Does FPL deserve all $1.3 billion for Irma?

More than a decade has passed since Florida Power& Light asked customers to pay all of the company’s costs froma big hurricane, but the scrutiny of this request should be just as thorough.

FPLwants the Public Service Commission to let it assess customers $1.3 billion for the cost of restoring power afterHurricane Irma. FPL spokesmanDavidMcDermitt said the number is preliminary. At that amount, the monthly increase for the average residential customer who uses 1,000 kilowatt hourswould be $4, rising to $5.50, through 2020.

Many homeowners, though, use more electricity than that. The surchargewould fall hardest on business customers. The surchargewould start inMarch, one month after the surcharge forHurricane Matthew expires.

In an interview with the Sun Sentinel Editorial Board, McDermitt said FPL didn’t have many specifics yet. The company arrived at $1.3 billion “based on our experience.” He predicted FPLwould file its request with the PSC by the end of the year.

It’sworth noting that the company didn’t file its justification for last year’s HurricaneMatthew expenses until two weeks ago, even though customers have been paying a surcharge for those costs for months. There still must be a hearing, as there will be for the Irma surcharge.

Most of the Irma costs, McDermitt said, relate to “restoration.” Nearly 20,000 nonFPLworkers helped get power back on. Restoration costs also include material, such as poles. Other expenses will be for repairs to the grid, whichMcDermitt said “held upwell.” Therewas comparatively little rebuilding, most of which has been completed.

Regulators, however, should askwhy Irma did so much damage after FPL invested nearly $3 billion to harden the grid since the 2004 and 2005 hurricane seasons. In October 2005, Wilma cut power to 3.2 million of FPL’s then-4.3 million customers— or roughly 75 percent. FPL now has 4.9million customers, and 4.4million lost power after Irma— nearly 90 percent.

McDermitt argues that regulators should evaluate FPL not on howmany customers lost power, but on howquickly they got it back on. AfterWilma, he said, the averagewaitwas five days and the longestwas 18 days. After Irma, the average waitwas two days and the longestwas 10 days. Wilma, McDermitt said, took down roughly 12,000 poles. Irma took down about 2,500.

As with bills, however, FPL is asking regulators to accept howit frames the story. Yes, bills are comparatively low, but could they be even lower? Yes, the postIrma responsewas better than the postWilma response, but could it have been better still? Andwhy did so many customers lose power outside of where Irma’s highest winds hit? Was enough preparation done?

FPL also could lessen the impact of the Irma surcharge by selling bonds. The company did that for its costs from the 2004 and 2005 seasons. That surcharge has lasted longer— it will end in 2019— but the amountwas just $1.05 per month for the average residential customer.

McDermitt said FPLwouldn’t issue bonds for Irma reimbursement, based on its rate case settlement last year. The Public Service Commission can’t order FPL to securitize the cost, but commissioners can ask about the company’s decision.

So, too, should commissioners ask FPL why the company didn’t let city tree-trimming crews help clear paths for utility workers. Doing sowould have reduced the need for crews that make time-and-a-half as soon as they hit the road, and who came fromas far away as Canada.

In 2006, FPL asked the commission for $1.7 billion related to the 2004 and 2005 hurricanes. The issuewas whether FPL’s lack of maintenance contributed to the damage. The reviewwas detailed enough to include faulty bolts that caused the collapse of a transmission line inwestern Palm Beach County.

That Public Service Commission cut $600 million fromFPL’s request, going with the staff recommendation. More recently, however, the staff and commission have consistently sided with FPL.

Based on history, regulators should be skeptical of the company’s claim that anything less than full reimbursementwould hurt the company’s ability to attract investors.

After that 2006 ruling and the commission’s 2010 rejection of a rate increase, FPL executiveswarned that the company might not be able to raise capital. Yet the stock price of FPL’s parent company, NextEra Energy, has increased nearly 400 percent in the last 11years, trading thisweek over $150. The current rate agreement guarantees FPL a profit of between 9.6 percent and11.6 percent.

Norwould any of the Irma reimbursement go toward improving a communication system that basically failed customers and communities. McDermitt, though, said, “We are all over it.”

Customers have benefited fromthe regulated monopoly system under which FPL has invested in modern plants. That system goes out of balance, however, if utilities can assume their customers will pay for anymistakes. With Irma, the commission should not presume that FPL is blameless.

Editorials are the opinion of the Sun Sentinel Editorial Board and written by one of its members or a designee. The Editorial Board consists of Editorial Page Editor Rosemary O’Hara, Elana Simms, Andy Reid, Deborah Ramirez and Editor-in-ChiefHoward Saltz.