FPL Should Help Bear Storm Recovery Costs, Official Says

Apr 08 - South Florida Sun-Sentinel

-For the first time in a Florida utility case, a state regulator has proposed that Florida Power & Light Co. bear some hurricane recovery costs rather than pass them all on to customers through higher electric bills.

The company should pay up to 20 percent of the $827 million it wants for repairing substations, raising poles and fixing other damage from the 2005 hurricanes, said Joseph Jenkins, deputy economic regulation director for the Florida Public Service Commission. Forcing FPL to cover part of the cost would encourage the utility to invest in protecting its system against blackouts, he said.

Jenkins' statements, contained in a written deposition recently filed with the commission, represent an unprecedented departure from PSC policy. It's unclear whether he was speaking for himself or expressing the views of others at the commission. Consumer advocates say he would be unlikely to offer such a proposal without approval from superiors and that his testimony indicates the Public Service Commission may be trying to shake its utility-friendly reputation.

"I don't think it would be done without the approval and urging of some of the five commissioners," said Mike Twomey, attorney for AARP, which is challenging FPL's attempt to raise electric bills.

"There was a whole rash of bad publicity because of the storms, slow recovery and increased rates."

PSC spokesman Kevin Bloom cautioned against drawing conclusions about the commission's thinking from the testimony of one official. "Clearly, it's Joe's opinion," he said.

Reached by phone, Jenkins declined comment Friday.

FPL is seeking the commission's permission to charge customers $1.7 billion to recover losses from the hurricanes of the past two years and rebuild a storm reserve fund. The average customer would pay a monthly surcharge of $1.58 for 12 years.

The company's request has generated opposition from customers and consumer groups, who say the public shouldn't pay the price of the FPL's failure to maintain its infrastructure. After Hurricane Wilma toppled thousands of utility poles, many customers said they had complained for years about rotting or leaning poles, only to be ignored by the company until the poles went down in the storm.

Meanwhile, the PSC came under fire from state legislators, Attorney General Charlie Crist and others for what they saw as a willingness to raise rates at the request of electric and telecommunications companies. The PSC is a five-member board appointed by the governor from lists of nominees from the Legislature.

The controversies over FPL and the PSC will come to a head in the coming weeks, as the commission considers and votes on the company's request to raise bills. Hearings are scheduled in Tallahassee for April 19-21, with a vote to take place by May 15.

In his testimony, filed on behalf of the PSC's staff, Jenkins acknowledged that his proposal was "a departure" from the commission's traditional policy that all prudently incurred storm costs be borne by customers. But forcing the company to pay will give it an incentive to follow through with its recently announced program of strengthening its system against future storms, he said.

While he called FPL's proposal "admirable," he noted that, "FPL did not implement its proposed hardening long ago to avoid the number of downed poles and transmission towers caused by the 2005 storms."

Also, customers have seen their bills soar in the past few years, including a 19 percent increase from 2005 to 2006, he said.

FPL spokesman Bill Swank dismissed Jenkins' assertion that cost-sharing would give the company an incentive to harden its system. "I don't see the logic of that."

He said Jenkins' proposal "contravenes long-standing and well-founded regulatory policy."

Harold McLean, the state's public counsel, whose job is to argue the consumer's side in utility cases, said the commission shot down the idea of cost-sharing last year. "We argued that until we were blue in the face," he said. McLean is challenging about $600 million of FPL's request for surcharges, saying the company overstated costs and failed to invest enough in replacing utility poles and other maintenance that would have allowed its system to ride out the storms.

He said he was "insatiably curious" about the source of Jenkins' testimony.

In South Florida, where many people were furious over the length of the outages from Hurricane Wilma, there is likely to be considerable support for Jenkins' proposal.

"If there's a loss, they should take a share of the loss," said Ray O'Neidas, of the Mainlands section of Tamarac, where residents had complained to FPL about swaying poles that eventually went down in Wilma, knocking out power for 10 days. "It's not all profit. They want to make more money than a normal company that has a higher risk."

David Fleshler can be reached at dfleshler@sun-sentinel.com or 954-356-4535.

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Distributed by Knight Ridder/Tribune Business News.