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FPL says state Supreme Court should uphold increased rates

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News Service of Florida

Florida Power & Light on Wednesday urged the state Supreme Court to reject challenges to a settlement that increased electric rates, arguing the controversial plan is in the “public interest.”

Four groups appealed to the Supreme Court after the state Public Service Commission approved the four-year settlement. In a 111-page brief filed Wednesday, attorneys for FPL urged the court to uphold the settlement, which was reached last year and addresses a series of issues such as rates, profitability and solar-power expansion.

“The current settlement enables FPL to continue its focus on improving service delivery, realize additional efficiencies in operations, and create even stronger customer value, all while providing a high degree of base-rate certainty for customers for at least four years,” the brief said.

But in briefs filed in April, opponents blasted the settlement and disputed that it was in the public interest, a legal test in utility cases. In part, they took issue with the amounts of profit FPL would be able to earn under the settlement. Those profits, measured by what is known as a return on equity, would exceed the amounts that could be earned by Duke Energy Florida and Tampa Electric Co.

“If allowed to stand, the 2021 FPL settlement will result in FPL’s customers paying hundreds of millions of dollars per year, totaling in the billions of dollars, in excessive costs over the next four years,” attorneys for the group Floridians Against Increased Rates wrote in an April brief. “This is a gross miscarriage of justice — imposed on FPL’s customers by the PSC’s (Public Service Commission’s) failure to act consistently with its own contemporaneous decisions — and the (Supreme) Court should reverse the order accordingly.”

FPL in March 2021 filed a base-rate proposal at the commission and later reached a settlement with the state Office of Public Counsel, which represents consumers in utility issues, and groups such as the Florida Retail Federation, the Florida Industrial Power Users Group and the Southern Alliance for Clean Energy. The commission later signed off on the settlement, which included lower rate increases in 2022 and 2023 than FPL had originally proposed.

The settlement led to a $692 million rate increase in January and will allow another $560 million hike in January 2023. It also will allow increases in 2024 and 2025 to pay for solar-energy projects.

The plan also incorporated a merger between FPL and Northwest Florida’s former Gulf Power. That merger, which formally took effect at the beginning of 2021, came with issues such as the utilities having widely different rates. As a result, the settlement included what was described as a “transition rider” that led to Northwest Florida customers paying more than FPL customers in other areas.

In addition to Floridians Against Increased Rates, the groups Florida Rising, the League of United Latin American Citizens of Florida and the Environmental Confederation of Southwest Florida challenged the commission’s approval of the settlement.

The challenges deal with numerous issues, such as part of the settlement that set a range for FPL’s allowed return on equity. That range includes what is known as a “midpoint” of 10.6 percent.

While the challengers contend that is excessive, FPL said in Wednesday’s brief that the settlement is “designed to preserve FPL’s financial strength” and that the return-on-equity midpoint was increased only slightly from the past.

“The record evidence demonstrates that making investments necessary to continue to provide customers with safe and reliable power requires financial strength,” the brief said. “This settlement allows FPL to maintain the financial strength it needs.”

While not directly a part of the Supreme Court case, FPL customers and local-government officials in Northwest Florida have inundated the commission in recent months with requests to re-evaluate the utility’s rates. In addition to higher base rates, customers also have faced increased costs related to natural gas for power plants.

“In short, I request that PSC staff be directed to re-investigate FPL's rate increase filings for accuracy, review the current rates effective January 1, to ensure they are fair and reasonable, and, if necessary, direct FPL … to address inadequacies in fuel diversity and fuel supply reliability which have resulted in unconscionable fuel charges to FPL customers following the rate increase which was effective January 1, 2022,” DeFuniak Springs City Manager Robert Thompson wrote to the commission last month.