Why did Progress Energy Florida suddenly agree to pay the $23-million in rebates it had been fighting for months? It's up to Attorney General Charlie Crist to find out.
Published July 13, 2003
The remarkable turnabout by state utility regulators and Progress Energy Florida in a bitter, multimillion-dollar rebate case raises questions that Attorney General Charlie Crist has an obligation to try to answer. Put simply: What led the company and Florida's Public Service Commission to come together almost overnight on $18-million in rebates Progress fought for months but now is content to pay? This case is not only about what Progress owes its electric customers, but whether the decisionmaking process at the agency was corrupted to save the company millions.
The rebate stems from a rate-reduction settlement Progress reached with the public counsel's office last year. The two sides disagreed on revenue figures used to calculate the rebate amount. The PSC staff initially sided with the public counsel and crafted a recommendation to the five-member commission to order a rebate of $23-million. But the staff changed position after its supervisors met with two commissioners, who are appointed by the governor, and asked for the recommendation to be watered down.
The final recommendation of the staff was no recommendation at all - it merely laid out three options, from the board agreeing to a $5-million rebate, as the company proposed, to ordering a rebate of the full $23-million. This failure of the staff to stick by its professional judgment in the face of political interference is an issue the governor needs to address.
But the most troubling question is when and how the groundwork was laid to give the company a break. State officials had begun to investigate whether the case was improperly handled, but the investigation was effectively scuttled July 9 after the PSC ordered, and Progress agreed to pay, the original $23-million amount.
While the rebate amount is settled, larger questions remain about the PSC's conduct - questions that Florida's top law enforcement officer should address. Among them:
What prompted the staff to change its initial recommendation?
Harold McLean, the commission's general counsel, said in a deposition he asked the staff to change course at the urging of Commissioners Rudy Bradley and Charles Davidson. The two, McLean said, preferred a range of options and also wanted the staff to refrain from expressing any preference. One staffer involved said it was only the third time he recalled such a move in his 27-year commission career; the staff's executive director called the options "arbitrary" - a view she didn't share with the commission.
Why did the commissioners intervene to weaken the recommendation?
In depositions, staffers made clear they changed their recommended order on the rebate amount only because Bradley and Davidson encouraged them to do so. Staffers even said Bradley asked for a copy of the draft recommendation, his first-ever such request. Davidson said he wanted a range of options merely for consideration. Bradley won't talk.
When and why were Bradley and Davidson informed of the staff's recommendation?
According to depositions, staff shared their recommendation with Bradley and Davidson but with no other commissioners. McLean, the PSC lawyer, said he met with the two "several more times than once" and "at their request." Was a decision on rebates affecting Florida customers taken away from the full policymaking board and manipulated by two members?
Did Progress know early on which way the staff recommendation would go?
One staffer said he told company representatives while the recommendation was being drafted that he backed the public counsel's position for a $23-million rebate. Stories also circulated at the commission's office that a company lobbyist had suggested that two commissioners supported Progress' effort to lower the rebate. McLean said the lobbyist's remarks went beyond the usual braggadocio: "(That) worried me a little bit." Progress also refused to fully cooperate, blocking depositions of president Bill Habermeyer and another senior company official as part of the public counsel's investigation.
The inquiry into contacts between the PSC and company representatives would have helped establish who said and did what - and most important, when. What was the basis for this "alternative" recommendation, which represented an $18-million difference between what the staff wanted initially and what the company hoped to pay? The explanation that commissioners merely wanted latitude makes little sense, for the board can reject the staff recommendation.
The attorney general's involvement in the case was a huge help in producing a deserved victory for consumers, by casting a spotlight on the PSC and by embarrassing Progress enough for the company to decide to pay and move on. But the refund amount is only part of the story. The larger story is how a near-fivefold difference in the rebate amount came and went from the radar screen. Crist should put those involved under oath and establish a chronology, so Floridians can see whether this sorry example of regulatory procedure was something bigger altogether.
