Florida Power & Light shifts story on company’s rise to power
Florida Power & Light President Eric Silagy wants to revise history.
In an op-ed published Monday in the Sun Sentinel, Silagy criticized “short-term thinkers” who allegedly opposed FPL’s program to modernize its generating plants. Only because FPL ignored “short-term thinkers,” Silagy wrote, do customers enjoy a cleaner, more efficient system that has saved them money.
In fact, no “short-term thinkers” have opposed this modernization. The debate continues to be how much money FPL should make from it.
On Tuesday, arguments began before the Public Service Commission — which regulates utilities — over FPL’s Solar Together project. The company wants to build 20 plants that collectively would generate almost 1,500 megawatts of power — slightly more than the capacity of FPL’s Port Everglades plant.
Silagy touts “the country’s largest, most innovative community solar program.” Florida. Sun. Clean energy. Only “shortterm thinkers” would have a problem with that.
This request, however, differs little from
FPL’s request to build that Port Everglades plant and the many others. Every time a plant opens, the commission decides how much FPL can raise that portion of your bill known as the base rate — which finances the grid and is where FPL makes its money.
In 2011, the base rate made up 46 percent of FPL’s average monthly bill — 1,000 kilowatt hours. By last fall, according to the Florida Public Service Commission, the base rate made up 70 percent.
So the real story of FPL’s recent history is how the company has thrived by flipping its business model and playing politics.
In 1989, FPL had diversified into insurance and real estate. Executives became obsessed with winning the Deming Prize, for quality management, and FPL became the first non-Japanese company to do so. Then the company tried to make customers pay the $2 million it had cost FPL to enter the competition.
James L. Broadhead had taken over FPL’s parent company — FPL Group, now NextEra Energy — that year. He sold those unrelated businesses and prepared FPL for what he believed would be energy deregulation in Florida.
Broadhead didn’t want to build plants. He wanted a lean company. Throughout the 1990s, Broadhead cut thousands of employees, calling it necessary to position FPL in “the rapidly changing utility industry.”
The cost of that approach showed itself during the hurricanes of 2004 and 2005. After Wilma in 2005, power in some areas was out for two weeks.
In 2006, FPL sought $1.6 billion from customers for repairs and upgrades to the power grid. The Public Service Commission staff recommended that the company get less because FPL had caused some of the problems. FPL had money to replace more old poles and improve maintenance “but elected not to do so.”
The commission billed FPL $570 million for those failures. In January 2010, the commission denied the company’s request for higher rates to build plants. So FPL decided to play hardball in Tallahassee.
Three months later, at FPL’s urging, the Florida Senate refused to confirm then-Gov. Charlie Crist’s two appointees to the fivemember commission. Two commissioners who had criticized FPL and were seeking reappointment didn’t get even an interview with the PSC Nominating Commission, many of whose members are legislators.
In early 2012, FPL named Silagy president and CEO. He had been the company’s top lobbyist. His predecessor, Armando Olivera, was an engineer by training.
Under Silagy, FPL has lost just one case before the Public Service Commission. Last year, the commission rejected the request by FPL and other utilities to end energy conservation goals.
Unlike Broadhead, Silagy wants more plants. FPL must prove a need for them, but that’s been no problem, given the commission and staff ’s acquiescence. FPL even got permission to bill customers for natural gas exploration before the Florida Supreme Court ruled that the venture violated state law on regulated monopolies.
FPL is a large, well-run company. Having bought Gulf Power last year, FPL serves more than half the state and uses economies of scale to the public’s benefit.
But FPL also is greedy. Bills that are low by industry standards could be lower still if the company hadn’t made Florida’s regulation and political systems two of its many acquisitions. When Silagy credits FPL for thinking long-term, he doesn’t just mean power plants.