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Weep not for utilities; you're padding their budgets

By GREG HAMILTON
Published December 12, 2005

Florida's electric companies have had a difficult couple of years, as we all have, dealing with the devastation wrought by a record number of hurricanes. Triple-digit wind gusts and horizontal, driving rain just don't mesh well with skinny wooden poles and miles of exposed cables and transformer boxes.

Weep not for these legal monopolies, however, for they enjoy a bucket truck full of means to recoup their losses - advantages that are unavailable to us poor slobs still trying to pay for new roofs and flooded cars.

If these companies are feeling windburned now, just wait. There's a major storm brewing over the horizon, and it's heading straight for them. More on that later.

But first, some useful background.

The utilities and their investors are shielded from financial harm by a deck stacked by the government that deflects any business risk away from them and onto you, the customer. Sweet deal, no?

Take hurricanes. Each month, part of your bill payment goes into an aptly described "rainy day fund" to be used in case of emergencies such as, say, a hurricane. During the years when no such disasters strike, the account swells like helium swells a balloon. The guaranteed return to investors, naturally, grows right along with it.

When the clouds roll in and we get slapped around by so many storms that the weather service's alphabetized list of storm names is exhausted, utilities, like thousands of businesses around the state, get clobbered.

The difference is, these other businesses must pull themselves up by their financial bootstraps and use their own resources to recover. The utilities are buffered from harm, at your expense.

This year, rather than make their investors suffer with a smaller profit, Florida's major electric companies chose to pass along their hurricane costs to you, the storm-tossed consumer, in the form of an additional surcharge on your monthly bill. This, even though you already have paid into that recovery fund.

When the utilities sought yet another rate hike along with the surcharge, Florida Attorney General Charlie Crist weighed in. "These companies have already been given $670-million for hurricanes, and now they have the gall to ask for another $635-million" in higher base rates, Crist said. "Frankly, they don't deserve it."

Crist and a handful of consumer advocacy groups worked out a settlement with Progress Energy in November to freeze the base rate for two years. But the hurricane surcharge stayed, as did added hikes to cover the costs of rising fuel prices.

That means Progress customers, whose electric bills already have risen, will see monthly bills rise between $12 and $15 in January even if their use goes down.

Merry Christmas.

The Office of Public Counsel, which tries to represent the state's utility customers, said Progress Energy's fuel cost argument is a bit shady. The company, for instance, had bought large amounts of coal at a much higher price from one of its own subsidiaries, then used this increased cost to justify a rate hike.

As usual, the state's Public Service Commission slapped down this valid challenge while snuggling even deeper into the warm laps of the utilities it laughingly claims to regulate.

The PSC, whose chairman and at least one commissioner have been the subjects of recent ethical complaints for allegedly accepting favors from the utilities, is supposed to review these matters for fairness. Calling them human rubber stamps would be an insult - to rubber stamps.

The PSC and the outrageous actions of the state's utilities, however, are about to come under legislative attack. Crist, who is seeking the GOP nomination for governor, is leading the charge. And he has enlisted state Sen. Nancy Argenziano, R-Dunnellon, as a high-voltage ally in this looming battle.

Argenziano has support outside Tallahassee and among consumer advocates around Florida. Bentley Lipscomb, state director of the AARP, said recently, "The AARP believes Florida needs a new Florida Public Service Commission." Speaking to the Times last month after the PSC allowed the fuel charge rate increase, Lipscomb neatly summed up the impact of these increases on regular citizens:

"All Floridians, and especially older Floridians on a fixed income, took a massive hit. Some fuel recovery increases are understandable, but rate hikes of this magnitude are shocking. Older people already are struggling to meet the rising costs of prescription drugs, food, clothing, telephone bills, fuel, homeowners insurance and property taxes."

In the coming weeks and months, the PSC and the state's ravenous utilities can expect to face a force of nature that will make Wilma, Charley, Frances and the whole gang seem like balmy breezes: an enraged Argenziano.

And they thought facing down Category 4 hurricanes was tough.

--Greg Hamilton is editor of editorials for the Citrus edition of the St. Petersburg Times.

[Last modified December 12, 2005, 01:10:15]