Tuesday, January 19, 2010

Florida Power & Light suspends long-term projects, hints at job cuts

TALLAHASSEE, Fla. - Florida Power & Light and its suppliers on Jan. 14 denounced state regulators' decision to reject nearly all of the company's $1.3 billion rate increase, calling the ruling politically motivated and short-sighted, though business and consumer groups hailed it as sound.
Florida Power & Light, which spent $6 million and 10 months lobbying state regulators to raise the rates its customers pay by $1.3 billion, on Jan. 13 got virtually nothing.
The Public Service Commission unanimously rejected the company's request to raise its base rates 30 percent, allowing an increase of only $75.4 million - about 75 cents a month on a 1,000-kilowatt-hour bill.
The commission dismissed nearly every major issue FPL raised, saying that in a better economy the company might have done better. “Utilities are just going to have to make do in these difficult economic times,” said Commissioner Nathan Skop.
Because of a reduction in fuel costs, FPL's 4.5 million customers will pay about $13 a month less for 1,000 kilowatt hours in 2010 than they did in 2009 for the same amount of electricity. The savings take effect this month.
The commission rejected every major piece of FPL's argument - from its request to be allowed to award $49 million in executive compensation to its request to be able to set aside an additional $150 million for future storm damage. The commission also rejected the recommendation of its staff - which suggested the company be allowed to raise its rates $357 million.
FPL focused on the impact the decision will have on potential jobs, announcing on Jan. 13 that the company will suspend about $10 billion in planned capital projects in Florida over the next five years.
Among the suspended long-term projects: the construction of two new reactors at the Turkey Point nuclear plant, a natural-gas pipeline, modernization of the Riviera Beach and Cape Canaveral plants and upgrades to its transmission and distribution systems.
FPL said it will continue to seek a license from the Nuclear Regulatory Commission for the nuclear reactors, but it won't take any steps toward construction beyond what is required to receive the license.
Officials remained silent about any layoffs, but the company made plans to internally broadcast a town hall-style meeting with employees.
Public Counsel J.R. Kelly, who represented customers in the rate case, said that the commission's ruling should have no impact on employee jobs because the ruling allowed the company to continue collecting the revenues it needs to provide safe, adequate and reliable service at a quality level.
In Orlando, Siemens Energy said the decision could threaten 250 jobs it had intended to create as part of a contract to supply gas turbines over the next five years and provide service to FPL's Riviera Beach and Cape Canaveral plants.
The head of FPL's parent company said the PSC's decision to reject all but $75.4 million of the company's request indicated a worsening regulatory environment that has already started to scare off investors.
FPL and Progress Energy had asked for a $500 million rate increase but got nothing from the PSC during a Jan. 11 hearing.

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