- The Florida Public Service Commission has rejected a bid by the state's consumer advocate to closely consider utility fuel hedging programs when it makes decisions on the rates consumers pay for electricity.
- According to the Florida Office of Public Counsel (OPC), billions in hedging losses are being swept aside in rate proceedings, leaving consumers with the responsibility for bad utility bets.
- The PSC did, however, determine that the public advocate would be allowed to conduct discovery in any proceeding affecting rates and cost of service, despite concerns the decision could make the proceedings more expensive and time consuming.
Florida utilities are struggling to keep fuel prices down, and between bad hedging programs and unprofitable gas investments are leaving consumers with higher bills and billions more in fuel costs. According to Florida's public utility advocate, since 2002 hedging programs have lost $6.1 billion for customers. As the Tampa Bay Times reports, that's enough money to build three new gas-fired plants.
OPC had lobbied regulators to make the hedging losses a central theme in rate cases, but that request was denied because the commission determined the agency could present the evidence later in the year in another proceeding.
An OPC associate public counsel told the commission that it needed to "stop the bleeding and stop the utilities from wasting the public's money in their zombielike automatic hedging programs."
The commission declined to make hedging a central topic in rate proceedings, but it did determine that the advocate would be allowed to conduct discovery in any PSC proposed agency action proceeding affecting rates and cost of service. According to a statement from the commission, industry representatives argued that allowing OPC’s discovery "might increase rate case expense impacting customers." The PSC determined, however, that the state's civil procedure rules would address those concerns.
Fuel costs have been an issue in Florida of late, with Florida Power & Light investing directly in Oklahoma shale gas to try and keep costs down. But a new report from the utility shows that plan is not yet paying off, with about $6 million in losses so far this year and customers now expecting about half the projected savings.
Revelations about the program's efficacy could impact similar proposals. Duke Energy has reportedly been considering shale investments as well, hoping to use a similar system where customers would shoulder the risk of the investments.