Mayco Villafana said in an e-mail this morning.
Tags: Florida Power & Light, FPL, PSC, Public Service Commission
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January 13th, 2010 at 4:08 pm
Poor FPL is just crying and crying. PGN got slammed and now they know they are next. They need to put a limit on how many times a utility can request a rate hike.
They havent even been rejected for this and they are already requesting another one.
UNBELIEVABLE
January 13th, 2010 at 4:35 pm
Sad thing it will be the reliability of the current power plants that will suffer. Run to failure just got amplified ten fold while the so called leadership shoves more and more into their own pockets. Yahoo finance. Sell for 50 buy for 30. Only this cast of con artists. No one in the public will ever win.
January 13th, 2010 at 4:39 pm
The PSC finally did something right on the behalf of the Florida Residents/Consumers.
January 13th, 2010 at 4:42 pm
I will keep my fingers crossed next time there is peak demand for electricity that there will not be an outage in my neighborhood. I also hope there are other businesses and industries stepping up to the plate to invest in our economy and create the jobs that FPL was going to do if the rate increase was approved.
As my grandfather always said, “Everyone wants to go to heaven but nobody wants to die to get there.”
January 13th, 2010 at 5:37 pm
William Gist,
Cry me a river. It’s like you are saying the Police are not going to come because they did not get a raise… or firefighters are not going to put our fires. The monopoly FPL has a very sweet deal here, and should be GRATEFUL to the citizens of Florida for being such lambs. If there are problems with electric, I’ll call the PSC, not FPL.
January 13th, 2010 at 5:42 pm
Bill, are you serious? “Everyone wants to go to heaven but nobody wants to die to get there!!!! What the eff does that have to do with the FPL monopoloy? or are you one of the shareholders that won’t get a dividend? FPL needs to cut back like other companies and gov’t agencies…at least this is a step in the right direction
January 13th, 2010 at 5:55 pm
FPL needs to put their own profits into their own equipment and less in there pockets, the greedy SOB’s. And as to FPL’s threats about power outtages, look at this way, if the meters are not spinning they are not making money so they will only be hurting themselves.I think it’s time we get some competition in this state for power.
January 13th, 2010 at 6:30 pm
$1.2M is probably too much and I do not want to pay more but what I do know is this company is a well run, progressive organization and I am paying much less since moving into FPL’s territory.
January 13th, 2010 at 6:48 pm
Ten percent profit is still too high. As a geographic monopoly providing are needed service to the public, they should only be allowed seven percent profit. There is a great deal of operating inefficiencies and salaries are way too high. If they need more money, they can start there. Getting rid of the corporate jet will bring them the millions initially and save them millions more in maintenance and operation.
January 13th, 2010 at 6:52 pm
All I am saying is that everyone wants: increased capacity, newer and greener technology, new jobs to help our economy rebound, a power grid that won’t break down in a crisis; however, not many want to pay more to get it. I don’t want to pay any more for my electricity than I have to but I hope I have the perspective to realize that the bigger picture is that FPL was willing to make significant investments in our state. With today’s decision, that investment will be far less and thus, the decision will most likely have a negative, not a positive, impact on our long term effort to grow our economy and our need to embrace new energy technology.
January 13th, 2010 at 6:57 pm
How much has the cost of gas for your vehicle gone up in the last 15-20 years? How about the cost of a gallon of milk? Or even the cost of a Snickers bar? Then check the records and find how many times the base electric rate has increased…you may be surprised. Tallahassee is full of folks in power on agendas for their personal betterment, not the betterment of the public…it’s a fact. Sometimes you can’t see the forest for the trees…and that’s just the way the lobbyist and politicians want it to stay. Congrats on causing another 300 fellow Floridians to be laid off…and even worse, causing a number of new jobs to go by the wayside. Yeah, the commission staff and panel are certainly looking out for the little people. You can dispute this if you want, but it’s fact….like it or not.
January 13th, 2010 at 7:45 pm
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January 14th, 2010 at 8:32 am
Mr. Gist, you are what is wrong with the world. Get over it~ get tough. You will be the first one to cry like a baby after a hurricane when you have no AC. Let’s see you get out and do this work for peanuts! It is dangerous and not at all a job anyone can do. I for one am appreciative having electric on at the flick of a switch and any little outage, big deal. Go call the PSC again why don’t you. I imagine you are first one to complain about any and everything. I pay my bill and get service and am happy to do so. And out of work~don’t care to pay more for services either but fact of life. Everything goes up, it is expected.
January 14th, 2010 at 8:57 am
People private jets have nothing to do with getting and keeping your power on! Be glad you have power. The people of Haiti would love to have the luxury right now. Stop complaining and if you can’t pay your 500. electric bill, CUT back and turn the thermostat up~like I do. Everyone wants conservation but that starts at home! Have you forgotten that? Too much waste in our society. Everyone has gotten too comfortable. Not one of us really knows what it is like to do without. Be thankful.
January 14th, 2010 at 9:17 am
I wish I could say we have a new PSC. We have the Director who controlled the staff recommendations who spent alot of time being pro business. Mray Bane leaing was because her staff recs and the skewed natural gas projections for the state were shown to be a lie. For most of you, you could not comprehend reading archives of over 6 yrs of 20 different attys, copmmissioners general counsels’ emails from the PSC. And the review of Mary Bane’s staff changes starting with Lila Jaber and Harold McLean.
It would be nice to think that Comijmssioner Argenziano made this happen. But she’s had PIN communications ex parte violations during hearings. And she DID VOTE for the 2006 Energy bill, like a lemme during Jeb Bush’s governorship. As Argenziano AND Fasano voted for the bill, it’s a little too late to say they didnt read it, something was slipped in at the last minute. The bill’s ramifications were published in the Miami herald a WEEK before the final vote in April 28, 2006. Tired of the dog and pony show.
January 14th, 2010 at 12:50 pm
FPL uses the statement that they have not had a base rate increase in over 20 years. The facts are that back then the base rate was the only that FPL could collect money from it’s customers but now they have fuel adjustment costs and many other pass through costs. Pass through meaning that if there is a fuel increase they pass the cost on to the customers.
Plus they are claiming they will not be able to do their projected system improvements and maintain their facilities. The truth is we already pay for those improvements in our current bill. The CEO got an 11 million dollar bonus last year and the company made over ¾ of a billion dollars profit last in 2008. If they really needed the money I would have been all for the increase I do not believe they needed the money and neither did the PSC.
Give back your bonus
January 15th, 2010 at 10:08 am
Dear fpl employee, I am sure you are retired and will not have to worry about being laid off if in fact they do come to fruition. That is why you post such a remark. Most companies are all about profits, show me one that isn’t. Not happy about paying more for anything in this world of ours but most we have not control over. The PSC are puppets, and Charlie Crist is the master, so it seems.
January 22nd, 2010 at 6:33 pm
[...] Utility Regulators Reject FPL Profit Making Request The Public Service Commission dealt another blow to Florida Power & Light, this time unanimously rejecting a 12.5 percent return on equity sought in its $1.2 billion-a-year rate hike request. [...]