Groups de­mand $736 mil­lion re­fund from FPL to con­sumers

Orlando Sentinel - - BUSINESS - By Jim Saun­ders

TALLAHASSEE — At­tor­neys for con­sumers and two busi­ness groups are ask­ing state reg­u­la­tors to re­quire Florida Power & Light to re­fund as much as $736 mil­lion to cus­tomers and are call­ing for a re­view of the util­ity’s base elec­tric rates.

The state Of­fice of Pub­lic Coun­sel, which rep­re­sents con­sumers in util­ity is­sues, the Florida Re­tail Fed­er­a­tion and the Florida In­dus­trial Power Users Group filed a pe­ti­tion Wed­nes­day at the state Pub­lic Ser­vice Com­mis­sion. The pe­ti­tion fo­cuses on tax sav­ings un­der last year’s fed­eral tax over­haul and con­tends that FPL has ex­ceeded a limit on prof­its in­cluded in a 2016 rate set­tle­ment.

“The is­sue pre­sented in this pe­ti­tion is the de­ter­mi­na­tion of the fair, just, and rea­son­able rates to be charged by FPL fol­low­ing the wind­fall cost re­duc­tion re­sult­ing from the (fed­eral tax over­haul),” the pe­ti­tion said.

But FPL quickly fired back Thurs­day, say­ing in a state­ment that its rates are among the low­est in the na­tion and that the pe­ti­tion, if ap­proved, would re­sult in higher elec­tric rates. A spokesman also said the util­ity has not ex­ceeded a max­i­mum re­turn on eq­uity, a closely watched mea­sure of prof­itabil­ity, in­cluded in the 2016 rate set­tle­ment.

“We are proud to serve our cus­tomers, and on be­half of all of them, we in­tend to fight this po­lit­i­cally mo­ti­vated ac­tion,” the util­ity said in a state­ment. “If (the Of­fice of Pub­lic Coun­sel and busi­ness groups) are suc­cess­ful with this, our cus­tomers will be pay­ing higher rates and mas­sive lit­i­ga­tion costs. Noth­ing about this ac­tion seems log­i­cal, sen­si­ble or in the best in­ter­ests of cus­tomers.”

The pe­ti­tion in­volves a com­pli­cated mix of ac­count­ing is­sues, the 2016 rate set­tle­ment, the fed­eral tax over­haul and FPL’s Hur­ri­cane Irma restora­tion costs.

Base rates are per­haps the most con­tro­ver­sial is­sue in util­ity reg­u­la­tion, with rate cases typ­i­cally tak­ing months and re­quir­ing ex­ten­sive in­ves­ti­ga­tion of util­ity fi­nances and op­er­a­tions. The Pub­lic Ser­vice Com­mis­sion ap­proved the 2016 set­tle­ment, which froze FPL’s base rates with some lim­ited ex­cep­tions. The Of­fice of Pub­lic Coun­sel and the Florida Re­tail Fed­er­a­tion were par­ties to the multi-year set­tle­ment.

The set­tle­ment in­cluded nu­mer­ous pro­vi­sions, in­clud­ing set­ting a max­i­mum re­turn on eq­uity of 11.6 per­cent and ap­prov­ing FPL’s use of a fi­nan­cial re­serve. The pe­ti­tion filed Wed­nes­day said the pur­pose of the re­serve was “to pro­vide FPL flex­i­bil­ity to man­age its busi­ness to ad­dress fluc­tu­a­tions in costs and other gen­eral or cycli­cal risks af­fect­ing earn­ings.”

Hur­ri­cane Irma caused mas­sive dam­age across the state in Septem­ber 2017, with FPL say­ing it had about $1.3 bil­lion in storm­restora­tion costs. In late 2017, Congress passed the fed­eral tax over­haul, which, among other things, re­duced cor­po­rate in­come-tax rates from 35 per­cent to 21 per­cent.

NI­CHOLAS KAMM/GETTY-AFP

Downed power lines are seen in Bonita Springs, north­east of Naples, in 2017 af­ter Hur­ri­cane Irma hit Florida.

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