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Utility regulator blasts FPL $1.2 billion rate hike request

by Dara Kam | January 13th, 2010

Public Service Commissioner Nathan Skop took a swipe at Florida Power & Light for requesting a $1.2 billion-a-year rate hike before the utility regulators broke for lunch.

“This rate case seems to be more about improving cash flow from operations and discretionary expenditures than substance,” Skop said.

“That’s clearly indicated by the substantial adjustments” PSC staff made to FPL’s request, Skop said. PSC staff suggested the Juno Beach-based utility be granted just $357 million of the $1 billion it asked for this year.

On Monday, the PSC denied any of Progress Energy Florida’s requested $500 million rate hike, going even lower than the staff’s recommendation of about $50 million.

And things aren’t going so well for FPL so far this morning. The panel turned down its request for a second year rate hike of about $300 million and discontinued its ability to make adjustments in the base rate without the PSC’s approval, taking about another $180 million off the table.

The most contentious part of FPL’s request is up for discussion after the panel, headed by consumer-friendly Chairman Nancy Argenziano, returns in about an hour.

That’s its return on equity – how much profit the state’s largest utility should be allowed to earn – and how much of that its customers should pay for.

FPL wants a 12.5 percent ROE, almost a 2 percent jump from what it’s currently earning.

FPL contends it needs the higher profits to be able to borrow more cheaply in the future and to invest in future projects.

“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.

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5 Responses to “Utility regulator blasts FPL $1.2 billion rate hike request”

  1. WPB Resident Says:

    Bravo, score one for the consumer. Now we just have to wait and see what happens this afternoon. I feel that the PSC should deny ALL of FPL’s request just like they did with Progress Energy.

  2. Shawn Parker Says:

    No score for the consumer when the service is cut back in a state that is ravaged by hurricanes and has the lowest electric rates in almost the whole country.

    If all these requests are denied get ready for big tine service cuts and long hold times on the phone in emergency – no new tech – which will just mean even higher rates later

  3. Tweets that mention Utility regulator blasts FPL $1.2 billion rate hike request | Post on Politics -- Topsy.com Says:

    [...] This post was mentioned on Twitter by SayfieReview.com, PostOnPolitics.com and Electricity Pricing, Adam Rivera. Adam Rivera said: So far, so good. RT @postonpolitics Utility regulatory blasts FPL for $1.2 billion rate hike request http://bit.ly/8MbETo [...]

  4. Shad Says:

    Ignorance is bliss….
    Wake up people, Mr. Parker is right. You think things can’t get worse. Think again. Be careful what you wish for. Paying a few bucks more a month to get continued coverage and service and maybe a start to more efficient energy seems fair. I am not happy about paying more for anything but who wants to wait for the electric to come back on in 90+ heat. Not me. I think all who are so against the power company will be sorry in future. Frankly, I am tired of those who complain at the least little thing. They are like that with everything in life I am sure. Like complaining about a meal for a free lunch. Get the point~

  5. underwater Says:

    Very beautiful. Dive Safe!

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