Regulators approve $350 million increase for FPL

TALLAHASSEE - After tweaking a controversial settlement agreement, state regulators Thursday approved a plan that will lead to Florida Power & Light increasing base electric rates by $350 million in January.

State Public Counsel J.R. Kelly, whose office represents consumers in utility cases, said he will "strongly consider" appealing the decision to the Florida Supreme Court. Kelly has argued for months that FPL's base rates should drop --- not increase --- next year.

But members of the Florida Public Service Commission, which voted unanimously to approve the four-year rate deal, said it was fair to consumers and to FPL. They said it would provide predictability about electric rates while having relatively little impact on customers' pocketbooks.

"It is good for the customers,'' Commissioner Lisa Edgar said. "It is good for our local economies. It is good for businesses that are hopefully looking to expand here in Florida."

FPL early this year filed a proposal to raise base electric rates by $516.5 million in January 2013, but it announced in August that it had reached a settlement agreement with groups of large electricity users. That proposal called for an initial $378 million increase in January and three future increases when new power plants start operating.

The changes approved Thursday will lead to a $350 million increase in January, while continuing to allow FPL to raise base rates in the future for the new plants. In trimming the potential January rate increase from $378 million to $350 million, the PSC said $18 million of the savings will be reserved for residential customers.

"Surely, what I think was a fair deal has been made more fair, with most of it benefiting residential customers,'' said Jon Moyle, an attorney for the Florida Industrial Power Users Group, a business coalition that approved the agreement with FPL.

But Kelly said the plan approved Thursday wasn't much different from the August proposal and is not "fair and reasonable to the ratepayers." Kelly's office delivered a document to the PSC during the middle of the day that made clear it would not support the deal.

Utility base-rate cases, which involve complex financial and technical information, often are controversial. But FPL's decision to negotiate a settlement with the large electricity users --- and the lack of agreement by the public counsel --- touched off a fierce debate before the PSC.

After commissioners recommended changes to the proposed settlement Thursday morning, they recessed for about 90 minutes to allow FPL and other parties in the case to determine whether they would go along with the plan. Officials from FPL and the PSC's staff could be seen huddling as they tried to work out details.

Along with Kelly's office, the Florida Retail Federation opposed the deal. Kelly has argued that FPL's rates should decrease by as much as $253 million in 2013.

While base rates will increase in January, FPL says many residential customers will actually see slight reductions in their monthly bills. That is primarily because the base-rate increases will be offset by decreased costs for natural gas that fuels power plants, a cost that is passed along in customers' bills.

FPL said a residential customer who uses 1,000 kilowatt hours of electricity a month will see a 37-cent decrease in January to $94.25. Such monthly bills would then increase by less than $1 in June, when a new Cape Canaveral power plant comes online, according to FPL. Future rate increases would happen in 2014 and 2016, when power plants at Riviera Beach and Port Everglades start operating.

In a prepared statement, FPL President Eric Silagy called the deal an "important step forward for Florida's economy and energy future."

"By helping us keep bills low and reliability high, this four-year rate agreement is a win for all of our customers now and in the years ahead,'' Silagy said.

One of the key issues in the case was how much profit FPL should be allowed to make. The August settlement proposal called for FPL to earn a return on equity --- a key measure of profitability --- of 10.7 percent.

As part of the deal Thursday, that target was reduced to 10.5 percent. Commissioner Eduardo Balbis said that was a fair amount because FPL will need to attract investors to help finance the new power plants, which the company says will be more efficient and cleaner for the environment.

Also, the commission killed an FPL proposal to increase the amount of fees it charges customers who don't pay their bills on time. FPL wanted to increase the minimum late-payment fee from $5 to $6, but regulators strongly opposed the idea.

"It is a big deal to me,'' Commissioner Julie Brown said. "It's a principle issue."

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