Thursday, October 30th, 2014

Scott-O-Meter

Lower electricity costs for business


"Address Florida's relatively expensive electricity costs."


Updates

Data points to a drop for businesses but hard to quantify total dollars

Gov. Rick Scott wants to reduce the pain of electricity costs for business.

"Address Florida's relatively expensive electricity costs so businesses could save approximately $3.25 billion," Scott wrote in his 7-7-7 campaign plan in 2010.

In 2011, we rated Scott's promise In the Works for the progress he made on short-term savings to businesses' energy bills.

We wanted to check his progress after the Legislature's session in the spring of 2013.

This is not a simple promise to measure because there are dozens of utilities across the state. Florida's Public Service Commission regulates the rates of a handful of the largest ones. Also, there are various ways to measure electricity bills -- base rates only or the total bill -- for various sized customers and different points during the year.

J.R. Kelly, who works in the office of the public counsel, suggested that we examine customers' base rates. There are other types of charges that are included in the bill and the big one -- fuel -- could go up or down regardless of any actions by Scott.

The Public Service Commission sent us charts showing charges for different sized businesses for a handful of utility companies including Florida Power & Light -- the largest one in the state -- for December 2010, 2011 and 2012. Note that is not an average for the year; it is the cost for one month of the year. We started the clock ticking in 2010 before Scott took office as a base comparison to see if rates dropped while he was in office.

We looked at both small and large businesses and the components of the bills that PSC told us would add up to the base rate. We did not find any significant differences during Scott's tenure.

The PSC also shows the combined charges for commercial/industrial customers in comparative rate statistics reports. We looked at FPL as an example -- the largest provider -- and again found little change.

FPL spokesman Mark Bubriski shared data with us that reflected full years of averages -- unlike the PSC reports that reflected only one month.

Their data showed how rates have changed for different sized businesses since 2010. For the small businesses, on average the bill dropped by about 7 percent between 2010 and 2013. For the medium to large commercial businesses the savings were about 15 percent. The costs includes base and fuel charges, plus other surcharges.

In 2011, the PSC signed off on a request by FPL to offer discounts to large businesses to lure them to Florida. Hertz will save about $125,000 over four years through that discount, Bubriski said.  

Susan Glickman, a clean energy lobbyist, told PolitiFact Florida in an email: "The governor has done nothing to reduce energy costs for consumers -- businesses or residential. In fact, by supporting new nuclear, he has in fact done the opposite. He has done nothing to encourage efficiency or homegrown energy sources."

So what are we left with here? Clearly some businesses have seen their electricity bills drop, but it's difficult to pinpoint why they dropped and by how much. Fuel costs, for example, go up or down regardless of any actions by Scott. Some evidence suggests that overall electricity costs haven't changed significantly. We also did not find evidence to show that the savings added up to $3.25 billion.

If we find more evidence, we'll look at this promise again. For now, we rate it Compromise.

Sources:

Public Service Commission, Comparative rate statistics reports, 2010-2012

Florida Power and Light, Comparison of business rates for 38 utilities, 2010-13

Interview, John Tupps, Gov. Rick Scott spokesman, May 10-June 3, 2013

Interview, J.R. Kelly, Office of the Public Counsel, May 15, 2013

Interview, Cindy Muir, spokeswoman for the Public Service Commission, May 22, 2013

Interview, Erin Gillespie, spokeswoman for Florida Agriculture Commissioner Adam Putnam, May 15, 2015

Interview, Susan Glickman, clean energy lobbyist, May 23, 2013

Interview, Mark Bubriski, FPL spokesman, May 29, 2013

Gov. Rick Scott advocates lower energy costs for businesses

Gov. Rick Scott's campaign plan to create 700,000 jobs in seven years included a focus on reducing "unnecessary costs" on businesses.

One target was Florida's "relatively expensive electricity costs." Addressing those costs, his plan said, could save businesses approximately $3.25 billion.

That's no simple task when prices are determined largely by how utilities produce energy -- and how utilities produce energy is based on decisions made years before that electricity's ever produced. In Florida, a recent study out of the University of Florida highlighted the state's higher reliance on natural gas than neighboring states, which has seen price fluctuations, pushing costs up. Paying ahead for new nuclear plants pushes them higher still. (Heck, simply living on a peninsula boosts costs.)

"The sources of high rates and high bills are deep and pervasive," said Scott Hempling, a national expert in utility regulation who teaches at Georgetown Law. "They can't get fixed in one generation."

What has the governor accomplished so far?

• Opposed a bill that would have let investor-owned utilities charge ratepayers up to an additional 2 percent of their annual revenue for renewable energy. It would have allowed utilities to raise customer bills to cover investments in renewable energy. It failed for a third straight legislative session in April 2011.

• Supported a Public Service Commission decision to roll back rules that encourage energy conservation. The rules required customers to pay for conservation programs. (A policy adviser for the governor said the programs were too expensive; clean energy advocates said the programs could have been cheaper, and that rolling them back ignored long-term savings.)

• Supported a plan by Florida Power & Light, the state's largest electric utility, to offer discounts to new commercial and industrial customers — boosting other customers' bills to pay for it. 

• Named an energy adviser, Mary Bane, to produce a state energy plan. It was projected to be done by late summer 2011, but such a policy is still in the works, according to the Governor's Office. "Gov. Scott feels a comprehensive energy policy for Florida is something that is needed for the state," spokeswoman Jackie Schutz said. "Gov. Scott looks forward to working with the Legislature and the Department of Agriculture and Consumer Services to develop such a plan."

(The Department of Agriculture and Consumer Services is involved because Scott and the Legislature this summer eliminated the Florida Energy and Climate Commission from the Governor's Office, creating instead an Office of Energy in the Agriculture Department. That introduces a new layer of collaboration with agriculture commissioner Adam Putnam.)

Just how large a role might a governor play in addressing energy costs?

In Florida, the five-member Public Service Commission regulates investor-owned utilities based on state law set by the Legislature and governor. The governor appoints commissioners, who are confirmed by the Senate. (Scott chose to reappoint four commissioners in his first year: Art Graham, Ronald Brise, Eduardo Balbis and Julie Brown.)

So, according to Hempling, a governor might lead through legislative proposals that make consumers less dependent on utilities, by opposing legislation that commits to major power plants that could be avoided through conservation, by welcoming federal regulatory efforts to make wholesale competitive markets work, by proposing ways for the PSC and Legislature to welcome diverse energy suppliers, by establishing professional standards for the PSC and its staff and by persuading the public that some investments now will help their bills in the future.

Recent governors used their stature to wage high-profile energy initiatives, according to long-time Tallahassee clean energy lobbyist Susan Glickman. Gov. Jeb Bush moved toward deregulation. Gov. Charlie Crist focused on reducing greenhouse gases.

"The role of the governor is really whatever the governor wants to make of it," Glickman said. "The governor can be a game-changing leader if they want to."

So far, Scott has focused on narrow policy initiatives, most of which focused on short-term savings to businesses' energy bills. We'll be watching to see how the governor's state energy plan shapes up. Bane, the governor's energy adviser, has been "meeting broadly with stakeholders," Glickman said.

As we wait for a broader blueprint — and steps toward implementing it — we'll rate this promise In the Works.

Sources:

E-mail interview with Jackie Schutz, spokeswoman for Governor's Office, Dec. 9-19, 2011

Interview with J.R. Kelly, Office of Public Counsel, Dec. 16, 2011

Interview with Susan Glickman, clean energy lobbyist, Dec. 16, 2011

E-mail interview with Scott Hempling, Georgetown law professor, former executive director of the National Regulatory Research Institute, Dec. 17, 2011

Public Utility Research Center, University of Florida, "Addressing the Level of Florida's Electricity Prices," Sept. 28, 2011

St. Petersburg Times, "Puzzled by the price of power?" Jan. 16, 2011

St. Petersburg Times, "Progress Energy customers are helping to pay for a nuclear plant they aren't likely to benefit from," Sept. 4, 2011

Florida Public Service Commission, Comparative Rate Statistics as of Dec. 31, 2010

Florida Public Service Commission, "Facts & Figures of the Florida Utility Industry," March 2011

Florida Public Service Commission, "Florida Public Service Commissioner History," accessed Dec. 16, 2011

Florida Senate, SB 2156: Governmental Reorganization, accessed Dec. 16, 2011

Florida Department of Agriculture and Consumer Services, Office of Energy, accessed Dec. 16, 2011

St. Petersburg Times' Venture blog, "Key challenge after Duke Energy-Progress Energy merger? Managing politics of rising electric rates," Nov. 11, 2011

St. Petersburg Times' Venture blog, "At PSC, chairman Graham's mantra for governing energy world is keep it cheap, keep it basic," Aug. 3, 2011

Miami Herald, "Regulators roll back rules requiring FPL to encourage energy conservation," July 26, 2011

Miami Herald's Naked Politics blog, "Scott commends FPL's discount for companies that bring jobs," July 26, 2011

Miami Herald's Naked Politics blog, "Scott to weigh in on energy policy with less conservation, more renewables," June 23, 2011

Miami Herald's Naked Politics blog, "Renewables bill dies of its own weight -- for the third consecutive year," April 26, 2011

WTSP.com, "Proposal by Governor-elect Rick Scott's transition team could mean higher electric rates for consumers," Dec. 27, 2010