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PSC open to lifting cap on utilities’ ‘economic development’ charges

The Public Service Commission agreed Wednesday to consider allowing three major electric utilities to boost the “economic development” fees they’re allowed to collect from customers by millions of dollars.

The change would allow Florida Power & Light Co. to collect as much as $26.7 million annually by 2023. Tampa Electric Co. would collect $4.9 million, and Gulf Power Co. $3.8 million.

The utilities insist those sums would add only marginally to individual customers’ bills — 24 cents per 1,000-kilowatt hours for FPL; 14 cents for Gulf Power, and 10 cents for Tampa Electric.

The Office of Public Counsel, which represents ratepayers before the PSC, protested that the proposed rule revision seemed to have been fast-tracked — in contrast to its own proposal, advanced as much as 1 1/2 years ago, to bring order to a similar add-on for customers of small water and sewage utilities.

“We want to observe and note that there may be a difference — and we hope it’s not the case — between the powerless and the powerful in this state when it comes to getting what the people need and what they want,” Associate Public Counsel Charles Rehwinkle said.

“We’re not opposing this,” he said of the economic fee rule change. “We think there could be merit to what the petitioners are asking for. We’re just asking that this process not be rushed along.”

The process ought to include evidentiary hearings into how existing economic development rules work, he added.

“I agree with you,” PSC Chairman Art Graham said. “Some of this stuff is kind of vague,” he added, referring specifically to language in a proposed order regarding “making financial contributions to state and local governments to assist strategic planning efforts.”

But he also pointed out that the order would allow the commission and its staff to open the rule-making process — not guarantee any outcome.

Commissioner Donald Polman agreed.

“I was assured that the purpose here is to open up the process, and that it is both timely and appropriate that we go through a thorough examination,” he said.

“The staff has assured me that the intention is to gather as much information as we can, and that this will be very open,” Polmann said. “I want to make sure that the appropriate people are benefited, and this this is not simply a burden on the ratepayers.”

James King, senior attorney for FPL parent company NextEra Energy Resources, said his side was all right with that.

“It’s our intent to develop the record, answer questions, participate in workshops,” he said.

State law limits economic development fees to “operational assistance,” including participation in trade shows; helping state and local authorities develop economic strategic plans; marketing and research; and answering government and business questions about delivering power to specific sites.

State regulations limit such fees to 0.15 percent of a utility’s gross annual revenues or $3 million — whichever amount is smaller.

The utilities complained that the rules now amount to a $3 million flat cap — the value of which has declined by 65 percent in the past 20 years.

“There’s nothing wrong with taking time to make sure that you get it right when it comes to what we would consider discretionary spending by utilities.,” Rehwinkle said.

“What matters most to economic development — from my experience with economic development — is low rates.”

As for the delay on the water utilities, Public Counsel J.R. Kelly said following the meeting that, since his office requested action, the commission held a workshop perhaps nine months later.

PSC policy allows small water and sewage utilities “that virtually have no rate base” to replace equipment and make other investments in infrastructure, Kelly said.

Affected utilities may collect small surcharges against their basic operating expenses for that purpose. But the PSC has never adopted a formal rule governing the process, potentially allowing unfair treatment of customers of different utilities.

“They need to have a rule, so that we would have a uniform application, and everyone would know what the rules are,” Kelly said.

“Since we brought it to their attention, they cannot continue to apply the policy. If they were challenged in court, the court would knock them down.”

What he heard during the hearing comforted him.

“It’s been around 20 years, and it may be time to raise the cap a little bit,” he said. “However, I’m not sure I’m going to be comfortable raising the cap as much as petitioners are proposing.”

Written By

Michael Moline is a former assistant managing editor of The National Law Journal and managing editor of the San Francisco Daily Journal. Previously, he reported on politics and the courts in Tallahassee for United Press International. He is a graduate of Florida State University, where he served as editor of the Florida Flambeau. His family’s roots in Jackson County date back many generations.

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