FPL seeks 7% rate hike

FPL seeks 7% rate hike

Increase would be second since July

By JULIE PATEL
South Florida Sun-Sentinel
Publication Date: 11/04/08


Florida Power & Light Co. customers could see their monthly electric bills increase by more than 7 percent next year if the state approves the utility's environmental, fuel and energy conservation fees totaling almost $7.3 billion.

Under the proposal the Florida Public Service Commission will consider today, monthly residential bills for FPL would go from $110.77 now to $118.99 in January for the first 1,000 kilowatt-hours of power, which is slightly less than what the average residential customer uses. Overall, that would mean monthly residential bills would be 16 percent higher than the $102.63 average in July.

The proposed price increase comes at a time when many Florida residents are facing possible job losses, home foreclosures and higher living costs as the economy worsens. The bulk of the increase comes from FPL's projected $7 billion in 2009 fuel and purchased power costs.

Many FPL customers are questioning why FPL is projecting higher fuel costs because the price of oil has plunged since July and the company had projected a drop in power sales this year and therefore less fuel use. Crude oil prices have fallen more than 50 percent from a high in July of $147 a barrel. Natural gas prices have also dropped sharply since then. To that end, Progress Energy Florida and Tampa Electric Co. recently lowered earlier projections of fuel fees.

"They should know we can't afford this," Flo Pettinger, a Sunrise resident said of FPL. FPL spokesman Mayco Villafana said even with a price increase the average residential customer's utility bill would still be among the lowest among electric companies statewide.

The Florida Industrial Power Users Group, which represents business customers, wants the commission to ensure that utilities don't pass the cost of lost power sales to customers. For instance, FPL had projected $278 million less in fuel costs in June because of lower energy sales but still asked to raise fuel fees. FPL says the potential savings were more than offset by "much higher" fuel costs.

The state allows FPL to keep much of its fuel cost breakdowns secret for competitive reasons.

Villafana said FPL adjusts the fuel fees when it appears fuel revenues will end up 10 percent higher than its fuel costs -- which hasn't happened at this point. The procedure, developed by the commission to ensure prices aren't changed too frequently, was triggered this summer when the commission approved an 8 percent fuel fee increase.

Under FPL's proposal, the fuel and purchased power fee portion of residential customers' monthly bills would increase by 14 percent from about $55.58 a month this year to an average of $63.09 next year for the first 1,000 kilowatt-hours of power that customers use. Specifically, the fee next year would be $64.13 from January to May, $61.72 from June to October and $61.44 for November and December.

The environmental fee residents pay would more than double from 40 cents a month now to 94 cents next year. And the energy conservation fee would increase 40 percent, from $1.45 to $2.03 monthly.

If FPL's proposed energy conservation fees are approved, customers will pay about $205 million next year for programs that promote making homes more energy efficient and creating incentives for customers to use less energy.

FPL also proposes passing about $94 million in environmental costs to customers next year, including initial costs for a massive solar project in Florida that could give customers a taste of future electricity costs as the state prepares to set renewable energy requirements for utilities.

The $729 million solar project in Brevard, DeSoto and Martin counties would cost the average FPL customer more than 83 cents extra on their monthly bills in 2011, and another 31 cents more each month the first 25 years the solar plants are operating.

The Florida power-users group says that all these so-called cost recovery fees have "been a boon to regulated utilities." Utilities aren't allowed to earn a profit on the fuel fee but can on other fees such as the conservation and environmental surcharges.

A commission audit this year found that FPL included an executive's moving expenses and bonus in the fuel fees it proposed passing to customers. FPL agreed to remove the items from the fee.


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