Legislators Open Door for Utilities to Raise Rates $772 Million Without PSC

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By Mary Ellen Klas
St Pete Times

In a bill poised for passage in the House today, Florida’s four largest utility companies would be allowed to circumvent regulators and raise electric rates on customers by $772 million by 2013, under a last-minute amendment tacked onto a renewable energy bill sought by the governor and Republican leaders.

If passed by the Senate and signed by the governor, Florida Power & Light could raise up to $450 million a year more in cash from customers after three years, nearly half what it sought from the $1 billion rate increase the Public Service Commission rejected in January. For Progress Energy, the increase would be $190 million a year, less than half of the $500 million it sought in a rate increase the Public Service Commission rejected. Tampa Electric would be allowed an $86 million rate increase and Gulf Power would be allowed a $46 million increase.

The increases are authorized for renewable energy projects in a late-session amendment by Rep. Seth McKeel, attached to HB 7229, the House renewable energy bill on Friday. Only Rep. Scott Randolph, D-Orlando, spoke out against it.  

But unlike increases that the Public Service Commission have authority over, this gives the utilities to right to raise customer bills regardless of the cost of the renewable energy project and without having to show the power plant is needed.

The bill attempts to encourage renewable energy development but, contrary to what some clean energy advocates have sought, it give the incentives exclusively to the state’s utility companies and expand their monopoly. The original bill would have capped the rate customers pay for renewable energy at two percent a year, but the late-session amendment allows the increase to rise another percent over two more years.  

“The House is opening the door for utilities to develop more renewables but this stops short of building a broader market,” said Susan Glickman, lobbyist for the Southern Alliance for Clean Energy. 

Environmentlaists are convinced that while the renewable energy bill is a good start, requiring utilities to set a goal to rely on a portion of their energy from renewable energy would be a more effective way to jump start the market in Florida and bring the price of renewable energy down.

The legislation allows utilities to be exempt from current law which requires that utilities to seek the lowest cost energy sources, so that ratepayers don’t pay more than they should. The only restriction is that the company use “reasonable and customary industry practices’’ when it designs and builds the project.   
 
Under the amendment, power companies also will be allowed to convert any of their existing power plants into a renewable facility without having to prove to the PSC that there’s a need. It gives the utilities the sole discretion to determine the type of renewable energy they want to develop, regardless of the cost.

Right now, state law requires that before a utility is allowed to build a new energy plant and charge customers, it must prove the power plant is needed.

But rather than allow for biomass and other renewable sources, the amendment gives the advantage to solar – as long as the power companies don’t do more than 80 percent of their renewable energy as solar. FPL’s DeSoto County power plant is generating solar energy at 50 cents a kilowatt hour, higher than projections. The Florida Biomass Coalition, which includes Florida Crystals, Mosaic, Waste Management Inc., and other companies, wants projects it can produce renewable energy at 7.4 cents per kilowatt hour.

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