TALLAHASSEE, Fla. (AP) — Testimony began Monday on Florida Power & Light Co.'s request to raise base rates by $690.4 million a year after a state commission turned down motions by the state's consumer advocate to delay the hearing or immediately dismiss a settlement proposed by the company.
The Florida Public Service Commission, instead, upheld an earlier order by its chairman to go ahead with the two-week hearing and temporarily set aside the settlement.
The state's largest electric utility last week filed the agreement with groups representing industrial, health care and federal agency customers for new rates that would go into effect next year.
Public Counsel J.R. Kelly, who represents all consumers, and the Florida Retail Federation were not parties to the deal, and they are opposed to it.
Kelly contends the settlement eventually would exceed FPL's original request through future base rate adjustments as new power plants come on line in 2014 and 2016, though the portion going into effect next year would be reduced to $378 million.
FPL and other parties to the agreement last week asked the commission to suspend the hearing so the panel could first consider their proposal.
They reversed course, though, after Chairman Ronald Brise on Friday ordered the hearing to proceed. Instead, it was Kelly who asked for a delay so the panel could first hear oral arguments and then vote on the proposal.
"The purported settlement ... is the elephant in the room and we are asking you to remove that elephant before beginning any evidentiary consideration," Associate Public Counsel Charles Rhewinkle told the panel.
Rehwinkel argued the proposal amounted to a separate rate case because it has new elements not in the company's original March rate filing. These include the 2014 and 2016 base rate adjustments, higher late- payment charges and a cost shift from high-end users, such as those that are part of the settlement, to residential and small commercial customers.
FPL lawyer Wade Litchfield denied that the proposal amounted to a new rate case and said granting Kelly's motion would have a chilling effect on efforts to settle future cases. Litchfield also accused Kelly and the retail federation of trying to "obstruct and literally hold this proceeding hostage."
The five-member panel unanimously sided with FPL although Commissioner Art Graham was skeptical about the proposed settlement.
"It's difficult to even entertain a stipulation that public counsel's not a part of," Graham said.
Kelly then offered a three-part motion calling for the panel to immediately dismiss the settlement without a hearing or else set an expedited oral-argument schedule and then make a decision on the deal or, instead, dismiss FPL's original rate case.
The commission also denied that motion as well as another by retail federation lawyer Robert Scheffel Wright to prohibit any reference to the settlement during the rate hearing.
The panel instead agreed to let Brise use his authority as chairman to limit such testimony if any party should object to it.
Kelly said he may appeal the commission's denials of the motions to the courts.
Litchfield said Kelly's office and the retail federation participated in settlement talks. Kelly declined to confirm his participation, saying to do so would violate legal ethics.
Besides FPL, the proposed settlement was signed by the Florida Industrial Power Users Group, the South Florida Hospital and Health Care Association and Federal Executive Agencies.
The company says the settlement would increase base rates for 1,000 kilowatt hours a month — the average for residential use — by $4.10 in January and $1.83 in June when the first of three new power plants goes on line. That would boost the total increase to $5.93. It offered no figures for the plants expected to begin operating in 2014 and 2016.
FPL, though, also expects fuel costs to drop, so total bills would increase by only 93 cents in January and 28 cents in June for a total of $1.21. June bills would total $95.83. If the commission approved FPL's original request, the June total would increase by $1.16 to $96.99.
A commercial customer using 1.1 million kilowatt hours would pay a total bill of $87,533 in June — a $29 decrease — under the settlement.
Company officials argue that even with the full increase their rates would remain the lowest in Florida.
Wright, though, argued the commission should not only deny any rate increase but order a $253 million reduction.
Associate Public Counsel Joseph McGlothlin said the company's annual allowed rate of return on investment, which is now 10 percent, should be lowered 8.5 percent or 9 percent if it also reduces its unusually high equity ratio.
FPL is seeking an 11.25 percent rate of return with an extra 0.25 percent incentive for good performance. The settlement, though, calls for 10.7 percent.
The company serves 4.6 million homes, businesses and other customers in South Florida and along the Atlantic coast.