THE NEWS SERVICE OF FLORIDA: CAT Fund a Paper Tiger; FPL Announces 2009 Storm-Hardening Plans

Mar 2, 2009


Florida’s $29 billion hurricane safety net couldn’t fulfill its duties without federal aid or the backing of Florida’s retirement system in the event of a monster storm and will likely see reform this session, insurers said Monday on the eve of the 2009 Legislative session. Credit rating agencies and insurance companies are anxiously awaiting action in the upcoming session on the future of the Florida Hurricane Catastrophe Fund. Given the tight credit markets, it would be unlikely the state could sell sufficient bonds to cover a catastrophic storm causing more than $10 billion in damage. State officials are aware of the funds shortcomings and agree a fix is needed, but the question remains how to bolster the fund during these precarious times. Options include getting commitment from the federal government or the state’s $100 billion pension plan to buy the bonds. “The CAT fund was reliable and will be reliable again,” said Sam Miller, executive vice president of the Florida Insurance Council. “We just need to know where to go.” Insurers are also asking that premiums for Citizens Property Insurance Corp. be increased after the rate freeze expires next year.  Sen. Garrett Richter, R-Naples, and chairman of the Senate Banking and Insurance Committee, said fixing the overextended CAT fund would be a top priority. Legislation is expected in the weeks ahead.  “We’re still in the thinking stage,” Richter said. “We do not have anything on paper at this point.”

Florida Power & Light said Monday that it plans to invest more than $200 million in hurricane hardening this year. In its annual storm strengthening and reliability report filed with the Florida Public Service Commission, FPL said nearly $70 million of that will go toward trimming trees and clearing vegetation away from power lines, lessening the chances that falling trees will take down lines. Another $85 million will be put into strengthening power lines and equipment serving 18 acute care medical facilities in the company’s ervice area. FPL also said it plans to strengthen power lines serving 26 hospitals, 35 emergency 911 centers, an emergency operations center and various other buildings that need power after a hurricane, such as police and fire stations. FPL also said it plans to inspect 139,000 poles at a total cost of $32 million to $42 million. The company also said it plans to spend another $16 million or so on completing transmission system work identified during inspections completed last year. “While no system will be immune to the devastating power of a hurricane, our goal is to minimize damage to critical infrastructure and increase the resiliency of the system,” FPL President Armando J. Olivera said in a statement. “And while these investments are designed to respond to the potential for more frequent, more powerful hurricanes, they are also delivering customer benefits by enhancing day-to-day reliability as well.”