Millions of Floridians’ power bills could rise dramatically as FPL and other utilities look to customers to pay more for improvements that could make the state’s electrical grid more resilient from hurricanes.
Newly proposed legislation, which is advancing in the Florida Senate, would establish a 10-year plan to further strengthen the state’s electrical grid against damage from storms, in part by burying power lines and stepping up vegetation trimming. It would give utilities a new mechanism to recover expenses for grid upgrades, separating those costs from base rates.
The proposal’s opponents fear electric bills could soar. They call the change unnecessary, because utilities already may upgrade their grids and recover costs from customers’ payments. Zayne Smith, associate state director at AARP Florida, which represents senior citizens, recently told a Senate committee the proposal essentially gives utilities “a blank check to raise the rates.”
But proponents say the move is needed to improve how customers recover power after hurricanes. Juno Beach-based Florida Power & Light Co., the state’s largest electric utility, is among those backing the legislation, sponsored by Sen. Joe Gruters, R-Sarasota.
“This bill is about making our grid stronger, and helping the most vulnerable among us rebound from natural disasters,” Gruters told the Senate Committee on Infrastructure and Security on March 20.
FPL said it couldn’t discuss the “hypothetical impact to customer rates,” but favors how the bill creates a long-range plan to strengthen the electrical grid.
“I can tell you we’re supportive of the bill, as it advocates for more undergrounding [of power lines] — which is very important for our state given Florida’s susceptibility to hurricanes,” FPL spokesman Christopher McGrath said. The utility’s work in recent years to strengthen the grid has “reduced overall power restoration times and costs for our customers,” FPL said.
J.R. Kelly, Florida’s Public Counsel, said while he doesn’t weigh in on legislation, he is concerned about the potential cost for customers. He said utilities already recover costs spent on upgrading the electrical grid by filing with the Florida Public Service Commission, which determines whether the costs should be included in base rates.
“The commission has always approved any prudent plan for storm hardening,” Kelly said.
Currently, a utility goes through a regulatory review of its base rates every few years. Base rates are intended to cover a utility’s operations, capital investments and provide a return on those investments.
But under the proposal, a utility could recover its costs from burying power lines and other storm protection, including a profit on those expenses, each year, according to a House staff analysis of the bill. The bill authorizes a new charge applied to all customers.
Smith, with AARP, said she is wary there’s no spending cap in the bill, either on annual costs or for the total cost of strengthening the state’s entire electrical grid, which is unknown. Smith said the utilities would make an extra profit with the new annual fee proposed in the bill: They still would be collecting a profit through base rates. AARP is especially concerned for Florida’s seniors on fixed incomes, she said.
Jon Moyle, lobbyist for Florida Industrial Power Users Group, big power users in the state, said the bill “is a one-way financial street.”
He said the way the bill is written, the commission only would be able to approve or modify the utilities’ annual plans — not reject them.
“Ratepayers will not have any choice of paying these rates [if] imposed,” Moyle said before the Senate Committee. And the numbers will be “huge,” he said, pointing to cost examples for burying power lines in the bill’s staff analysis.
The analysis says FPL already has a three-year plan to convert 158 miles of overhead lines, and that’s estimated to cost a total of $100 million, or $632,911 a mile. Based on those costs, converting just 4 percent of the power lines each year would cost about $577 million a year, according to the staff analysis. “That’s a lot for people in impoverished communities,” Moyle told the Senate committee. But Christopher Emmanel, the Florida Chamber of Commerce’s director of infrastructure and government policy, says the cost for greater storm protection is worth it.
The Florida Chamber supports the legislation because it “puts into place a good framework to harden and bury [power lines] where needed,” he said.
“From our perspective, the costs of lights out is very expensive for Florida’s economy and very bad for public safety,” he said.
In the recent Senate Committee meeting, Sen. Ed Hooper, R-Clearwater, pressed bill sponsor Gruters on whether utilities would enjoy the same “rate of return” for upgrading their grid, as they do through base rates.
“Is there an ability to enjoy a profit — a rate of return for hardening their grid? Are they going to make a profit off me and you and [these other] folks by hardening their grid?” Sen. Hooper asked.
“Yes,” Gruters replied. The legislation, “Public Utility Storm Protection Plans,” is SB 796 in the Senate and HB 797 in the House. If passed by the full Legislature and signed by the governor, the law would take effect July 1.