Power Companies Ask For Bigger Profit Margin

Florida consumers are facing up to $1.8 billion in higher power bills if the state Public Service Commission approves requests from two big electric-power companies for increases in their base utility rates. AARP is urging consumers to speak out against the requests.

Florida consumers will have several chances to testify at eight public hearings scheduled in June and July regarding a $1.3-billion base-rate increase sought by Florida Power & Light (FPL). Eight more public hearings will be held on a $500-million rate increase sought by Progress Energy. These hearings may be the only opportunities for FPL and Progress Energy customers to address members of the Florida Public Service Commission regarding the proposed rate increases.

According to independent expert witnesses, if approved, the increases would boost each company’s profit rate. FPL’s profit level would rise from about 10.7 percent to a range of 12 to 13 percent, according to company filings. Progress Energy’s profit level would rise from 9.76 percent to 12.54 percent, according to its filings.

“This is an outrage,” said AARP Florida State Director Lori K. Parham. “These companies already make a very healthy return on investment. Now they want more. In the wake of the recent market turmoil, Floridians of all generations would love to have the kind of return on investment that these companies are making now. Enough is enough.”

For a customer using just 1,000 kilowatt-hours of power per month, the rate increase requested by FPL would be about $12.55 per month, or $150.60 per year. Many consumers use more than 1,000 kilowatt-hours per month.

For Progress Energy customers, the rate increase would amount to $13.83 per month for a customer using 1,000 kilowatt-hours per month, or 31.5 percent above present rates.

Neither company’s “base rate” increase request is related to recent proposed rate increases for nuclear power plants or for changing fuel costs. Instead, through these rate requests, the utilities seek to increase their base revenue and profitability. The FPL rate increase would be a 30-percent increase in the “base rate” portion, which makes up about 42 percent of a customer’s bill. The Progress Energy rate increase would represent a 31.5 percent increase in the “base rate” portion, which makes up about 44 percent of Progress Energy customers’ bills.

AARP is calling on area residents to turn out and testify at public hearings scheduled by the Florida Public Service Commission to receive public comment. In all, 16 hearings will be held throughout Florida. “It is very important that as many people as possible come in person to these hearings to testify,” Parham said. “This may be the public’s last chance to have its say on this outrageous plan.”

AARP volunteers and staff will be present at many of the hearings to help guide members of the public through the process of signing up to testify.

The hearings are the most effective way to persuade state Public Service Commissioners that the rate increases are unwarranted, and are particularly ill-advised at this time of great financial distress, consumer advocates say.

A complete list of hearings scheduled by the Florida Public Service Commission is available on the home page of this site. Look in the left column at the Events Calendar.

Sign up to become an AARP Florida e-activist, get information on utilities and a broad range of other issues affecting Floridians age 50+, or call 1-866-595-7678 toll-free and ask for an AARP Florida staffer working on the utilities issue.