State regulatory staff recommends much smaller rate hike than requested by Fla. Power & Light

Fla. PSC staff backs smaller utility rate hike

TALLAHASSEE, Fla. — Public Service Commission staffers recommended the panel approve only about a third of a $1 billion annual rate increase being sought by Florida Power & Light Co.

The staff’s base rate recommendation on Wednesday for the state’s largest electric utility, a subsidiary of FPL Group Inc., is $357 million.

The case has gotten caught up in politics and been the focal point of accusations some commissioners and staffers have been too cozy with the utilities they regulate.

Gov. Charlie Crist, who is in a heated race for Republican U.S. Senate nomination, has been an outspoken opponent of the rate increase. The five-member panel granted Crist’s request to delay decisions on the FPL increase and another being sought by Progress Energy Florida until the second of his two new appointees to the commission takes office in January.

Attorney General Bill McCollum, who is running in the GOP gubernatorial primary, has intervened in the case, siding with Public Counsel J.R. Kelly, who represents consumers. Kelly has urged the commission to cut FPL’s rates by $1.3 billion.

“They obviously read what our case was and followed significant parts of it,” said Earl Poucher, a senior analyst for the public counsel’s office. But, he added, “It falls far short of what we asked for.”

FPL spokesman Mayco Villafana said the company already has the lowest rates in the state. They also are 10 percent under the national average while FPL’s reliability factor has been 47 percent above average, he said.

“All we ask is that the commissioners evaluate our request on the merits and the facts that were presented, which clearly showed our proposal will help keep our service reliability high and our bills low over the long term,” Villafana said in a statement.

The commission is not bound by the staff recommendation. The panel is scheduled to make decisions Jan. 13 on more than 170 separate issues included in the revenue recommendation.

One of the most important is the company’s profit margin. FPL sought a 12.5 percent rate of return while the public counsel proposed 9.5 percent. The staff recommendation falls in-between at 10.75 percent.

Once the commission resolves the revenue issues, staffers will make another recommendation on what the company’s new rates should be. The commission will decide that issue on Jan. 29.

Even if the commission approves FPL’s full base rate increase, overall bills would decline by $6 a month for the typical customer using 1,000 kilowatt hours in 2010, Villafana pointed out. That’s due to previously approved reductions in separate rates covering fuel, energy conservation, capacity and environmental expenses.

FPL serves about 4.5 million homes, businesses and other customers in 35 counties — mostly in South Florida and along the East Coast.