MIAMI HERALD EDITORIAL: FPL customers need relief

Posted on Fri, Aug. 28, 2009
FPL customers need relief

Steamy August is never a good time for an electric utility to proffer a rate hike -- even if it has kept its base rate low for decades and its average bill is cheaper than any other in Florida.

As air conditioners churn across the state and bills spike during the summer, no one wants to hear that Florida Power & Light wants to increase its rate by 30 percent -- especially not in a recession with statewide unemployment at historic levels.

Add to that angst the fight FPL waged to keep confidential the names of executives receiving top pay and benefits, which has resulted in an unnecessarily nefarious tone to the rate-increase discussion.

Many FPL ratepayers were insulted to learn this week, too, that FPL has budgeted $40.5 million for 42 executive salary and benefits packages, according to Public Service Commission documents obtained by the Herald/Times Bureau. If the PSC approves FPL's 30 percent rate increase, the pay and benefits for those 42 executives would go up by $1 million.

Asked by a PSC commissioner if FPL executives would forgo a pay raise, FPL CEO Armando Olivera said no, arguing that his is a very competitive business.

Certainly, utility managers in certain categories require special expertise beyond a business degree to run a utility that serves 4.5 million households in Florida. But you don't have to be a nuclear engineer to understand why there's a public backlash.

The PSC should look at ways to relieve FPL customers during tough economic times.

Ideally, FPL's shareholders would cover part of the salary and benefits packages for top executives. That's how it's structured in Washington state.

As it stands, FPL's 11,000 employees received an average salary increase of 2 percent this year even as many businesses were forced into pay cuts and furloughs for their employees. About 440 employees earn more than $165,000 annually.

FPL, as is the case with all electric utilities, is a monopoly. Its rates have to be approved by the state Public Service Commission, which helps add some stability for investors of the publicly traded utility. Its rate request is an effort to build a more efficient grid for the future -- a smart way to diversify away from oil dependency.

Mr. Olivera's annual salary package of $3.6 million is paid by FPL customers. By contrast, customers pay about two-thirds of the $7.4 million compensation package for Lewis Hay, who runs FPL Group, the parent company for the utility. Shareholders pay about 32 percent of Mr. Hay's compensation because he oversees private ventures for FPL group as well.

Would that type of cost-sharing between investors and customers be suitable for all top FPL executives? After all, FPL is delivering for those investors.

The question shouldn't be whether these managers deserve the money but how to do it without hurting ratepayers.