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A commission appointed by Gov. Bush endorses wholesale plants to break utilities' monopoly.
By STEVE HUETTEL
© St. Petersburg Times, published February 1, 2001
TALLAHASSEE -- Florida should break the monopoly held by big utilities over the state's $13-billion electricity business, a commission appointed by Gov. Jeb Bush recommended Wednesday.
The Florida Energy 2020 Commission endorsed a plan that would let out-of-state companies build power plants in the state and sell wholesale electricity to utilities.
Supporters argued the plan would increase energy supplies while avoiding the blackouts, rate increases and threatened utility bankruptcies that have come with California's more sweeping electricity deregulation plan.
The Florida proposal wouldn't allow consumers to choose among competing power companies the way they can shop for long-distance telephone service.
But if the state Legislature makes the plan law, its supporters say consumers should benefit as independent power companies and Florida's old-line utilities compete to sell juice on the open market. Also, base rates for utilities would be frozen for three years, although consumers could still be hit by increases to reflect rising expenses for fuel.
Echoing a concern voiced by Bush, commission chairman Walter Revell said Florida faces a shortage of electricity in the next decade unless out-of-state companies build new plants.
"I think we have a serious supply problem that could affect us socially, economically and environmentally in Florida," Revell said.
The proposal faces tough going in the Legislature, commission members acknowledged. California's botched attempt at deregulation makes any plan politically risky, they said.
Commission members took great pains to point out how their plan differed from the Golden State's.
Unlike California, big utilities could make long-term power contracts with suppliers instead of relying on the spot market. Also unlike California, state regulators would still review wholesale contract prices.
"It's phased, sequenced and stepped," Revell said. "We've tried to lay out what we're doing that California didn't."
But many commission members found parts of the blueprint they didn't like.
A big point of contention was allowing investor-owned utilities such as Florida Power and Tampa Electric to sell existing plants that were built with ratepayers' money to unregulated subsidiaries at their depreciated values.
"Why not spin them off to me at book value?" said state Sen. Tom Lee, R-Brandon. "If that's the deal, I think I could (afford) one."
Others worried that eliminating the state Public Service Commission's control over whether plants are built would leave Florida too reliant on generators using a single fuel such as natural gas.
Lee called the proposal "a work in progress" and said he would vote against it in the Senate in the present form.
"There's no way to bring Humpty Dumpty together again if we're wrong," he said.
But the proposal did have at least the nominal support of the large utilities, which, everyone agreed, have the clout to kill it in the Legislature.
Florida Power & Light and TECO representatives said the plan gave them a level playing field to compete on the wholesale market against out-of-state firms.
Vincent Dolan, Florida Power's regulatory chief, said his company would wait to see how the plan came out in the Legislature before endorsing or opposing it.
Pat Wood III, the chairman of Texas' public utility commission, told the Florida panel the cost utilities pay for power has dropped since his state deregulated.
But recent spikes in natural gas prices -- passed through to consumers before and after deregulation -- mask the savings. The same could just as easily happen in Florida.
"The rates won't be lower than they are today," Wood said. "But they will be lower than they were without deregulation."
- Contact Steve Huettel at huettel@sptimes.com or (813) 226-3384.