Storm hardening bill could hike Florida electric rates
Utilities are pushing the measure as an answer to the public outcry after Hurricane Irma knocked out power to two-thirds of the state in 2017, and subsequent storms also resulted in significant outages.
Irma prompted many to question whether
But burying the electric grid is costly and utility companies want to be able to pass that cost on to consumers. The cost-recovery method being advanced by the industry has some consumer advocates alarmed.
Currently, electric utilities receive payment for their storm protection efforts through their base rates, which typically are set every three to four years. The base rate process takes into account all the revenues and expenses utilities have, and weighs them against each other to determine a fair rate to charge consumers. The rate requests are heavily scrutinized and utilities aren't guaranteed to recover all of their costs.
The legislation (HB 797 and SB 796) sponsored by state Sen.
Each of these rate requests includes a built-in profit margin that could help boost the companies' annual profits. And
"When you start pulling things out (of the base rate) ... and you put them into a clause and say you automatically get to recover this then the utility is guaranteed to recover that," said Kelly, the state's public counsel. "Accounting wise it increases their profits because it's not part of their base rates -- it basically allows them to earn a little bit more in the process. They're guaranteed to recover 100 percent of those expenses as long as they're prudent and reasonable."
Critics say the bill will lead to windfall profits for utilities and higher costs for consumers, many of whom wouldn't immediately benefit from the infrastructure improvements because only a small portion of each utility's service area would see such investments each year.
But supporters argue that the costs will be offset by the benefits of having a more resilient electric grid, including avoiding the economic losses caused by extended power outages. Businesses lose money and employees lose wages when companies are shuttered for extended periods because of outages.
"There's no question there's going to be a cost to it but I think the benefits far outweigh the costs," said Gruters, noting that the economic loses in the days immediately after Irma were substantial.
Gruters considers the bill a legacy achievement that would benefit the state for decades to come.
"Listen, this is a big deal," he said. "We're literally going to bury almost every power line in the entire state. This is a big win for
Gruters conceded that the legislation is being pushed by utility companies, who came to him with the idea for the bill. But he said he wouldn't have filed it if he didn't believe it would benefit the state.
A spokesman for FPL praised Gruters' legislation.
"FPL wholeheartedly supports legislation which will require our state's utilities to create robust, long-range plans for making the electric grid more resilient to extreme weather," said FPL spokesman
Hurricane Irma knocked out power to 6.7 million electric customers, or about 64 percent of the state, in 2017, including 83 percent of
The massive power outage caused by the storm was a major inconvenience that proved life-threatening for some, and since then state leaders have been exploring how to limit the severity and duration of similar events in the future.
"It literally took three weeks to get everything back to normal and it's a lot of lost revenue," Gruters said.
Nobody disputes that
The senior citizen advocacy group
"The way this bill is written will also shift the cost more to consumers than it already is,"
Moyle recently described the cost recovery clause in Gruters' bill as a "one way financial street that only leads to increases" in electric rates. By comparison, Moyle said that keeping the storm hardening costs in the base rates would soften the impact on utility customers.
"It's described as the ultimate true-up," Moyle said of base rate cases. "It's a situation where everything's looked at."
Some also are questioning the focus on putting utility lines underground, which Gruters and others have described as the primary impetus behind the bill. While underground power lines aren't affected by high winds, they're still vulnerable to storm surge and are more difficult to repair when there's a problem.
Communities with buried power lines can still experience power outages if other parts of the grid are knocked out by a storm, and it is costly to move overhead lines underground, leading some to argue that there should be a more targeted approach that emphasizes burying lines in certain areas where it would have the greatest impact.
A House bill analysis notes that it currently costs
Burying 4% of those overhead power lines each year would cost ratepayers roughly
Despite those costs, the legislation has received unanimous support from
"Great bill. I went through the hurricane in 2004 and lost my power. My neighbors lost their power. My whole community lost their power," Rep.
The bill has cleared three committees in the
Utility companies donate large amounts to both
In February FPL gave
A PAC controlled by Rep.
"This bill is a no-brainer for the long-term fiscal health of
The utilities also have given big money to PACs controlled by legislative leadership, with FPL, Duke and TECO contributing
Since 2015,
Gruters became chairman of the
Information from the News Service of
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