Miami Herald: State regulators extend deadline for FPL’s request to raise rates

Sep 28, 2009

The Miami Herald published this article on September 28, 2009

Herald/Times Tallahassee Bureau

A week before the governor must decide whether to reappoint him to the Public Service Commission, the chairman of the state utility regulation panel ruled Friday that the largest rate case of his term should extend into January — and into the new terms of either his or his successor.

PSC Chairman Matthew Carter made the decision to extend the Florida Power & Light rate case until Jan. 11, after the proceedings went into overtime this month. Carter is up for reappointment to a new four-year term, which would begin Jan. 4.

If Crist fails to reappoint him and Carter’s schedule holds, the governor risks bringing new blood onto the panel in the midst of the rate case, making it difficult for Carter’s successor to be an active participant in the final ruling.

In the past two months, the PSC has been embroiled in controversy over whether commissioners and staff are too close to the utilities it regulates, particularly FPL.

The commission is under investigation by the Florida Department of Law Enforcement, and four staffers have been reassigned, forced to resign or placed on administrative leave.

Two commission chairman has come under fire for ethics questions for improper communications with FPL officials.

FPL has asked the commission to allow it to raise its rates 30 percent beginning next year, including $1 billion starting on Jan. 1 and $300,000 in 2011.

Carter has scheduled the hearings to resume Oct. 21, but FPL executives this week asked him to reschedule that for Oct. 1, a request Carter rejected.

In a letter to Carter on Friday, FPL Vice President Wade Litchfield suggested that if FPL doesn’t get a rate increase by Jan. 1, its return on equity “is projected to decline to a grossly inadequate 4.69%.”

To avoid that, he suggested that the $1 billion rate increase FPL is seeking should automatically take effect on Jan. 4, as the commission has agreed to earlier this year if the case was not complete.

“This would be an inequitable, arbitrary and capricious outcome,” he wrote. Customers would be refunded the difference, if the PSC orders a lower rate increase, he said.

But the Office of Public Counsel, which represents the public in rate case hearings, believes FPL should get no rate increase but instead lower its existing rates and focus on encouraging customers to reduce consumption.

Carter last week has set the final date for the hearing for December but on Friday extended that to January, after he “considered the existing docketed matters on the Commission calendar and the Commission’s workload, as well as the requirements of Chapter 366,” he wrote in the order.

Sen. Mike Fasano has asked Carter to postpone the rate case until an FDLE investigation into the PSC’s relationship with the utilities it regulates is complete. Crist also has said he wants to see how Carter and Commissioner Katrina McMurrian, who is also up for reappointment, handle the rate case “and then I can have a better handle on who to appoint or reappoint.

By law, however, Crist must decide whether to reappoint or reject Carter for another term by Oct. 3.

Mary Ellen Klas can be reached at