Are Utility Rate Hikes Ahead?

AARP and other consumer advocates say Public Service Commission needs reform

by: John Kennedy, from: AARP Bulletin, March 1, 2011

Nancy Argenziano, who quit the Florida PSC when her second-term nomination failed, has become a critic of it. AARP backs legislation to limit communications between utilities and the commission. — Tristan Spinski

En español | A pledge by Gov. Rick Scott to brighten Florida's corporate climate by offering lower electricity costs to some businesses has consumer advocates worried that residential customers may pay more.

Scott, a Republican, has suggested an "economic development rate" for corporations that agree to relocate to Florida or expand within the state. The reduced utility costs would be tied to job creation, but Florida's four big investor-owned utilities would not have to absorb the lost revenue. Instead, the reductions would be offset by higher charges to all other ratepayers — with residential customers shouldering most of the costs

"This is the wrong time to pit new Florida businesses against their own customers," said Charles Milsted, AARP Florida associate state director. "This recession has been too tough on consumers."

Bill Newton, executive director of the Florida Consumer Action Network (FCAN), said, "What's good for businesses is going to be bad for consumers. The only thing we can hope for is that a rate increase can backfire on legislators, and they may not want to get involved in it."

The possible rate action follows a year in which the Florida Public Service Commission (PSC) was rocked by turnover and accusations of being a lapdog for phone and electric companies.

Consumer advocates, including AARP Florida, are backing legislation that would limit communications between state-regulated utilities and the regulators and their staffs. The measure stems from published reports that commissioners and staff exchanged text messages with utility lobbyists while a major rate increase for electric giant Florida Power & Light (FPL) — which serves 4.5 million customers, mostly in South Florida — was before the panel.

Newton said utility companies have too much influence with the PSC. "It needs radical change. I think that's the only way you'll ever see it looking out for the consumer."

After the PSC rejected FPL's rate hike, four of the five commissioners failed to gain reappointment. Two were rejected by the state Senate, and two failed to get renominated — prompting charges that the commissioners' reappointments were somehow derailed by the utility company. FPL President and CEO Armando J. Olivera rejected that speculation as "rumors, innuendo and baseless attacks."

But the allegations have eroded consumer confidence in the PSC, said Leslie Spencer, AARP Florida associate state director.

"The PSC has been a soap opera," Spencer said. "From a consumer's perspective, if this was all I knew about utility regulation, it wouldn't give me a real sense of trust."

State Sen. Mike Fasano, R-New Port Richey, is pushing legislation aimed at building a higher wall between commissioners and utilities. The measure passed the Senate last year on a 39-1 vote but stalled in the House.