Sun Sentinel Editorial Board
May 21, 2019
The seriously misnamed Public Service Commission gave the back of its hand to the public yet again this week when it let the Florida Power & Light Co. keep its windfalls from the December 2017 federal tax cut rather than share them with its customers.
That’s nearly $1 billion so far and growing by some $60 million every month. The pretext was that FP&L is using the money to recover what it spent on the damage from Hurricane Irma, which hit Florida three months before Congress enacted the massive tax cut. FP&L claims that Irma cost it $1.3 billion
The excuse is fatuous because the PSC has yet to decide what Florida’s largest utility will actually be allowed to claim for Irma repairs. So it may be piling up excess profits in the meantime. The PSC already permits FP&L to earn a generous 11.5 percent profit.
As it usually does, the PSC is allowing some of the Irma cost data to be kept from the public on the premise that it’s “confidential business information.”
The Office of Public Counsel and lawyers for other parties will get the unredacted data, for whatever good it will do.
If that sounds cynical, it’s meant to be. The PSC mostly serves the utility industries, rarely the public. In the current case, it rejected not only Public Counsel J. R. Kelly’s pleas on the behalf of FP&L’s ratepayers but also the recommendation of its own staff, which said FP&L should deduct its Irma costs from the tax windfall and share the rest with its customers. It’s unusual for the PSC staff to be brushed off like that.
The decision also overrode the objections of the Florida Retail Federation and the Florida Industrial Power Users Group, which in this instance were on the same side as residential customers.
The PSC’s true function as a subsidiary rather than a regulator of the utility industry has been an ongoing scandal for nearly all of the 41 years since the Legislature agreed with then-Gov. Reubin Askew to enlarge the agency from three members to five and have them appointed rather than elected.
Askew believed that appointees chosen for their integrity and expertise would regulate utility industries more responsibly than elected commissioners had. One notorious former commissioner, Jerry Carter, had described himself to a congressional committee as “a cheap politician — the only kind my constituents can afford.
But the Legislature slipped a poison pill into Askew’s reform. Although the governor appoints the PSC members, they are nominated by a council selected by the Senate President and House Speaker. Six of the twelve members must be legislators. Unsurprisingly, ex-legislators have often been nominated to the PSC though none currently sit there.
In effect, the PSC is an extension of the Legislature, and that’s what it was meant to be. No other Florida industry is regulated that way. Insurance and banking, the other big ones, answer to professional regulators appointed by the governor and Cabinet.
The worst of it is that the Legislature itself is effectively controlled by the utility industry through its campaign contributions and lobbying. Thus, so are the council and the PSC.
Recent history serves up a sobering warning to any PSC member who might think of bucking those traces. In 2010, the PSC turned down rate increases for FP&L and Progress Florida. Retribution came swiftly. The long arms of the utilities purged all four members who had put the public interest first. The council refused to renominate two whose terms were expiring and the Senate denied confirmation to two others who had been appointed recently by Gov. Charlie Crist.
One of the ousted commissioners was Nancy Argenziano, an iconoclastic former legislator and a not-so-conservative Republican, who said she had “never seen anything so corrupt as the PSC.” She said she had been in office only three months when “the threats came in from the Legislature to do as they say.”
Former Florida Comptroller Bob Milligan, a retired Marine general and one of the most widely respected officials in this state’s modern history, didn’t even make the cut for final consideration by the council two years ago.
Integrity Florida, a nonprofit watchdog agency, slammed the PSC as being “’captured’ by the industries it regulates – which often leads to decisions that are not in the best economic interest of Florida’s families and businesses” in a highly critical report issued in 2017.
“Since the utilities exercised their legislative muscle to remove the four PSC commissioners, the PSC rarely rejects a request by the utility industry,” Integrity Florida said. “In November 2016, the PSC unanimously approved a $400 million Florida Power & Light rate hike for 2017 as well as a $411 million increase over the next three years. The agreement was endorsed by the Office of the Public Counsel, but was opposed by consumer groups, including the Sierra Club and AARP. The ruling was a typical settlement agreement in which the utility backed off its original rate increase request of $1.3 billion in return for the four-year rate guarantee.”[More Opinion] Florida finds its own Steve King in Dennis Baxley | Editorial »
In a separate report, Integrity Florida said the four largest utilities contributed more than $43 million to Florida candidates and political committees in the 2014 and 2016 elections.
What the PSC can’t do for the utilities, the Legislature does directly. By votes of 37-2 in the Senate and 110 to 3 in the House the just-concluded session passed legislation allowing utilities to bill customers extra for the cost of burying power lines to protect them from storms. Such work should be treated as normal maintenance, a routine expense that’s figured into the rate base upon which the PSC decides what profits to allow. Treating it as a separate expense makes it less subject to PSC oversight.
The Integrity Florida report, which called for various reforms of the PSC and the nominating process, was ignored by the Legislature and by the Constitution Revision Commission. That wasn’t surprising, since the revision commission is also dominated by legislators.
You can’t vote for or against the PSC commissioners who raise your rates. But you can vote for or against your legislators. They’re the ones you should hold to account.
Editorials are the opinion of the Sun Sentinel Editorial Board and written by one of its members or a designee. The Editorial Board consists of Editorial Page Editor Rosemary O’Hara, Sergio Bustos, Steve Bousquet and Editor-in-Chief Julie Anderson.