Utility regulators have added an extra day to hear testimony in the $1.3 billion Florida Power & Light Co. rate hike case.

The base rate case is already into overtime and is running long past the original two weeks scheduled for early August, including several back-to-back 12-plus hour days of testimony.

The Public Service Commission was slated to finish the hearings on Wednesday and Thursday but this morning added Friday to the schedule.

Only four commissioners remain on the regulatory panel - former Commissioner Katrina McMurrian walked off the $133,000 a year job recently after Gov. Charlie Crist effectively fired her and Chairman Matthew Carter and appointed two new members who will take over on Jan. 1.

The Juno Beach-based utility’s rate case and Progress Energy Florida’s proposed $500 million base rate increase is shining an unwelcome spotlight on the agency that heretofore operated with little public interest.
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FPL Group CEO Lew Hay and three other chief executives broke bread with President Barack Obama yesterday in the president’s private dining room.

But taxpayers needn’t worry about picking up the tab for the Hay and the bosses of Amazon.com, Kraft and Eastman Kodak.

The Wall Street Journal’s Elizabeth Williamson blogged that the four chiefs whipped out their credit cards at the end of a sandwich and salad luncheon “for the same price as the going rate outside the walls of the White House.”

It was the third Dutch-treat lunch hosted by the president at the White House, Williamson reported.

Obama’s no-free-lunch policy is meant to reflect the administration’s harsh view of coziness between elected officials and special interests.

That attitude is also reflected in Florida’s gift ban laws that make it illegal for legislators or their staff from accepting goodies of any sort - including meals, beverages and even after-dinner mints - from lobbyists or for lobbyists to give them.
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Gov. Charlie Crist will replace Katrina McMurrian, who abruptly resigned from the Public Service Commission this morning, to fill out the less than three months remaining in her term.

Crist effectively fired McMurrian and PSC Chairman Matthew Carter, both appointed by Gov. Jeb Bush in 2006, last week by refusing to reappoint them to the panel when their terms run out Dec. 31.

Crist’s general counsel Rob Wheeler asked the Public Service Nominating Council for a list of three recommendations to fill McMurrian’s place.

Wheeler asked the council’s lawyer Jay Vail to hurry up with the recommendations “so that there is no membership gap in representation on the Commission.”

There will be a membership gap beginning tomorrow, when the PSC - minus McMurrian, whose resignation was effective immediately - is scheduled to take a vote on a Florida Power & Light Co. proposed $1.5 billion, 300-mile natural gas pipeline.
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Public Service Commissioner Katrina McMurrian, who quit her post this morning effective immediately, expanded on her resignation in a statement.

McMurrian refused to recuse herself from a vote on a pending $1.3 billion Florida Power & Light Co. rate increase despite questions about her ability to be impartial on the issue.

McMurrian was a panelist at a New York City energy conference also attended by FPL executives, and went to a dinner also attended by an FPL executive.

Gov. Charlie Crist snubbed McMurrian and PSC Chairman Matthew Carter last week by passing them over for reappointment in favor of two inexperienced replacements.

Crist asked that the panel postpone the FPL hearing and another $500 million Progress Energy Florida rate increase proposal until his new panel takes over on Jan. 1.

“No doubt, I am an insider. I started out at the Commission in 1994. I grew up in this process, moving up from a Regulatory Analyst to a Commissioner’s Aide to a Commissioner,” McMurrian said in her statement.

“There are rules that govern all aspects of the Commission process. I know the rules, and I have followed them. But members of the public have spoken, and the Governor has spoken. They want a new set of rules… and new leadership. I respect that,” she wrote. “I recognize that this issue is much bigger than me. I don’t want to be a part of the problem – I want to help with the solution.”

Public Service Commissioner Katrina McMurrian quit her post this morning effective immediately.

Gov. Charlie Crist last week passed over McMurrian, who worked for the panel for almost a decade prior to her appointment four years ago, for reappointment. He also snubbed PSC Chairman Matthew Carter, whose term also ends on Dec. 31.

McMurrian has been the subject of criticism because she refused to recuse herself from a proposed $1.3 billion rate hike sought by Florida Power & Light Co. An intervenor wanted her off the case because her interactions with FPL executives at an energy conference raised questions about her ability to be impartial.

After cleaning house with his two new appointments last week, Crist on Friday asked the regulators to postpone any further action on the FPL hearing and another $500 million rate increase sought by Progress Energy Florida.

McMurrian’s resignation comes as the PSC is discussing the outcome of an internal ethics investigation about her behavior and other issues involving possible conflict of interest between the regulators and their staff and the utilities they oversee.

“The Commission has been asked to delay our vote on major cases until the new Commission is in place. I respect this request and want to ensure that the new Commission is positioned to set the course for the agency, one guided by different leadership,” McMurrian wrote in a resignation letter to Crist today.

After Jan. 1, Crist will have appointed all five members of the panel, including Commissioner Lisa Edgar, first appointed to the post by Gov. Jeb Bush. Crist’s latest picks - former newspaper editorial writer David Klement and Pensacola bar owner and manager Benjamin “Steve” Stevens - have no experience with utilities, tilting the panel away from those with connections to the energy industry or the commission itself for the first time in decades.

That’s when Commissioner Nancy Argenziano, a former state senator and vocal critic of the PSC, will take over as chairwoman. She’s asked state prosecutors to look into allegations of wrongdoing at the agency and wants a revamp of the way the PSC is organized.

PSC lawyers are still checking into whether the rate cases votes can be postponed in response to Crist’s request. Because he is not an intervenor in the case, he may not have standing to ask for a delay on the hearings.

Consumer groups applauded Gov. Charlie Crist’s choice of two outsiders to serve on the Public Service Commission shifting the balance away from a utility-friendly panel for the first time in decades.

Crist ousted PSC Chairman Matthew Carter and Commissioner Katrina McMurrian, both appointed by Gov. Jeb Bush and whose terms end Dec. 31, as the panel gets ready to vote on two pending utility rate increases, including a proposed $1.3 billion Florida Power & Light Co. rate hike.

Instead, Crist tapped David Klement, who spent more than three decades as a newspaperman and now serves as director of the Institute for Public Policy and Leadership at the University of South Florida Sarasota-Manatee campus, and Benjamin “Steve” Stevens, an accountant and chief financial officer for the Escambia County Sheriff’s Office.

The regulatory agency has come under fire for allegations of coziness with the industries it oversees as the FPL and Progress Energy Florida rate hearings are underway. Thus far, one PSC staffers has been fired, two more resigned and two have been placed on administrative leave in the aftermath of reports that some of the aides swapped secret BlackBerry messages with an FPL lawyer.

Here’s what consumer advocates had to say about Crist’s selections.

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Gov. Charlie Crist appointed two new utility regulators to the Public Service Commission, snubbing current Chairman Matthew Carter and Commissioner Katrina McMurrian.

Crist tapped former newspaperman David Klement and Escambia County Sheriff’s Office CFO Benjamin “Steve” Stevens and shaking up the status quo at the regulatory panel mired in controversy in the process of deciding on a proposed $1.3 billion Florida Power & Light Co. rate hike.

The ouster of McMurrian and Carter makes it likely that renegade Commissioner Nancy Argenziano, an outspoken critic of the PSC who accuses regulators of being too close to the utilities they oversee, will take over as chairwoman of the panel next year.

Crist put Argenziano, a former state senator, on the board two years ago to represent consumers and his picks today of two new commissioners who have no ties to utilities mark a decided shift from a PSC that has up until now been viewed as utility-friendly.

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.
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Florida Power & Light’s proposed $1.3 billion rate hike 13-hour marathon hearing yesterday concluded with one head-injured FPL lawyer, an order for an independent audit of the utility’s corporate jet spending and yet another delay to hear yet more testimony next month.

Public Service Commissioner Nathan Skop demanded the audit to check into the Juno Beach-based utility’s fuzzy accounting for VIPs, their wives and guests who flew, some at customers’ expense, to far-flung destinations including Europe, Martha’s Vineyard and Louisville during the Kentucky Derby.

FPL will have spent at least $32.5 million between 2006 and 2009 on the corporate aircraft travel alone, its records show.

“It’s very important to me that the rate payers of FPL are not being allocated costs that are not prudently incurred,” Skop said.

The discussion of the executive’s flights revealed that FPL Chief Financial Officer Armando Pimentel flew to Tallahassee on the corporate jet, earning a rebuke from Jon Moyle, a lawyer for the Florida Industrial Power Users Group that opposes the rate increase.

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Florida Power & Light Co.’s proposed $1.3 billion rate hike hearing fizzled out at 10:55 p.m. this evening after a 13-hour marathon of testimony from FPL CFO Armando Pimentel.

Public Service Commissioner Nancy Argenziano, attending the hearing by telephone, spoke up before the panel was set to take a five-minute respite.

“I really think this is wrong. 10:44 at night is not a good time for people” to be asking important questions,” Argenziano said. “I’m sure everybody there wants to go home.
That’s just not the way to do this. I have strong feelings that we may have pushed it too far or too late.”

PSC Chairman Matthew Carter, who’s had two back surgeries earlier this year, was in such pain late this evening that he went home after being helped out of the room by an aide.

Commissioner Lisa Edgar had already vacated hours earlier.

That left Commissioners Katrina McMurrian, acting as chairwoman, Nathan Skop and Argenziano to decide.

Argenziano won out in the end over FPL’s objections. Pimentel wanted to finish up because he did not want to have to return for the next round of hearings in late October, his lawyer said.

“We all want to get done. We’ve been at it more than 13 hours today,” said Sheffel Wright, an attorney representing the Florida Retail Federation that opposes the hike.

“I tend to agree with a lot of what’s been said. I think we are at that stage and we are getting a little overly tired and anxious,” McMurrian said, stumbling over her words. “I can’t even string a sentence together.”

She adjourned the meeting. The panel will reconvene on Oct. 21.

Public Service Commissioner Katrina McMurrian’s absence at the onset of this morning’s Florida Power & Light Co. rate hearing wasn’t a mystery after all.

McMurrian said she was about an hour late to the meeting because her response to a motion asking her to be removed from the panel for the rate increase vote wasn’t yet ready.

McMurrian, who refused to recuse herself, didn’t want to attend the meeting until her formal response had been filed, she said.

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Gov. Charlie Crist crossed the line when he threatened two utility regulators’ jobs if they vote for a proposed $1.3 billion Florida Power & Light Co. rate hike, a Palm Beach Post editorial opined today.

“I think it would be nice to reject the increase. I’m trying to appoint members that would be sympathetic to the people and the economic challenge that they’re facing. So that’s a factor,” Crist said Monday.

Here’s an excerpt of today’s editorial:

“Imagine that the governor said: ‘I will base my decision on whether these commissioners approve what FPL wants. The company is very important to Florida, and its rates are the lowest in the state. FPL needs this money to make its plants more efficient, saving customers money and providing the electricity Florida will need to rejuvenate the economy.’

Hearing that, most people who don’t work for FPL or have a connection to the company would say, “How dare he?” And they would be right. Which is why it was just as wrong for Gov. Crist to say on Monday that he would reappoint Commissioners Matthew Carter and Katrina McMurrian only if they reject that $1.3 billion annual increase FPL wants.

The governor’s comment wasn’t just political grandstanding; it was borderline demagoguery, because it played on the public’s ignorance of the facts. When a seat on the Public Service Commission - which regulates power and phone companies - comes open, a 12-member nominating council accepts applications. The council screens and interviews those applicants, and recommends finalists. The governor must make his pick no more than 30 days after receiving the names.”

The Florida Power & Light Co. $1.3 billion rate hike hearing is droning on this morning as opponents to the increase grilled the utility’s expert witness Bill Avera on projected earnings and credit issues.

FPL reps sit in the audience, as they have each day of the hearing now more than a week into overtime above its planned one-week schedule.

But noticeably absent from the FPL pack is what until today had been their constant companions: BlackBerries.

Not only are their communication devices tucked away, their ever-present laptops sit idly inside their cases.

The change is likely due to the firestorm of controversy over secret messages called PINs exchanged between FPL attorney Natalie Smith and several of the commissioners aides. Critics fear Smith may have communicated with the aides during the hearings about the rate case under discussion.

FPL spokesman Mayco Villafana had this to say on the issue in an e-mail:

“Regarding pin communications what I can tell you is that Natalie Smith has never communicated via PIN with Commissioner Edgar or any other commissioner. With respect to PIN communications in general, these Blackberry-based text messages are not unusual nor any different than any other form of communication that isn’t paper-based such as a telephone call. In addition to those individuals you have cited, Natalie also has a PIN, for example, for Commissioner Argenziano’s chief advisor and had one for Commissioner Skop’s former chief advisor. Communication with staff members is a normal and appropriate part of the regulatory process in which all parties to any proceeding or issue regularly engage.”

Nancy Argenziano fired her aide Larry Williams for giving his PIN number to Smith. PSC Chairman Matthew Carter banned the commissioners and staff from using PINs or other types of messaging that don’t leave a public record.
He and Commissioner Lisa Edgar put their aides on paid leave indefinitely until a review of the PINs is complete. The panel is now considering requiring all communications between the PSC and the utilities be in writing.

Commissioner Katrina McMurrian’s response to have her recused from the case is now online.

This morning’s Florida Power & Light Co. $1.3 billion rate hike hearing got off to a murky start despite Public Service Commission Chairman Matthew Carter’s insistence yesterday that the regulatory panel wants to conduct its business in the sunshine.

Commissioner Katrina McMurrian, who was asked by an intervenor on the case on Monday to disqualify herself from the case, was a no-show when the hearing began at 9:30 a.m.

PSC staff were unable to say where McMurrian was or whether she planned to attend the hearing.

About an hour later, McMurrian showed up with no discussion of the motion to have her step away from the case.

McMurrian sat on the panel for about 20 minutes before a copy of her motion denying the request to have her removed was available. It was only available by request and was not on the PSC’s website.

Stephen Stewart objected that McMurrian couldn’t be objective because she had was a panelist at a New York conference at which financing and credit issues related to the FPL rate case were discussed. Utility representatives had attended the conference but no consumer advocates were present, Stewart argued, so McMurrian could not be impartial in her vote on the rate hike.

But McMurrian said Stewart’s logic would put commissioners in a bind: they are supposed to be technical experts but wouldn’t be able to use any information that wasn’t purely objective to learn more about the issues.

That’s a paradox, she wrote.

“The media, both broadcast and print, continuously feature discussions about the general effects of economic conditions on businesses and consumers,” McMurrian wrote. “Even if I recused myself…I would still be the recipient of an unending flow of information concerning these issues, none of which can be realistically expected to be perfectly objective.

“Accordingly, I believe that the paradox presented by the motion is better resolved with more information, rather than less,” she wrote.

Public Service Commissioner Nancy Argenziano summed up her view of the public’s view of the regulatory panel mired in controversy while considering a proposed $1.3 billion Florida Power & Light Co. rate hike.

“The perception of people out there - they think we suck,” said Argenziano, a former state senator who is asking for a grand jury investigation into possible misconduct in the regulatory agency.

“Is that a technical term?” asked PSC Chairman Matthew Carter.

“That’s my technical term,” retorted Argenziano.

Argenziano participated by telephone in the panel’s discussion about how to handle what they called a “spaghetti bowl” of ethical questions about the regulators’ relationships with the utilities they oversee.

Commissioner Nathan Skop offered an unlikely solution: move the agency out from beneath the governor, who now appoints the five-member panel.
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The Public Service Commission tomorrow will discuss a proposal to require all communications between the regulatory panel and the utilities it oversees in writing.

The discussion comes amid a firestorm of criticism about commissioners’ aides swapping secret Blackberry codes with a Florida Power & Light Co. attorney that would allow them to communicate without creating a public record, even during hearings.

Commissioner Nancy Argenziano fired her aide for giving his Blackberry personal identification number - PIN - to FPL lawyer Natalie Smith and two other commissioners, including Chairman Matthew Carter, suspended theirs with pay for doing the same thing.

PSC Commissioner Katrina McMurrian

Discussion of her proposal was added late this evening to the panel’s internal affairs agenda slated for tomorrow.

McMurrian is the target of a different conflict-of-interest criticism. An intervenor in FPL’s proposed $1.3 billion base rate hike case asked that she be disqualified from voting because she had hobnobbed with FPL executives during a conference in New York earlier this year.

Florida Power & Light’s proposed $1.3 billion rate hike hearing will resume Wednesday as planned despite a powerful GOP senator’s request that that case and another be put on hold.

But Sen. Mike Fasano’s letter asking for the delay went into the case files, Public Service Commission general counsel Booter Imhof responded in a letter sent to Fasano today.

“It’s laughable. It’s laughable. You would think it would be a joke or a hoax if this wasn’t so serious,” Fasano, R-New Port Richey, said of Imhof’s response.

Fasano’s district is almost exclusively served by Progress Energy Florida, which is seeking a $500 million base rate increase.

“I think that’s a sad response when you hear about the coziness they have with the utility companies but they can’t respond in a better way to a sitting senator who has concerns about his citizens and the rate increase,” Fasano said.

Imhof is the latest PSC employee to jump ship. He resigned on Friday and is going to work for the Florida House. The PSC’s lobbyist Ryder Rudd resigned last week after an internal investigation could not prove he violated state laws or rules by attending a Kentucky Derby party at the Palm Beach Gardens home of FPL executive Ed Tancer.

Since then, the commission has fended off conflict-of-interest concerns concerning communications, conferences and dinners.

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The future of two utility regulators depends upon their vote in a proposed $1.3 billion Florida Power & Light Co. rate hike, Gov. Charlie Crist said this morning.

Public Service Commission Chairman Matthew Carter Photo Courtesy Capital News Service

PSC Commissioner Katrina McMurrian

“Let’s see what the commissioners want to do. Then I can have a better handle on who to appoint or reappoint,” Crist told reporters this morning.

A reporter asked Crist if he heard the governor correctly - that the commissioners’ vote would affect their appointments.

“You did,” Crist answered. “I think it would be nice to reject the increase. I’m trying to appoint members that would be sympathetic to the people and the economic challenge that they’re facing. So that’s a factor.”

Sen. Mike Fasano on Friday asked Carter, appointed to the panel by Gov. Jeb Bush, to indefinitely delay the FPL hearing and a $500 million Progress Energy Florida rate case until a storm of controversies surrounding the regulatory panel clears.

Crist disagreed.

“I don’t know why we should postpone it,” he said.

Carter said this morning that he hadn’t seen Fasano’s letter because he was on bed rest Friday recuperating from two back surgeries earlier this year.

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Public Service Commissioner Nancy Argenziano snapped back at state Rep. Carlos Lopez-Cantera for criticizing her critique of his questions of Public Service Commission Chairman Matthew Carter.

Argenziano, a former lawmaker who served in both the House and the Senate, sent a heated letter to Lopez-Cantera late this evening in which she expounds on her repeated complaints that lawmakers with too close of ties to utilities have too much influence over the regulatory panel on which she sits.

Lopez-Cantera sits on the council that selects nominees for the governor to appoint to the regulatory agency. He wasn’t happy with the answers Carter gave at the Sept. 1 nominating council meeting although Carter did make the list of six finalists for Gov. Charlie Crist to consider.

Her letter is a response to one Lopez-Cantera sent to her yesterday criticizing her reaction to his dissatisfaction with the PSC’s unanimous decision to force Florida Power & Light officials to release the salaries of all its employees that earn more than $165,000 per year. He advised Argenziano she could have found the information in the Juno Beach-based corporation’s federal filings as he and his office staff did in less than an hour.

“This same information would have saved the PSC time and taxpayer money,” Lopez-Cantera, R-Miami, wrote in a letter sent yesterday.

The federal information does not include bonuses and other perks that boost some of the salaries by up to 500 percent, Argenziano responded tonight.

“Your apparently gullible acceptance, Representative Cantera, as the FERC document reflects, that the salary of FPL’s Executive Vice President is $23,000, is flabbergasting. The ‘less than an hour’ which you and your office spent producing this useless information is perhaps the true waste of time and taxpayer money,” Argenziano wrote.

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Public Service Commissioner Katrina McMurrian offered what appears to be a simple solution to the troubled regulators and staff caught in a web of secret messages with utility company execs and lawyers.

Put it in writing.

McMurrian issued a proposal late Friday evening suggesting that the quasi-judicial panel should act more like…judges to restore the public’s trust.

In 1992, a statewide grand jury found that “the manner in which utilities communicate with the PSC is in need of reform.” That was long before Blackberries and text messages revolutionized communications, but, to McMurrian at least, the shoe still fits.

McMurrian proposed that no commissioner or staff “shall engage in communications with parties, interested persons, or stakeholders except in writing.” That would include “all procedural matters, docketed matters, rulemaking proceedings, declaratory statements, workshops, non-docketed matters and matters for deliberation at Internal Affairs,” she wrote.

And, she suggested, all the communications should be posted on the PSC’s website for the public to read.

Today Sen. Mike Fasano asked that a Florida Power & Light $1.3 billion rate increase hearing scheduled to resume Wednesday and a Progress Energy Florida $500 million rate increase case set for the following Monday be delayed indefinitely.

McMurrian and Chairman Matthew Carter are both included in a list of six nominees give to Gov. Charlie Crist earlier this month. He has until Oct. 1 to pick one and the Senate Ethics and Elections Committee, on which Fasano sits, must confirm his choice.
“Respectfully, I ask my fellow commissioners for their support of this proposal. I would also like to let the public know that we hear you and want to earn back your trust,” McMurrian’s proposal concluded.