Supreme Court Overturns Regulators on Utility Costs

The Florida Supreme Court on Thursday overturned a decision by state regulators about how a utility could recoup costs from customers for a construction project.

The 5-1 ruling stemmed from a 2015 request by Florida Public Utilities Co. to collect money from customers for an interconnection project with Florida Power & Light.

The relatively small Florida Public Utilities Co. does not generate its own power, which it buys elsewhere. Florida Public Utilities Co. in 2014 entered into a settlement agreement at the state Public Service Commission that established base electric rates for customers. A year later, the company proposed recovering the interconnection-project costs through what is known as the “fuel clause,” a part of customers’ bills that changes each year to address variable expenses. The interconnection project was designed to help the utility provide electricity on Amelia Island in Northeast Florida.

The Public Service Commission approved the utility’s request to recover the money through the fuel clause, but the decision drew a legal challenge from the state Office of Public Counsel, which represents consumers. The Supreme Court majority ruled Thursday that such costs should be recovered through base rates, rather than the fuel clause. “We do not believe that the fuel clause is an end-all-be-all of cost recovery, but rather its history suggests its use should be limited to facilitating recovery of costs related to fuel and power purchases that are volatile, rendering them less than ideal for a base rates case,” said the majority opinion, written by Justice R. Fred Lewis and joined fully by Chief Justice Jorge Labarga and justices Barbara Pariente and Peggy Quince.

“Today’s case is certainly not the first example of utilities seeking to recover for items that are more properly base rate costs through the fuel clause in a practice that has become alarmingly frequent.” Justice Ricky Polston agreed with the result but did not sign on to the majority opinion. Justice Charles Canady dissented, arguing the 2014 settlement agreement did not prevent Florida Public Utilities Co. from recouping the money through the fuel clause. Justice Alan Lawson, who joined the court at the end of December, did not take part in the decision.

Reposted with permission from The News Service of Florida

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