FPL Customers to Pay for Hurricanes

Light & Medium Truck, Jul 2006

The typical Florida Power & Light customer will pay just more than $1 per month extra over the next 12 years to make up costs from the past two years of hurricanes and to build a storm reserve, under a plan approved May 12 by utility regulators, The Associated Press reported.

The Florida Public Service Commission agreed to allow FPL, the state's largest electric utility, to pass on to consumers just over $1.1 billion in total costs - about $600 million less than the company was seeking to shift to customer bills, AP said.

The company is seeking to spread that cost out over 12 years by selling bonds to keep the hit lower for customers, AP said.

Customers will pay $735.5 million to make up for losses and costs from the 2005 hurricane season - primarily from Hurricane Wilma, which devastated South Florida last October, AP said. The PSC also allowed FPL to pass on $198.6 million to make up what it spent responding to the three hurricanes that hit its service area in 2004.

The biggest disagreement between the PSC and the company was about how big a reserve it should have, AP said. FPL will be allowed to build a $200 million storm reserve to respond to future hurricanes under the plan the PSC approved. That was far less than the company had sought, AP said. FPL wanted to build a reserve of $650 million, arguing that forecasts call for more active storm seasons. Company officials noted that FPL had a reserve of about $350 million until the 2004 hurricane season.

The new surcharge, which customers are likely to see starting in August, will replace the $1.65 the company is currently tacking onto bills to recoup costs from the 2004 hurricane season, AP said.

FPL officials said they don't have an exact figure yet for how much customers will see added to their monthly bills. But PSC staff estimated the typical FPL customer using 1,000 kilowatt hours of electricity per month would pay about $1.05 a month under the plan - if there are no more huge hurricanes that cause the company to return to regulators to ask for more, AP said.