A CALL TO ACTION
AARP Florida is calling on all Florida Power & Light (FPL) customers to write the Florida Public Service Commission to tell them to vote down their requests to increase rates.
How can you take action: FPL customers here
WHY DOES AARP CARE ABOUT UTILITIES ISSUES?
Millions of Florida residents find electric utility issues hard to follow. Regulated by a far-away, low-profile state agency, largely the domain of expensive utilities lawyers, powerful corporations and influential special interest experts, electric utility regulations are often unfair and unfamiliar for customers.
That's why AARP Florida continues to be a leading voice fighting for residential consumers on utilities across the state and nation. In some cases, AARP Florida is the only voice representing the interests of residential ratepayers.
Over the years, AARP Florida has played an important role advocating for the financial security of residential customers before the Legislature and the Florida Public Service Commission.
The Public Service Commission (PSC) has five members, all appointed by the governor. It regulates all investor-owned electric utility (IOUs) companies, gas, water and wastewater companies and must balance the needs of a utility and its shareholders with the needs of consumers. The PSC does not fully regulate rural electric cooperatives, of which there are 17 in the state, or the 33 municipally owned utilities, which are owned by cities or counties and regulated directly by elected officials in those communities.
Florida electric companies heavily rely on natural gas and nuclear power, and to a lesser degree coal and renewable energy (i.e. solar and biomass) to generate power for customers.
WHAT IS AN INVESTOR-OWNED UTILITY?
AARP Florida focuses primarily on the customer rate impacts of investor-owned electrical utility companies. There are five such companies in Florida, serving about 7.4 million residential households. The companies are:
- Florida Power & Light (FPL), which covers the Atlantic coast, all of south east and west FL.
- Duke Energy, which covers north Tampa and parts of Orlando, Ocala and Gainesville.
- Tampa Electric Co. (TECO), which services areas in and around Tampa Bay.
- Gulf Power (now owned by FPL) which covers nine counties in the panhandle.
- Florida Public Utilities Company, which covers three counties in North Florida.
Utility companies are granted licenses to operate in specific areas of the state. In other words, they are a state sanctioned monopoly. So if you live in their service territory, you must purchase your power from their company.
Electric rates are calculated to generate revenues that allow a company the opportunity to earn the amount needed for the approved expenses plus the authorized return. In order change its rates, an IOU must file a rate case before the PSC. The PSC investigates the request, allows public input in the process and allows interested parties to formally intervene in technical hearings (similar to a trial in a courtroom). After evidence is reviewed, expert witness testimony is given on both sides and cross examined, the PSC will issue its decision. This decision includes the following:
- Base Rate: This refers to the total of the customer charge and base energy charge for a typical 1,000-kWh monthly usage. These are costs other than fuel to produce and deliver electricity, including the cost of operating power plants and maintaining the grid.
- Rate of return (ROE): The PSC sets the allowable ROE IOUs can earn. The rage in Florida is 10 to 11.5 percent.
- Various Cost Recovery Clauses: These vary by utility company but can include capacity cost recovery (costs for purchasing electricity) and environmental cost recovery (costs to meet environmental laws and regulations).
- Fixed Customer Charge: This is a fixed monthly amount to cover the cost of the meter, billing and providing customer service. It is applicable whether electricity is used in a given month.
All these charges appear on your monthly power bill. They are referred to as fuel use and non-fuel use charges. Fuel use refers to the actual amount of electricity you are using by turning on lights, running appliances, A/C, etc. Non-fuel use represents the various fees and charges an electric utility company charges. Each company can and does charge for different amounts. These fees include things such as environmental cleanup, storm hardening, fixed customer charge, etc.
Utilities companies also are required to maintain an effective power grid. In September 2017, Florida was hit hard by Hurricane Irma, which at one point knocked out power to customers in 62 of the state’s 67 counties and caused billions of dollars in damage in the electrical grid. This lead the state to address multiple issues at the legislative and regulatory level. Many of the solutions will lead to significant increases in monthly electric bills for residential ratepayers.
Perhaps the most impactful grid hardening solution passed by the legislature and signed into law in 2019 was the Storm Protection Plan Cost Recovery Clause. (provide link to our report or the landing page) The Public Service Commission allows utility companies to levy storm hardening fees on all power customers.
“Storm hardening” is a term used to describe the work that goes into making electrical transmission lines and the power grid able to withstand major natural disasters like hurricanes. Storm hardening is an ongoing activity required by all utilities that includes burying powerlines, replacing wooden power poles with concrete power poles and maintaining power rights of way by trimming trees and other vegetation. Sadly, the estimated cost for FPL customers over the next 30 years is an estimated $40 billion, with $12 million just in profits for the companies shareholders.
AARP IS A FIERCE DEFENDER FOR FLORIDA RESIDENTS
If you would like to stay informed about AARP Florida’s work on utilities issues, go here to become an AARP E-activist. As issues important to older Floridians come up in the Legislature, Congress and the Public Service Commission, AARP Florida reaches out to E-activists to update them on key developments and equip them to raise their voices.