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FPL 2021 Rate Case: What It Is & Why It Matters

Florida Power & Light is moving swiftly to pass a rate increase that adds up to $4.868 billion over the next few years. This would be the largest rate hike in Florida’s history.

Most electric utility companies in the United States are
regulated monopolies. This means our power companies are guaranteed profits and a customer base, but they have to officially “ask” their regulators for permission to increase the cost of electricity.

Utilities have continuously increased their rates over the past decades which has led to one-third of households across the country having trouble paying their monthly electricity bills. Utilities propose rate increases that either retain or increase their own shareholder profits. Meanwhile, they maintain very limited bill assistance programs for low-income customers. The impact of rate increases is especially severe in low-wealth communities where too many residents live without consistent access to affordable electricity. 

Florida Power & Light (FPL) is the state’s largest utility and largest monopoly corporation. Throughout 2020, while many of our neighbors struggled to keep up with the cost of their utility bills, FPL banked over $2.65 billion in net earningsStudies show that FPL also invests the least nationwide on low-income energy efficiency programs which would help lower our bills in the long-run.

The 2021 Rate Case: 

In March of 2021, FPL filed a proposal to the Florida Public Service Commission (PSC) to increase FPL’s base rates by approximately 20% over four years. In August, after significant pushback and discussions with other parties involved in this regulatory battle, FPL filed for a settlement that slightly lowered their original rate increase proposal. The settlement would guarantee a 10.6% return on equity for the utility, a measure of profitability that would be the highest of any utility in the state. Meanwhile, all other regulated utilities in Florida, and many across the nation, are taking cuts to their returns.

If the PSC approves this rate hike—a decision set to be made by November 30, 2021—the average household’s utility bill is set to increase by over $200 each year by 2025.

FPL’s settlement remains problematic in many ways. The rate hike would undoubtedly impact low-income households and struggling small businesses hardest, at a time where the Covid-19 pandemic is still raging on and keeping hundreds of thousands from true financial recovery. In July of 2021, more than 650,000 households were late paying their FPL bills, which are already inevitably increasing due to extreme heat and other climate conditions that make energy a truly essential service. 

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We fundamentally believe that no business or policy decision should leave our neighbors or loved ones in the dark during times of collective hardship. Accessible and affordable energy services are essential to maintain our communities’ security and well-being. With this firm belief, energy justice advocates throughout the state have worked to establish and extend moratoriums on electricity shut-offs since the start of the pandemic in March 2020. Unfortunately, FPL resumed disconnections on households after six months in October 2020. This led to over 250,000 shut-offs (source: combined data from October, November, December) during a year characterized by record-breaking heat, widespread financial loss, and unprecedented public health risks.

Demonstrators from community groups gather outside FPL building in Miami where they have planted 250 flags to represent the 250,000 disconnections initiated by FPL after the moratorium on electricity shut-offs expired in the final months of 2020.

Meanwhile in 2020, the company banked over 
$2.65 billion in net earnings and FPL’s president and CEO Eric Silagy received an $8,801,904 compensation package. This is a $1.1 million jump from his compensation in 2019 and over 150 times as much as the median household income earned by Floridans in recent years. Our households, known to FPL as residential customers, are the greatest source of this revenue. Since 2016, residential customers have consistently accounted for 55 percent of their earnings.

Low-income communities are often those most impacted by high energy burden and energy insecurity. When residents have inconsistent access to adequate, reliable and affordable energy services, they are forced to grapple with tradeoffs between energy and other essential expenses. Energy insecurity often becomes a part of a cascade of disadvantages including financial wellness, housing quality, nutrition, and mental health. 

FPL has repeatedly stated that they proudly keep typical residential customer bills well below the national average through the end of 2025. This is based on the unrealistic and false assumption that the average customer for every utility uses an average 1,000 kWh per month. This average is inappropriate for FPL to use because FPL’s performance in terms of residential customer bills is far below average (page 6) when compared to other large investor-owned utilities.

FPL included a long list of changes and new investments in their filing for the PSC. This section includes some of the key items, but all the others may be referenced here.

Merging territories

  • FPL gains all of the customers previously serviced by Gulf Power, and the rate increase for FPL’s continuing customers avoids large rate increases for Gulf customers

New fossil fuel infrastructure

  • Investing in gas, a fossil fuel which creates planet-warming air pollution, is an uneconomic investment that we simply cannot afford

Trade association dues

  • Nearly $3 million to the Edison Electric Institute (EEI), a utility trade group that has played a key role in FPL’s attack on rooftop solar

Structurally unfair or unsustainable “clean energy” programs

  • Expansion of the SolarTogether program by up to 1788 megawatts, including 40% for homes and 60% for commercial/government customers

Solar Together is a controversial program because it allows for FPL to essentially double-bill customers for solar energy. It also portions out a higher share of the solar capacity for commercial and industrial customers, keeping residential customers (our households) from accessing a share that is fair in proportion to what we will be paying. Parties in the 2021 FPL Rate Case agree this is a prime example of how the settlement agreement will drive a “massive transfer of wealth from the residential class to participating commercial/industrial customers.” 

The cost of these unfairly structured clean energy investments looks like a couple hundred million dollars on paper, but it’s likely to balloon out over their lifetime. As an example, FPL expects to make over $2 billion in profit from the solar investments alone.

FPL loves to position itself as a climate champion, but its climate justice and clean energy advertisements are deceptive.

  • The settlement includes large investment in new fossil fuel infrastructure and other unsustainable programs (see below).
  • When FPL isn’t forcing customers to foot the bill for new fossil fuel infrastructure, the company has picked our pockets to clean up their environmental messes.
  • FPL lobbies against renewable energy policies, a particularly strange fact considering its parent company, NextEra Energy, is a “leader” in renewable generation.
  • In a study of the 52 largest electric utilities in the U.S., FPL was ranked #51 for utility energy efficiency programs to reduce energy use. 
  • FPL also lobbies against utility-scale efficiency goals that would be beneficial for all.

FPL continues to champion false solutions to the climate crisis, including fossil fuels and nuclear energy, which maintain monopoly power and high customer costs. Over 70% percent of the energy produced by FPL comes from fossil fuels (mainly gas), and over 20% comes from nuclear reactors.

If we are going to invest our time, labor, and hard-earned money into building a new energy system, we believe it should be powered by clean energy that does not force workers or neighboring communities to bear the brunt of energy-related pollution, health risks, and hazards.

The key questions emerging in FPL’s ongoing rate case require the Public Service Commission to decide between predominantly business and industry interests and the needs of residential customers across the state. The settlement leaves a disproportionate share of the cost burden on the shoulders of residential customers. As is, households will be forced to pay well over their fair share and actually subsidize the rates paid by commercial and industrial customers by several hundred million dollars.

FPL states that they strive to “deliver America’s best energy value.” If the company truly seeks to deliver clean, reliable and affordable energy services, they must assume responsibility for the impacts of their inequitable and extractive business practices. We are advocating for opportunities for community-based decision-making about critical energy needs, new roles (and business models) for energy utilities, and a commitment to equity and leadership from frontline communities.

A truly just transition to clean and renewable energy does not need to come at the cost of already financially-burdened, hardworking people—and that’s exactly who is footing the bill, while FPL continues to exclude many of us from the full potential benefits of the energy system.