Commission opposed FPL increase

July 1, 2008

County Commission
Letter sent to Florida Public Service Commission

Historic City News has been provided a copy of the letter sent to the Florida Public Service Commission on behalf of St. Johns County objecting to the proposed 16% rate increase recently requested by Florida Power and Light.

Mr. Matthew M. Carter II,
Chairman
Florida Public Service Commission
Chairman Carter and Members of the Commission:

I am writing to you in my capacity as Chairman of the St. Johns County Board of Commissioners to outline this County’s serious objections to the proposed 16 percent rate increase by Florida Power and Light Inc. Our deep reservations stem almost entirely from the potentially disastrous economic consequences this action could have upon our most vulnerable residents and local businesses that are vital to the survival of our County.

First, we are concerned that during these challenging financial times a rapid and significant rate increase in the cost of energy for residential use, especially an increase as large as the proposed 16 percent or greater, could turn what is undeniably a bad economic situation into a ruinous financial disaster for many families and residents of this County.

With the cost of refined oil products (e.g. gasoline having increasing over 40 percent in the last twelve months), and with significant cost increases in the basic necessities such as food, combined with the decline in value of real estate assets throughout the state, individuals find themselves with significantly less disposable income.

Second, a loss of revenue (an inevitable result when individual disposable income is decreased) will have dire consequences for local commerce, mostly comprised of small family owned ventures with comparatively small margins to absorb increased overhead and operating expenses. A rapid and significant increase in such operating costs (e.g. the proposed 16 percent increase in the cost of commercial energy) will be in my opinion the tipping point of financial ruin for many of these locally owned businesses.

It is our sincere desire as the PSC continues to strive to provide the residents of Florida with safe and affordable energy, you will seriously consider not only the timing but also the disastrous impact this proposed action will have on our local economy.

I thank you in advance for your prompt consideration of this request. With every good wish for your continued success, I am

Respectfully,

Thomas G. Manuel, Chairman
St. Johns County Board of Commissioners

Written by AuggieNewsHound · Filed Under Government

Comments

5 Responses to “Commission opposed FPL increase”

Admin on July 2nd, 2008 8:55 pm

It appears that our objection didn’t have my impact.

This correspondence was received by Historic City News this morning:

Florida Power & Light Company yesterday received Florida Public Service Commission (PSC) approval to adjust the pass-through fuel surcharge on customers’ bills and recover $746 million in unanticipated fuel costs. Dramatic increases in world oil and natural gas prices made it necessary for FPL to file a mid-year fuel correction as required by the PSC.

When we filed our request for a mid-year fuel adjustment on June 3, we projected that the impact to small and medium business customers would be in the range of 14 to 17 percent if we recovered the additional cost of fuel over a five-month period beginning in August 2008. Based on the plan approved by the PSC, FPL will recover 50 percent of the additional $746 million in fuel costs between August and December of 2008 and the remaining 50 percent over the 12 months of 2009. We are recalculating the impact to our business customers and will communicate more information to you by the end of this week.

Under Florida law, FPL is not permitted to earn a profit on fuel and customers only pay for the fuel needed to produce the electricity they consume. When fuel prices go up, the additional costs are passed through to customers, and when fuel prices go down, the savings also are passed through to customers.

We never like having to increase the price customers pay for electricity, and it’s especially painful during difficult economic times. We are doing everything we can to mitigate the impact of higher fossil fuel costs-modernizing older plants, increasing the output at our nuclear facilities, and proposing to build three solar energy centers. However, the increase in fuel prices that we have been experiencing is extraordinary. This is not unique to FPL; utilities across the country are experiencing the same issue.

In our mid-year fuel correction filing, FPL reported that the cost of natural gas, which powers 50 percent of FPL’s electricity generation, has jumped from $8.17 per million BTU in July 2007 (which formed the basis of FPL’s 2008 fuel filing) to $10.75 per million BTU in May 2008, a 32 percent increase. Fuel oil, which powers 8 percent of FPL’s electricity generation, went up for the same period from $57.81 per barrel in July of 2007 to $89.02 per barrel in May of 2008, a 54 percent increase. The cost of fuel has continued to go up since we filed our petition in early June, and at this point FPL is projecting an additional $300 million under-recovery at the end of 2008. This projection may vary depending on factors such as the volatility of world fuel markets, hurricane events, and other bill impacts.

FPL has taken numerous steps to mitigate the impact of fuel costs by improving the efficiency of its existing plants and building new generation facilities with low or no fuel costs:

FPL’s fossil fuel power plant fleet is the most fuel efficient among large-scale utilities nationwide. The company has improved fleet fuel efficiency by 10 percent in the past five years and by 18 percent since 1990. As a fossil power plant increases in efficiency, it can generate the same megawatt hour of electricity with less fuel, thus saving money for FPL customers and producing fewer greenhouse gases.

FPL has proposed to modernize its power plants at Riviera Beach and Cape Canaveral, a move that will save customers roughly $450 million in fuel and other savings over the life of the project. The new units will be considerably more efficient than the existing facilities, using 33 percent less fuel to produce the same amount of power.

FPL is upgrading its existing nuclear facilities to produce an additional 400 megawatts of power, which is the equivalent of a medium-size fossil fuel plant. Fuel costs for nuclear plants are dramatically lower than for fossil-fuel generation, costing roughly half a cent per kilowatt hour compared to 7 cents for natural gas and 10 cents for fuel oil.

FPL has proposed to build three solar energy centers in Florida with a capacity of 110 megawatts. The fuel used to power these sites will be free.

FPL programs can help SMB customers

FPL offers a variety of programs to help its SMB customers control their energy use, such as:

Business Energy Evaluation. Learn how to receive a free, comprehensive review of your facility’s energy usage.

Energy-Efficient Cooling and Heating. FPL will help you pay for high-efficiency direct-expansion (DX) split/packaged air conditioning and heat pumps, energy recovery ventilation, demand control ventilation, chillers and thermal energy storage systems.

Water Heating. FPL helps pay to install a heat recovery unit or heat pump water heater. You’ll benefit by lowering your hot water costs by 50 percent or more and reducing your air conditioning costs.

Refrigeration. Save energy and lower operational costs when you install controls and special equipment to reduce or eliminate the need for electric strip heaters on refrigerated display cases and freezer doors.

Lighting. Save energy and money on efficient lighting without sacrificing quality or output.

Building Envelope Improvements. FPL helps pay for window treatment, roof and ceiling insulation, and reflective roof measures that keep the heat out.
Business On Call®. Save hundreds of dollars a year by letting FPL occasionally interrupt service to your AC for brief periods.

Business Custom Incentive. If your energy-saving innovation trims at least 25 kilowatts from FPL’s summer peak, give us a call. You may be eligible for an FPL incentive.

We at FPL are continuing to do whatever we can to deliver the most cost-effective, reliable service possible to all our customers. Please call me directly at the number below, or call FPL at 1-800-375-5566, so we can begin identifying ways that will help minimize the impact of this fuel increase on your business.
Cato on July 3rd, 2008 4:14 pm

“Under Florida law, FPL is not permitted to earn a profit on fuel and customers only pay for the fuel needed to produce the electricity they consume. When fuel prices go up, the additional costs are passed through to customers, and when fuel prices go down, the savings also are passed through to customers.”

Therefore the only way FPL can NOT raise the cost to consumers would be to decrease the profits to FPL and its stockholders.

Do the same people who suggest/want FPL to lose profitability also suggest/want (like some in the U.S. Congress) the major oil corporations in the United States to decrease their profits in order to lower gas at the pumps?

If not, why not?
Phred on July 4th, 2008 7:20 pm

Cato … tuff question. The problem with trying to answer it is emotion. If it were just a black and white unemotional issue it wouldn’t be a problem, but, we’re being asked to change our lifestyle to accomodate “for profit” companies.

Most of us don’t understand why the price of a gallon of gas suddenly doubled in a year or so. If the price had increased slowly year after year, as one would expect, perhaps our paychecks could have been adjusted along with it, but this happened so quickly that we’ve had to adjust with what we have now.

Do I want the government to regulate profit for a private company? No, but what do we do?

FPL isn’t alone. We’re seeing increased prices in virtually all areas of consumer spending, especially food.

It’s all about options. We don’t have any. This isn’t like trying to decide how much we want to spend on a new car, we have no choice but to buy fuel, electricity and food.

I hope we don’t reach the point where private industry has to be controlled by a percentage figure.
Cato on July 5th, 2008 2:02 am

To “regulate profit” is a necessary result of any type of price or wage controls, and has been United States policy since Revolutionary times, notwithstanding screams of “socialism” and “fascism” and “communism” from non-thinking or ignorant citizens.

I’ve experienced them during WWII, the Korea War and the Vietnam War, and the country didn’t go to hell.

You [Phred] were probably in Vietnam when the last government restrictions were put in place, and my not have noticed:

Effective August 15, 1971, Nixon - that screaming liberal - imposed�wage and price controls by Presidential Executive Order.� Supposedly to last 90 days to combat inflation, peaking at 6% in 1970 and remaining at 4% in 1971, the controls, constantly being adjusted, lasted for more than 1,000 days!

We ARE in a war now - not just in Iraq and Afghanistan, but around the world with fundamentalist “terrorists” and the government, of and by the people, have an obligation to stop war profiteering.
Phred on July 5th, 2008 5:53 pm

Yes Cato, I do remember the wage and price control policy implemented during the Nixon Administration … it didn’t work.

I suppose government regulation of prices would be necessary during periods of war profiteering and price gouging during national emergencies (i.e. a major hurricane/tornado) but so far I’ve seen no evidence that the sudden oil price increase is directly related to wartime activities.

Also, in war profiteering, wouldn’t it be possible to identify a company or group of companies involved and deal with them directly instead of implementing nationwide controls?