FPL reaches agreement to get $1.53 billion rate hike in next 4 years

·6 min read

Florida Power & Light customers could see their utility bills rise by $1.53 billion over the next four years if state regulators approve a settlement agreement announced Tuesday between the utility giant and several consumer groups.

The settlement agreement was reached between the Florida Office of Public Counsel, which represents consumers in rate cases, the Florida Retail Federation, the Florida Industrial Power Users Group and the Southern Alliance for Clean Energy.

If approved, the company will start collecting $692 million more in base rate increases beginning in January, followed by $560 million in 2023, as well as additional rate hikes of $280 million to pay for solar installations through 2025.

The agreement short circuits a rate case that was scheduled to begin before the Florida Public Service Commission on Monday in which the utility giant originally sought $6.2 billion over four years from its customers. The agreement reduces that request by about $1.4 billion over the four years. The commission must now approve the agreement for it to take effect.

Notably absent from the announced agreement were environmental groups and consumer advocates, including the CLEO Institute, EarthJustice and Vote Solar who had argued in pre-hearing testimony that, based on the company’s performance, FPL should reduce rates, not raise them.

If approved, the agreement will increase the base rate of a typical monthly residential bill for a customer who uses 1,000-kilowatt hours of electricity by $13.64 over four years. The biggest hike would come next year when a $6.08 a month increase would occur for the typical residential bill using 1,000-kWh. Those customers would see another $3.85 increase in 2023, another increase of $2.21 in 2024, and a final bill increase of $1.50 in 2025.

Those additions would not account for any increases also approved for storm recovery, rising fuel costs, grid maintenance or storm hardening that regulators have routinely allowed.

FPL said in a statement that “the agreement would support continued long-term investments in infrastructure, clean energy and innovative technology” including what the company said is the “largest solar build out in the United States.”

“This agreement is a big win for all 5.6 million FPL customers and our state, and it demonstrates what can be achieved through a collaborative process,” said FPL President and CEO Eric Silagy in a statement “In a rapidly growing state on the front lines of climate change, our customers deserve bold and decisive, long-term actions as we build a more resilient and sustainable energy future all of us can depend on, including future generations. This agreement paves the way for FPL to continue delivering America’s best energy value — electricity that’s not just clean and reliable but also affordable.”

FPL noted that it will be able to make those investments even though the agreement shaves the company’s original request by 40% in the first year and 10% in the second year. The company agreed to reduce its requested base rate revenue increase for January 2022 from $1.1 billion to $692 million and dropped its 2023 requested revenue increase from $605 million to $560 million.

The agreement also takes advantage of an innovative program that allows the company to construct 894 megawatts of solar capacity in 2024 and the same amount in in 2025 by charging customers $140 million more each year. FPL said the investment will move the company closer to its goal of installing 30 million solar panels in Florida by 2030, a project the company said “remains ahead of schedule and under budget.”

The program will also double the company’s SolarTogether program, which allows customers to pay a fixed monthly subscription charge in order to have 100% of their energy come from solar.

Under the agreement, the company would deploy 16 million solar panels across more than 50 new sites, “enough to power approximately 1 million homes with clean, emissions-free energy from the sun,’’ FPL said.

Those advancements were enough to win the support of the Southern Alliance for Clean Energy, a clean energy advocate that in the past had been critical of FPL’s opposition to an open and competitive solar energy marketplace in Florida.

“We certainly have had our disagreements with FPL, and we certainly don’t agree with them on a lot of things, but they have the ability to really accelerate clean energy in some extraordinarily meaningful ways,’’ said Stephen A. Smith, executive director of SACE.

By weaving solar expansion into their base rate, “It allows them to create shareholder value for putting solar on the ground and allows large amounts of solar to go forward,’’ he said. Since 2016, when the rate case settlement allowed for the solar expansion program called “solar base rate adjustment,” Florida has gone from hardly any solar installations to one of the top three in the nation, Smith said.

“Can we find some issues with some of the things that FPL is doing? Absolutely,’’ he said. “But is there somebody that’s going to put solar on the ground faster in Florida? No.”

It’s the third time in the last decade that the state’s largest utility has avoided the scrutiny of a rate case by negotiating a settlement with some of the parties. In 2016, the company received approval to raise rates by $400 million beginning in January 2017, which was followed by $411 million in rate hikes in the next three years.

Earlier this year, as FPL positioned itself for its high-stakes rate case, legislators forced out the longtime head of the Office of Public Counsel, J.R. Kelly, who in the past had challenged the company’s attempts at reaching settlement agreements. Legislators then interviewed a single candidate to fill the post, Richard Gentry, a 70-year-old veteran lobbyist who last year represented a utility-backed nonprofit.

If the PSC agrees with the settlement, as expected, it will allow the company to avoid going on the record with answers to questions about its clean energy record and its commitment to keeping its rates affordable. Also opposing the rate increase as intervenors were Floridians Against Increased Rates, WalMart, Florida Rising, Inc., the Larson Family, the League of United Latin American Citizens of Florida, Florida Internet and Television Association and the Federal Executive Agencies.

For example, Vote Solar lawyer and Southwest Director Katie Chiles Ottenweller wanted regulators to hear FPL justify its request to continue adding fossil fuel assets to its energy fleet.

“FPL is one of the few large utilities who have not made a commitment to a carbon-emission-free system by mid-century and are asking to extend the life of its fossil-fuel plants beyond 2050, when we need to have all these assets off the system,’’ she said.

This story has been updated to correct the first reference to the rate increase n 2022 and the total impact of the increases overall. It is $692 million in 2022, bringing the total to $1.53 billion. The list of organizations that joined the case as intervenors has been added to the story.

Mary Ellen Klas can be reached at meklas@miamiherald.com