Florida Power & Light customers could be paying about 15% more for their electricity by 2025 under a four-year rate proposal the utility plans to submit to the Florida Public Service Commission later this year.
In a news release Monday, FPL said it wants to increase its revenue by about $2 billion over four years. The increases would be phased in — by $1.1 billion in 2022, by $615 million in 2023 and by $140 million each in 2024 and 2025. The increases in 2024 and 2025 would reimburse the company for the cost of building 900 megawatts of new solar generation capacity in each of those two years.
The utility said its four-year plan would increase revenue “less than” 3.7% a year between 2022 and 2025. Assuming the utility seeks annual rate increases of 3.6% each year to guarantee its targeted revenue increases, customers paying $99 now for 1,000 kilowatts per hour of electricity each month would pay $114 a month in 2025.
FPL spokesman Christopher McGrath said by email that the projected annual revenue increases of “less than” 3.7% does not necessarily mean that rates will be increased by 3.6% each year.
“A detailed projection of how the four-year rate proposal could affect customers will be included in the formal proposal FPL submits to the Florida Public Service Commission in March,” McGrath said. “FPL’s projected rate increases will still keep FPL bills well below the national average through 2025. The revenue increases are necessary to support continued investments that benefit customers as the company builds a more resilient and sustainable energy future for Florida in the face of climate change and strong, frequent severe weather.”
NextEra Energy, FPL’s parent company, recently acquired Gulf Power and its 470,000 customers in Florida’s Panhandle. The companies will be fully merged in 2022. Together, the two companies serve 5.6 million customers stretching from the Panhandle to Florida’s east coast.
Rate increases will be necessary to help pay for more than $29 billion FPL is investing during the four-year period from 2019 through 2022, the company said, adding that the investments improve service reliability, reduce emissions, improve fuel generation efficiency and reduce power outages in severe weather.
FPL last requested a general rate increase in 2016 and extended its current rate agreement by freezing base rates for an additional year, the company said. FPL is an investor-owned monopoly, which means that it generates profits for shareholders while state law prevents it from facing marketplace competition. To ensure rates remain reasonable for consumers, regulators limit how much profit can be generated for investors.
In its most recent financial report, FPL reported third-quarter net income of $757 million, or $1.54 per share, compared to $683 million, or $1.40 a share, the previous year. The release said the $11.7 million increase in 2022 and 2023 would enable the utility to increase its allowed return on equity from 10.55% to 11.5%.
“The requested increase in allowable return on investment would be unreasonable,” said J.R. Kelly, Florida’s public counsel. “They’re saying the $11.7 billion revenue increase is required for them to earn a fair, reasonable return on equity of 11.5%. That’s not reasonable in terms of today’s interest rates, which are at an all-time low.”
Kelly said a full analysis of FPL’s proposal wouldn’t be possible until the utility submits financial documentation to support it, which is expected sometime in March. But Kelly won’t be in a position to analyze it. He is stepping down from the position on Friday after 12 years. His resignation comes in the wake of a law enacted last spring capping the public counsel’s term at 12 years. In the role, which is intended to give ratepayers an attorney equivalent in expertise to those representing utilities, Kelly frequently challenged utilities’ efforts to raise rates.
In 2018, Kelly joined with the Florida Retail Association in challenging FPL to refund taxpayers more than $700 million it received in a windfall when President Trump’s 2017 tax reforms reduced the company’s federal tax rate from 35% to 21%. The Public Service Commission rejected the challenge and allowed FPL to keep the windfall. FPL said it used the money to help wipe out $1.3 billion in costs related to Hurricane Irma and avoid imposing surcharges on customers.