FPL, key customer advocacy groups ask PSC to approve proposed rate settlement that would help secure low rates for FPL customers for four years

JUNO BEACH, Fla., Sept. 27, 2012 /PRNewswire-FirstCall/ — Today, the Florida Public Service Commission is scheduled to begin reviewing a proposed settlement agreement in Florida Power & Light Company’s 2013 base rate proceeding. The settlement, if approved, is expected to help secure low rates for FPL customers through the end of 2016 while supporting FPL’s ability to provide safe, highly reliable service.

“Compared with current rates for Florida’s 55 electric utilities, our residential customers are projected to continue to have the lowest typical bills in the state under the proposed settlement, along with reliability, an emissions profile and customer service that are among the best in the country,” said FPL President Eric Silagy. “We believe this four-year agreement makes sense for all of our customers and provides a predictable, stable rate structure that will help FPL plan for the future and keep investing in Florida.”

In January, FPL notified the PSC of the company’s need for a base rate increase in 2013. The formal request was filed in March. In August, FPL joined key customer advocacy groups to file a proposed settlement designed to limit the impact to customers while maintaining FPL’s financial strength and ability to invest billions of dollars in Florida’s infrastructure in the coming years.

The settlement agreement is supported by FPL, the Florida Industrial Power Users Group, the South Florida Hospital and Healthcare Association, the Federal Executive Agencies and Algenol Biofuels. If the PSC does not approve the settlement agreement, a decision on FPL’s original request would likely be made in November.

As part of the proposed settlement, FPL agreed that it would reduce its January 2013 revenue request by about 25 percent, from $517 million to $378 million, primarily through a reduction in the company’s requested return on equity (ROE) from 11.5 percent to 10.7 percent. This is slightly below the average allowed ROE of 10.75 percent for Florida’s other investor-owned utilities and well below the average allowed ROE of 11.52 percent for other investor-owned utilities in the southeastern coastal United States.

The agreement would also provide for appropriate base rate increases covering the capital and operating costs of new, highly efficient power plants at Cape Canaveral, Riviera Beach and Port Everglades when these plants go into service, which is expected in 2013, 2014 and 2016, respectively. The costs and benefits of these projects were carefully considered by the PSC in prior proceedings that resulted in approval of these power plants. In addition, when these plants go into service, customers are expected to see decreases in the fuel portion of their bills that would significantly offset the base rate increases due to the plants’ advanced efficiency improvements. Combined, the more efficient power plants are projected to save customers more than $1 billion in fuel and other costs during their operating lifetimes over and above the plants’ cost of construction.

Also, except as contemplated in the agreement, FPL would not seek any additional base rate increases for the four-year term of the settlement agreement, provided its earnings remain within 100 basis points of the allowed 10.7 percent ROE midpoint.

2013 Customer Bills

Today, FPL’s typical residential customer bill is down approximately 13 percent compared with 2006 as a result of investments in more efficient power generation, the beneficial impact of lower fuel prices and the company’s strong cost controls. FPL’s typical commercial customer bills are down 14 percent over the same period.

Under FPL’s original request, the company’s typical 1,000-kWh residential customer bill would increase by roughly $2.50 a month, or about 8 cents a day, in 2013, including the impact of FPL’s latest projections for fuel and other charges. The proposed settlement would reduce the net increase in 2013 for FPL’s typical residential customer by about 40 percent, to roughly $1.50 a month, or about 5 cents a day.

This net increase of less than 2 percent compared with current rates would keep FPL’s typical bill the lowest in the state, based on current rates for other utilities, and more than 10 percent less than it was in 2006.

FPL’s Typical Residential Customer Bill – Proposed Settlement Agreement

1,000-kWh Residential








Base Rate




Increase of $5.77/month

($4.10 in January, $1.67 in June)

Fuel Charge




Decrease of $7.10/month

(-$5.54 in January, -$1.56 in June)

All Other Charges*




Increase of $2.89/month

($2.80 in January, $0.09 in June)





Net increase of $1.56/month or

5 cents/day in 2013

*”All Other Charges” include FPL’s filed projections for capacity, environmental and conservation clause recovery, West County Energy Center 3 recovery, the storm charge, base rate increase for completed nuclear upgrades and state gross receipts tax. All of these rates require PSC approval and are subject to change until approved. All January 2013 rates are expected to be finalized by early December 2012 and will be posted at www.FPL.com.

Under the proposed settlement agreement, total typical bills for most commercial customers are projected to be flat to down 3 percent in 2013.

For small businesses on FPL’s standard non-demand commercial rate – approximately 80 percent of FPL’s business customers – there would be no base rate increase in January 2013. Because FPL has filed to reduce its fuel charge, a typical small business using 1,200-kWh/month would see its total bill decrease by approximately 2.5 percent in 2013.

Indeed, lower projected fuel costs are expected to reduce the overall impact for all customer classes. While FPL cannot control future fuel prices, its investments in efficient new power generation reduce overall fuel usage, which, in turn, lowers overall bills no matter what the price of fuel may be. Industry experts agree that dramatic increases in the supply of natural gas in the U.S. are likely to keep natural gas prices moderate for many years to come. More than half of FPL’s fuel supply is comprised of natural gas.

As part of the agreement, FPL would increase its energy conservation credits to large commercial/industrial customers for load interruptions. As a result, total bills for customers who participate in the Commercial and Industrial Load Control and Commercial Demand Reduction programs are projected to decrease by up to 10 percent, including the impact of lower fuel costs. These programs benefit all customers by helping FPL avoid the necessity of building costly additional peaking facilities.

Parties to the proposed settlement have noted that the agreement would benefit Florida’s consumers and economy by keeping bills low, reliability high and promoting economic development.

“The settlement agreement is a win for all of our customers and for the state of Florida. It reduces the base rate increase for all business and residential customers while maintaining FPL’s ability to continue investing in the infrastructure to keep reliability high and bills low for the long term,” Silagy said. “Smaller businesses would see their bills decrease, and most larger business customers would see their bills remain flat or decrease, helping to support their ability to continue to invest in our economic recovery and create jobs.”

FPL’s projected 2013 rates for fuel and other components of the bill are subject to change until reviewed and approved by the PSC in November.