State to review utility's charges
By STEVE HUETTEL
© St. Petersburg Times, published May 16, 2001
State regulators, rebuffing Florida Power Corp.'s offer to settle a rate dispute, ordered a broad investigation into how much the utility charges for electricity.
The state Public Service Commission unanimously approved its staff's recommendation Tuesday, ordering the St. Petersburg utility to file extensive financial documents with regulators and consumer advocates.
The commission also directed Florida Power to set aside nearly $114-million for possible refunds to its 1.4-million customers. That's how much staff members estimate the utility overcharged customers for the year ended Feb. 28.
The ruling came a day after Florida Power had proposed a settlement, which the utility contends is a much faster route to rate cuts.
Florida Power's proposal would reduce rates $127-million over the next 31/2 years. The first part is $90-million over three years, which the utility estimates will be savings from the combination of Florida Power's parent company with Carolina Power & Light. For consumers that means a typical residential bill for 1,000 kilowatt hours would drop 80 cents to $92.61 starting in July.
Florida Power also proposed cutting such bills another $1.39 in 2004. The permanent reduction, from writing off the value of a Polk County power plant, is now scheduled for 2006.
PSC commissioner Lila Jaber didn't rule out a settlement but not before regulators take a closer look at Florida Power's books.
"I believe settlements and mediation are in the public interest," she said. "But I am not empowered with the information I need to make a decision on whether this settlement is in the public interest."
"We're disappointed," Florida Power spokesman Rick Janka said after the commission's vote. "But we'll all go to the table with the same thing in mind: reducing rates and helping create something that benefits customers."
That could take a while. Florida Power must submit volumes of financial documents by September. It's unlikely regulators would approve a settlement before looking over the numbers, said Public Counsel Jack Shreve, the state's advocate for utility customers.
Veteran PSC commissioner Terry Deason said it could be "well into 2002" before the panel has enough information to decide on an appropriate rate cut.
Like all investor-owned utilities in the state, Florida Power is allowed to make a certain return on equity. The trick to calculating the return is what utilities are allowed to count as expenses.
Florida Power is permitted a maximum annual return of 13 percent. But PSC staffers reported that the utility would have earned 17 percent last year if not for certain expenses they challenged.
Consumer advocates say the more regulators know about Florida Power's earnings, the stronger bargaining position they'd hold in rate-cut negotiations.
In the late 1980s, Florida Power offered a $100-million rate reduction to avoid a full earnings review, said Michael Twomey of Florida Utility Watch. After regulators looked at its books, Florida Power agreed to boost the refund by $40-million, he said.
"If you take this (settlement offer), how much do you leave on the table, or do you even know?" Twomey asked. "The answer is you would not know."
- Steve Huettel can be reached at (813) 226-3384.
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