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Florida Power & Light customers should brace for two boosts in their monthly electric bills, the first coming in August.
The state Public Service Commission on Tuesday approved FPL's request for a 16 percent price increase, but delayed half of it until January.
The increase will help FPL raise the extra $746 million it needs to cover higher-than-expected fuel costs from late 2007 to 2008.
Commissioners rejected the power company's request for the full price jump next month because consumers already are coping with increases in food and transportation costs.
The fuel fee increase means that in August residential customers of FPL, the state's largest utility, will see a monthly boost from $102.63 to $110.77 for using 1,000 kilowatt-hours of power, slightly less than what the average customer uses. In January, the monthly electric bill will increase to $118.42 for the second half of the fuel charge.
Florida utilities typically propose fuel cost adjustments annually, but can revise them mid-year if their projections are off by 10 percent or more. By state law, they are not allowed to earn profits on the fuel fees passed to customers.
Utility customers, including representatives of businesses and school districts, told public service commissioners sitting in Tallahassee the rate increase would have ripple effects for Florida's economy.
"The word 'shock' has been used a lot [today] but I can tell you we were shocked," said Jaime Torrens, chief facilities officer for Miami-Dade County schools. Torres said the district is one the state's biggest employers and has been forced to lay off employees, shut down schools completely during summer vacations and cut educational programs to deal with major budget cuts in recent years. "This is a very traumatic situation for our board...Every dollar we cut is coming from the classroom."
After about five hours of heated debate about fuel charges for FPL and Progress Energy Florida, which serves Central Florida, commissioners approved the proposed increases by a vote of 3 to 2. They also delayed half of Progress' 8 percent increase.
"We understand this is very painful for the customer. We hate to do these increases," FPL spokesman Mayco Villafana said. "We know the pain and today's decision is not ... a victory for anyone. It is what's happening in worldwide fuel markets."
Commissioner Katrina McMurrian voted against the increases because she said they should all be implemented next month, rather than delaying part of the increase until next year when consumers will be hit with other fee hikes. Commissioner Nancy Argenziano also voted against the hikes because she wants an investigation of the utilities' finances, including profits and executives' salaries, before approving the full increases.
"At some point, never ending rate increases have got to be controlled. We have to allow our regulated entities to recover the cost of service, and remain strong, healthy, and in business,'' McMurrian said. "But the current structure of automatic fuel, conservation, and environmental cost pass-throughs - with the addition of nuclear and renewables construction next year - cannot continue in isolation. It is time for us to look at the entire structure of a utility's rates, not in isolated piece-parts, but in totality."
In addition to the additional fuel costs, FPL residential customers will see another $2.51 cents tacked on their monthly bills in January for nuclear plant costs, bringing the bills for customers using 1,000 kilowatt-hours a month to $120.93. That will jump to 122.32 in June to help pay for a new natural gas generator in Loxahatchee.
Late Tuesday, commissioners also started discussing FPL's Sunshine Energy program, in which about 39,000 customers pay an extra $9.75 per month for alternative energy. PSC staffers have blasted the program for spending about 76 percent of $11.4 million collected from FPL customers on marketing and administrative costs instead of renewable energy. Commissioners started discussing options such as refunds for customers and limits on what FPL can spend on marketing.
Although FPL's power grid does not separate renewable energy from other energy types, FPL created the Sunshine Energy program in 2004 to allow customers to contribute to the utility's alternative-energy projects.
Mike Twomey, a lawyer for AARP, the senior citizens advocacy group, said he suspects most customers wouldn't sign up for the project if they knew that three-fourths of the money collected from them went to administrative costs and that some of the rest of the money went to projects outside of Florida.
"But I've got a more fundamental question,'' he said. "I have to wonder why it took [regulators] so long to realize what FPL was doing. This thing should've been audited the first year and every year after.''
By Julie Patel, Sun-Sentinel July 1, 2008
