Proposal floated to change how power plants are paid for

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Florida Power & Light is floating a major change in the way customers pay for new power plants, avoiding full-blown rate hearings that can be contentious and time-consuming, reports Jim Saunders of the News Service of Florida.

The state’s largest utility tried Monday to get the change attached to a Senate energy bill, but Sen. Bill Montford, D-Tallahassee, withdrew the proposed amendment, at least in part because of what he described as its “great magnitude and significance.”

The proposal would allow utilities to increase base rates when new or upgraded power plants start operating, so long as those plants increase efficiency or lower fuel costs. Typically, utilities recover power-plant costs after going through base-rate cases in which the Florida Public Service Commission delves into various parts of the companies’ operations.

Mike Sole, FPL vice president of government affairs, said the proposal would streamline the process of recovering costs and that more-efficient power plants ultimately will save billions of dollars for customers in lower fuel costs. Sole left open the possibility of trying to get the proposal approved during the legislative session, after Montford withdrew the amendment in the Senate Agriculture Committee.

“I still think it’s a smart proposal,” said Sole, a former secretary of the Florida Department of Environmental Protection. “This proposal legitimately saves customers money, and it saves taxpayers money.”

But Jon Moyle, an attorney for the Florida Industrial Power Users Group, which frequently becomes involved in utility cases, criticized the proposal and called it a “one-way street to a rate increase.”

Moyle said power-plant costs should be considered in the broader context of utility operations. As an example, he said a broader rate case would allow the Public Service Commission to consider whether a utility has additional customers or revenues that might help offset increased power-plant costs.

“It would severely limit the ability of the commission to consider all relevant things when being asked to adjust rates,” said Moyle, whose group includes large corporate energy users.

The proposal would continue to require utilities to receive what is known as a “determination of need” from the Public Service Commission before starting power-plant projects. But it also says the commission “shall authorize” recovery of project costs through base rates when plants start operating.

If lawmakers approve the proposal, Sole said it likely would first apply to a major upgrade of a Riviera Beach plant, which is scheduled to start operating in 2014.

Also, the Public Service Commission will hold a determination-of-need hearing next week for a proposed $1 billion FPL project at Port Everglades. The upgraded plant, if approved, would start operating in 2016.

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including SaintPetersBlog.com, FloridaPolitics.com, ContextFlorida.com, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.