Sunday, January 17, 2010


By Sandy Prisant

Most of Florida Power & Light rate hike rejected

TALLAHASSEE, Fla. (Associated Press) 15 Jan -- State regulators under pressure from politicians and consumer advocates Wednesday rejected more than 99 percent of Florida Power & Light Co.'s request to raise base rates by $1 billion this year and all of a $247 million proposal for 2011.


Yogi Berra was right. It ain't over 'til it's over. Just when Sen. Dodd is jettisoning a US Consumer Protection Agency in finance. Just when the President's "body of work" is resulting in poll numbers that look more like those of the man he replaced. Just when Haiti slips light years further away from hope. Just at this moment--a little light shines at the end of the tunnel, in The Miami Herald article quoted above. 

A small group of people and public defenders took on a giant. And won. In real life. In a place where they still can't figure out who won the 2000 election. In a state where a dozen or so local public officials are ousted or arrested for corruption almost every year. This means that a few serious people (albeit with the Governor's implicit support) can still get things done in this age. That's to Florida's credit and a hopeful reminder to the nation.

Having been afforded the opportunity to testify before the Florida Public Service Commission in this matter and then provide line-by-line analysis of Florida Power & Light's combined rate petitions, here are paraphrased excerpts from sworn testimony to the Florida PSC in West Palm Beach, August 2009:

"Commissioners, good evening. My name is Alexander Prisant. I'm a homesteader in Boynton Beach and was previously a manager for the American Electric Power Company, one of the very few utilities in this country a good deal larger than FP&L. Maybe it would be helpful if I gave you a slightly different perspective from what I have been hearing tonight and what is actually happening here.

"Just to quickly cover my credentials, I helped write Congressional testimony for the US House of Representatives that led to the construction of 14 nuclear power plants around Lake Michigan. I was personally responsible for setting up the strategy for the lawsuit against the entire US Environmental Protection Agency and the personal lawsuit against the Director of the EPA in the 1980's. So I am a friend of big power.

"Having said that, I am embarrassed by what is being proposed here and I have been embarrassed by petitioner's presentation. There are a couple of hard truths that need to be talked about. In general, these proposals are outside---and I can only speak for myself personally--but outside of my 30 years of experience, outside of industry norms, and unconscionable without better performance.

"In the several states where American Electric Power operates, I had to make these kinds of presentations to people who demanded proof of performance. The hard fact is that within the industry, at the top level, Florida Power & Light is not considered a leader in best practices.

“The performance of transmission and distribution functions in Florida are not equivalent to many states. I am shocked to hear that in 2009 you folks are still trying to grapple with weather issues. In AEP’s states, we have tornado issues. We had to address those 30-40 years ago. Did Florida not have hurricanes 40 years ago? Instead you want the taxpayers, during a Depression, to take care of them now. No vision at all.

“Next: It is hard for consumers to understand a lot of the technical issues involved; this is a complex industry, but there are red flags that any of us can see. FP&L, in its first bill, offered me insurance at my cost for power surges—which would provide an extra payment to the utility as reward for poor performance, while FP&L avoids all liability.

“What is really scary is that I was offered a similar deal by an electric utility once before—in the Middle East. Does FP&L want to operate to the Middle Eastern standard?

“What specifically is the $1.6 billion in rate hikes over 2 years to be used for? I have heard no specifics tonight. If I walked into a hearing in the state of Indiana, for example, and said: ‘listen guys, I just want to raise my one billion dollar profit up to two billion,’ I’d have been run out with a shotgun.

“As effectively a protected monopoly, with a protected return, FP&L is now asking for a 12.5% ROI. Two things come to mind: First, how many companies of this size in this state have a guaranteed income of 12 or 11 or 10% ROI? I can’t think of any. And I’ve really tried.

“Next, if there is guaranteed rate of return of even half that—I have no background in finance—I guarantee you that within one week I will deliver to this Commission six sovereign wealth funds, three hedge funds and three other major financial groups from around the world that, in this environment, will dive in with both feet for a guaranteed rate of return of 6.25 or 6.125%. Think about it—this is a time when the Chinese and Japanese are having to live with T-bill rates of 2 percent. They would jump at 6%.

If, as FP&L proposes, investors were offered 12% guaranteed, off its customers’ backs, those investors might rightly fear Federal authorities intervening, because there must be something illegal going on.”

Commissioner Edgar: “May I ask you to sum up, please.”

Mr Prisant: “Yes. I will sum up by just saying this: Florida is losing population.

What is going on here?”

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