AARP Asks State Utilities Regulators to Reject Proposed Settlement Deal on FPL Rate-Increase Request

TALLAHASSEE – AARP Florida asked the Florida Public Service Commission (PSC) Thursday to reject a proposed $800-million-plus proposed settlement agreed to by Florida Power & Light Inc. (FPL) and groups representing some of FPL’s business and institutional customers.

However, other groups that have formally filed to intervene in the electric rate case haven’t agreed to the deal.  And AARP, the Sierra Club environmental group and a Loxahatchee couple who filed to intervene in the rate case all opposed the settlement.

“AARP believes the the proposed settlement agreement is excessive, is not justified and is not in the public interest,” said Jack McRay, AARP Florida advocacy manager.  “We’re calling on the Public Service Commission to reject this proposed settlement.”

FPL had originally asked the PSC to approve an increase in base electric rates – the part of consumers’ electric bills that pays for the construction and maintenance of FPL’s power grid, not including fuel costs – of more than $1.6 billion over four years.  But on Oct. 13, FPL reached a settlement with two groups of FPL customers, a group of South Florida hospitals, the Florida Retail Federation, and the Legislature’s Office of Public Counsel, the group that officially represents Florida consumers.

Most of the groups that had intervened in the rate case didn’t sign onto the proposed settlement agreement, however.  In testimony Thursday, an expert witness for AARP told PSC commissioners that the rate increase was too high compared to rates approved by other utility regulators around the country, and put too much of the burden on residential customers.

Under the proposed settlement agreement, utilities expert Michael Brosch testified, FPL would be entitled to a “return on equity” of up to 11.6 percent.   Brosch also testified that under the proposed rate settlement, residential customers would pay about 65 percent of the proposed rates, while commercial and institutional larger power users would pay less of the burden.

Brosch also testified that the settlement agreement would allow FPL to come back to regulators at any point during the proposed four-year settlement period and ask for new rate increases if needed to ensure a higher rate of return for the company.

FPL officials also said Thursday that they would be approaching the commission soon for a separate rate increase to recoup the cost of repairs to their power system sustained during Hurricane Matthew, which struck the state just as the settlement agreement was worked out.

PSC commissioners are expected to vote in November on whether to accept the settlement agreement.