FPL allowed to keep tax savings
The state’s biggest electric utility won’t have to share its $772 million tax savings with its customers, a surprising decision by state regulators who rejected their own staff ’s advice.
The Florida Public Service Commission ruled Tuesday that Florida Power & Light Co. can keep the money because it used the savings to cover the costs of recovering from Hurricane Irma in 2017, without seeking to increase customers’ bills.
FPL customers lose out, according to the Florida Office of Public Counsel, the state’s consumer watchdog. How much the break would have meant to each customer is unknown because FPL has no estimate. But any potential savings disappeared with the commission’s action.
“The commission’s decision was a big win for FPL and a big loss for ratepayers. The commission failed to keep ratepayers’ interest at heart,” said J.R. Kelly, the public counsel, whose office petitioned the commission to review FPL’s rates,
given its huge federal tax savings.
The savings resulted from the tax reform law of 2017, which lowered the corporate income tax rate from 35 percent to 21 percent. The tax changes were signed into law just three months after Irma. Other utilities in Florida, including Tampa Electric Co. and Duke Energy, passed on their tax savings to customers.
The commission ruled, however, that FPL can use the money to replenish a company account that was tapped to pay for Hurricane Irma’s costs, which the company estimated at $1.3 billion. Commissioners agreed that FPL’s rates are “just and reasonable” and don’t need to be reviewed.
The commission took the unusual step of going against its own staff recommendation, which had said FPL should deduct its costs from Irma but then pass the remainder to customers.
Jon Moyle, lawyer for the Florida Industrial Power Users Group, said his big power users group is “disappointed that the commission decided unanimously not to follow the recommendation of its professional staff to reduce FPL’s base rates by $772 million.”
Commissioners said they considered FPL’s rates and the 11.5 percent profit the utility is allowed. “FPL continues to earn a profit within the range permitted,” said Commission Chairman Art Graham. Some commissioners said that if FPL went above that range, it would consider the need for new rates.
Commissioner Julie Brown said FPL has a unique rate structure, agreed to in 2016, that doesn’t include a provision for a tax windfall.
“Customers who would have otherwise seen a surcharge have benefited,” she said. “Customers have continued to benefit from fair and reasonable rates. The utility is not over-earning,” Brown said.
Kelly, the consumer watchdog, said in an interview that FPL’s rates were approved before the presidential election in November 2016. The tax provision was included in other utilities’ settlements because they were done after the election. As a result, FPL customers are overpaying on taxes through their monthly bills, he said.
The Florida Retail Federation and Florida Industrial Power Users had joined the public counsel in asking the commission to pass the tax savings to FPL customers.