Getting It Right- Florida’s Utility Oversight System Is Broken

7/10/08

During the past few days Florida Public Utilities in Marianna announced that they were enacting an 11.1% rate increase, effective July 29. The announcement included an address in Tallahassee where complaints or comments concerning this rate hike could be sent to the Florida Public Service Commission for consideration at their decision making meeting on July 1. The only problem in my instance was that I did not receive this notice until after the meeting was over. This late mailing of the notice might have been a clever technique used by FPU to reduce complaints.
This hefty 11.1% increase comes on the heels of the giant increase of over 40% enacted by this same company in January. That increase was preceded by several other increases that were granted in 2007. The Public Service Commission has conducted public hearings on some of these increases. However, at these sessions they merely sit politely and listen to the ranting of the poor citizens and then go back to Tallahassee, conduct a meeting and pass the requested hike. In my opinion it is all a public sham, and the state oversight system for controlling monopolistic utilities is not working.
The state allows the utilities to maintain a guaranteed, constant percentage of profit of approximately 5%. This means every time they can document a factor that has caused their cost to increase, they can request and obtain a rate increase. Thus, they are very happy when costs are rising, since their dollar profits will also increase. Would you rather receive a guaranteed 5% of $100,000,000 which is $5 million dollars, or 5% of $200,000,000 which is $10 million dollars?
Barring any "creative accounting", Florida Public Utilities will make record profits in 2008 and 2009. This record dollar profitability will come at the expense of their customers at a time when they are facing very serious declining financial conditions.
This is the same terminology game currently being played by the giant oil companies in the face of charges of pricing abuses for gasoline. They state that their percentage mark-up and percentage profits are still at the 4% level they have historically used. However, they are reaping huge amounts of record setting dollar profits since their costs have been increased by 700%. The federal government classifies this as "windfall profits", but that term never seems to be used when the same situation is applied to the utilities.
Why does the Florida Public Service Commission always seem to approve all requests made by the Utilities? Well here are some interesting facts:
• Of 19 former Commissioners, 10 became attorneys, consultants, or lobbyists for the utilities.
• The Commissioners are political appointees selected by the Governor. These are usually nominated by the state political party organizations, which receive hefty political donations from the utilities either directly or through various utility serving associations.
• Thus, the appointments are sometimes "bought" through the political process.
• Because the utilities donate heavily to the political party organizations, their appointees to the Public Service Commission would have a dept of gratitude to repay to the utilities they are regulating.
• Since 1996 Progress Energy has donated at least $512,000, Florida Power and Light $1.5 million, Tampa Electric, $2.4 million, Verizon $950,000, BellSouth $2.5 million, and A T & T $2.6 million. It is probable that Florida Public Utilities was also a member of this group of donors.
• Even Governor Charlie Crist made the statement while he was a candidate that the Commission was a "lap dog" to the utility industry.
• "The utilities appear to have a substantial control over the nominating council and the Public Service Commission", stated Walter Dartland who served on the nominating council for the PSC for many years.
In my opinion, the net result of all of this is that the utilities are able to exploit their monopolistic position and dig at their pleasure into the disposable incomes of the public. That is why Florida Public Utilities is able to implement harsh credit policies and a constant stream of rate increases.
What can the public do about this unfortunate situation? First you can determine the opinion of all of the candidates running for state representative or state senator relating to this situation. The members of the Public Service Commission were elected until 1978, when they were changed to political appointees. I believe the Commissioner positions should be returned to the election process. I feel that the state should be broken into fifteen utility districts, with a Utility Commissioner elected from each. The campaign financing for qualified candidates should be publically financed with all political donations to these candidates deemed to be illegal. Also, a more meaningful and responsive appeals process to contested decisions should be created.
As the system currently is operated, the public has little or no protection from abuses from these monopolistic utilities. The annual budget of the Florida Public Service Commission represents a $30 million dollar per year waste of valuable tax revenues. The oversight system is broken. This issue needs to be of concern to us all, regardless of which utility we have to deal with.
For those of you who are Marianna area residents and are customers of Florida Public Utilities, there is another issue about which I feel you should actively take a position. The franchise with the city for this utility comes up for renewal in 2010. As I understand it, the City Commission will have three options; (1) They can renew the franchise for another extended period, (2) They can open the issue for consideration by other utility companies that could purchase the infrastructure from FPU and assume the franchise, or (3) The city could purchase the infrastructure and operate the utility as a municipal electric utility. It is my opinion that Florida Public Utilities has dealt with its customers in an aggressive, profit driven manner, and the citizens it serves might be happier under another arrangement. In the meantime, just be prepared to continue to dig deeper into your family’s income as they exploit their potential profitability to the maximum.
Get involved if you are unhappy with your utility. It is only through the political processes that this situation will be corrected. Complaining to your utility or to the Public Service Commission is meaningless. Contact your state representative or senator.
RUDAMENTS – ODDS AND ENDS WORTH MENTIONING:
• Another horse in Jackson County, near Grand Ridge, has the bacteria which can lead to West Nile in humans. The Health Department wants us to never go outside at night, always spray with stinky, slimy spray, and drain all standing water from cans, tires, and boats. They conveniently ignore all of those expensive, ugly, and mostly unnecessary pools of water in those EPA regulated retention ponds scattered throughout every town. I would recommend filling in about 70% of those to get rid of our mosquito blight. In their infinite bureaucratic wisdom they have created a public health hazard for you and your family.
• County Manager Ted Lakey, and his Administrative Services Director Pam Pichard have informed me that although one of the proposals for the construction of the proposed County Administration Building was for $18 million, the selected proposal was only for $12 - $14 million. However, this did not include the cost of partitioning and preparing the third floor, nor the engineering, site preparation, and paving of the parking areas. In our front page article last week we used the amount of $18 million as the projected cost.
• Some members of our federal bureaucracy are beginning a movement to reduce the national speed limit to 55 MPH in order to conserve fuel. To me, this is a federal overreaction and is another example of using the power of what they perceive as a much wiser government to make decisions that should be made by the private individual citizen. If I am in a hurry and am willing to pay for the extra fuel cost for driving 70 MPH that should be my decision…not big brother’s.
• If all that the Marianna City Commission does is make those two small changes to their sign ordinances as a result of all of these meetings and workshops, all I have to say is "thanks for nothing". It is no wonder that so many empty, ugly, cracked store windows fronting Lafayette are seen as one travels through downtown Marianna. Their anti-business attitude is working. Webbville might have made a better county seat.