Florida Power & Light and Office of Public Counsel Reach Agreement

Posted By: Garnie Holmes Industry ,

Florida Power & Light and the state advocate for utility customers have reached agreement on about $1.3 billion in costs to restore electricity after Hurricane Irma --- and on a system to better track expenses when major storms hit in the future.

The agreement between FPL and the state Office of Public Counsel was filed Thursday, five days before the scheduled start of a hearing at the Florida Public Service Commission to scrutinize the costs. Two business groups that are part of the case --- the Florida Retail Federation and the Florida Industrial Power Users Group --- had not signed onto the agreement Thursday, though it was not immediately clear how that could affect the commission’s handling of the settlement.

FPL says it spent $1.375 billion to restore electricity after massive Hurricane Irma blew through the state in 2017. But in filings as recent as late May, the Office of Public Counsel and the business groups questioned hundreds of millions of dollars in costs. The agreement includes $50 million in adjustments to accounting for expenses.

“Considered as a whole, the agreement fairly and reasonably balances the interests of FPL’s customers and FPL,” the utility and Office of Public Counsel said in a motion Thursday asking the commission to approve the settlement. “Approving the agreement is consistent with the commission’s long-standing policy of encouraging the settlement of contested proceedings in a manner that benefits the customers of utilities subject to the commission’s regulatory jurisdiction. Accordingly, OPC (the Office of Public Counsel) and FPL submit that the agreement is in the public interest, and respectfully request that the commission review and approve the agreement in its entirety and without modification.”

Utilities in the past have typically been allowed to recoup storm-restoration costs from customers through tacking on extra charges to monthly electric bills. But the utilities also have to go before the Public Service Commission to justify the details of the costs.
The situation with FPL and its Irma costs is different because the utility decided to use savings from a 2017 federal tax overhaul to cover the Irma restoration costs, rather than adding charges to customers’ monthly bills. The Public Service Commission last month signed off on FPL’s decision.

Nevertheless, the commission still needed to review the expenses, with the hearing scheduled to start Tuesday. Part of the complexity of tracking expenses is that utilities bring in large numbers of crews from other states to help restore power after major storms.
Adding to the difficulty are questions about whether utility operating expenses should be included in the hurricane-restoration costs --- or whether they are expenses that should be recouped through ordinary rates.
The settlement includes a series of steps aimed at better tracking expenses and establishing guidelines for expenses of outside contractors. As an example, FPL this year will start using a smart-phone app for recording time and expenses of crews and will expand the app’s uses in 2020.

“Importantly, while the financial issues addressed by the agreement are premised upon issues raised during the litigation of this matter, the process issues, not part of the litigation, have been added to the agreement in an effort to facilitate more efficient storm cost recovery proceedings in the future,” the motion for approval of the settlement said.

Hurricane Irma, which made initial landfall in the Florida Keys and then barreled up the state, knocked out power to more than 4.4 million FPL customers, according to the settlement. The utility used workers from 30 states and Canada to restore electricity.
In a statement late Thursday, the utility said the settlement “affirms that FPL never loses sight of our responsibility to operate efficiently while executing an aggressive and rapid response to a major hurricane. In line with the company’s culture of continuous improvement, the agreement also highlights FPL’s commitment to rolling out new, advanced technology to better track storm costs in a way that provides more transparency and facilitates more efficient regulatory reviews in the future.”

Article reposted with permission from The News Service of Florida.