Dispute Over Possibly Improper Rate Hikes Pits FPL’s 1% Against 99% of Customers

The state Supreme Court took up a challenge Thursday to hundreds of millions of dollars in rate increases approved last year for Florida Power & Light after the utility reached an agreement with major electricity users.

313The state Office of Public Counsel, which by law represents consumers in utility issues, contends that the Florida Public Service Commission approved the increases without going through the proper process. Also, the Office of Public Counsel takes issue with a settlement that set the stage for the hikes — a settlement that the public counsel vehemently opposed. FPL provides electricity for most of Flagler County customers.

Justices questioned attorneys on both sides about a complicated series of events that led to the rate increases, with Justice Barbara Pariente asking at one point how a settlement could be reached that did not include the public counsel. She likened the public counsel’s role to representing the “99 percent” of FPL customers, while major commercial electricity users that agreed to the settlement were “1 percent.”

“Aren’t we talking about the rest of the residential users who are going to be affected by this?” Pariente asked.

But attorneys for the Public Service Commission and FPL said the public counsel was able last year to contest issues before regulators approved the settlement. Also, the public counsel declined to participate in the settlement while it was being drawn up.

“This was not sprung on public counsel at the last minute,” FPL attorney Alvin B. Davis said.

The Public Service Commission, which regulates utilities and approves rates, agreed late last year to allow FPL to raise base electric rates by $350 million in January 2013. Also, it agreed to allow the utility to raise rates again as three new power plants started operating over a four-year period.

Base-rate increases are often a contentious issue and take months to play out, as utilities and other parties submit voluminous amounts of financial and technical information to the Public Service Commission. FPL filed a base-rate proposal in March 2012, but the legal dispute stemmed from an August 2012 settlement reached with representatives of some large electricity users.

An announcement of the settlement came just days before the Public Service Commission was scheduled to start a detailed hearing about FPL’s original proposal. That touched off four months of battling that ultimately led to the commission approving rate increases that were similar to the terms of the settlement.

The public counsel contended last year that FPL’s rates should drop by $253 million in 2013 — not increase. But FPL argues, in part, that the settlement will provide stable and predictable electric rates for four years.

In documents filed with the Supreme Court, the public counsel asked justices to send the rate case back to the Public Service Commission and require FPL to refund money that it has collected based on the increases. Justices typically take months to rule in such cases.

During Thursday’s hearing, Associate Public Counsel Joseph McGlothlin faced questions from justices Peggy Quince and James E.C. Perry about whether he thinks the public counsel has to agree with settlements before such deals can move forward. Perry asked whether the public counsel should have a “veto power.”

“We contend that the public counsel is necessary to approval of a valid settlement,” McGlothlin said earlier, in response to a question from Quince.

Pariente also questioned whether the arguments were about “form over substance” and whether the public counsel had an opportunity to raise concerns about the settlement.

“Was the resolution fair or unfair?” she asked.