Public must come first at Florida PSC

Guest Blog | August 30, 2010 | Energy Policy
E. L. Jacobs, Jr.
E. L. Jacobs, Jr.

As a former chair of the Florida Public Service Commission, I am concerned that recent actions in Tallahassee to dismantle the PSC send the message that the views of the working and bill-paying public count for nothing. Those actions show contempt for balancing the interests of ratepayers with politics.

What other meaning could be derived from the fact that immediately following a vote against record rate-increase requests, four members of the PSC were removed and the public counsel who advocated for ratepayer interests was asked to reapply for his position?

A strong, independent and objective regulatory agency is necessary to oversee utility ratemaking and operation. The Legislature recognized that back in 1978, and it remains true today as utility services expand and grow more complex. Just look at your monthly bills filled with obscure surcharges and rising prices. But the recent actions to subvert the independence of the PSC threaten to undermine the agency’s credibility and erode public trust. At the moment, the balance seems to be shifting away from consumer protection and toward the utilities and big-money politics.

Many Floridians would be surprised at the breadth of the PSC’s regulatory mandate. It serves a critical function, affecting virtually every aspect of Florida society by overseeing companies that provide electricity, drinking water, sewage treatment, telephone service, high-speed internet connections and natural gas. These are public services we depend upon and for which we pay. But in return we expect rates to reflect legitimate expenses.

While on average Florida electric costs are relatively modest, ratepayers in Florida have seen their energy bills increase faster than in all but a few states. Most important, these ratepayers face fundamental changes in how these services will be delivered without a meaningful opportunity to weigh in. Amazingly, there is no constituency more closed off from Tallahassee decision-making than ratepayers.

One of the controversial items currently facing the Florida PSC is the 2010 Nuclear Cost Recovery Clause docket. Due to legislation passed by the State Legislature in 2006, utilities can charge their customers in advance for costs associated with pursuing new nuclear reactors. Both FPL and Progress have proposed building two new nuclear reactors (two at FPL’s existing Turkey Point plant near Miami and two by Progress at an undeveloped site in Levy County) for combined project costs of more than $40 billion. Last year the PSC approved more than $260 million in construction charges in advance of power production for the two utilities. Hearings at the PSC began on August 24, 2010 with a Commission vote set for October 12, 2010.   Sara Barczak, High Risk Energy Programs Director, SACE

Monopolistic industries cannot have control over these essential services without adequate and transparent government involvement. I believe strongly in the mission of the PSC, which is ”to facilitate the efficient provision of safe and reliable utility services at fair prices.” Fair is the operative word — fair to consumers as well as fair to those companies providing basic services. But recent actions to subvert the independence of the PSC threaten to undermine the agency’s credibility and erode public trust.

I congratulate the new appointees and look forward to the two pending appointments. However, I also encourage all five commissioners—including continuing Commissioner Edgar—to consider that they now hold a public duty that demands substantive and moral compasses that are honest and independent of utility persuasion.

Yes, there is imperfection and much room for improvement within the PSC. If you have doubts, I direct you to a series of reports published by Common Cause in 2004: A State Agency In Need of Reform: Florida’s Public Service Commission (Rpt. #1, Rpt. #2, Rpt. #3). You may also wish to review the following:

  1. Jan Beecher’s Energy Law Journal article,  “The Prudent Regulator,” addresses the recent trend in several states to intrude on the independence of the utility regulator and the impact of this conduct; especially, it considers the value of an independent commission and an independent staff.
  2. Mark Jamison of the University of Florida Public Utility Research Center published a case study on the disbanding of the Maryland PSC (FPL had a large role in this) based on a fight to force commission action on energy deregulation. In a followup column, he cited the impact on jobs.
  3. A University of California at Berkeley, Institute for Government Studies article asks, “Does Private Money Buy Public Policy?
  4. The Palm Beach Post report on the 2008 PSC public scolding of FPL for misleading the public and the Commission regarding its green program and a follow-up story offers some historical context.

Nonetheless, the PSC is the designated sheriff, and it controls the balance of interests between utility ratepayers and shareholders. The sanctity of the agency must be maintained by ensuring a fair and transparent process where integrity is paramount. Without this, I suggest that the recent incidents of ethical lapses, name-calling and backroom deals will produce a public outcry that says, ”Enough is enough!”

Floridians must step in and demand that the PSC not be a rubber stamp for utilities and their political allies. Its members must not be chosen for the certainty of their votes. Healthy discussions and differences of opinions are welcome, but we cannot lose sight of the fact that, first and foremost, it is the public that comes first in the Public Service Commission.
– Ennis Leon Jacobs, Jr. is former chair of the Florida Public Service Commission.  He serves on the Board of Directors for Southern Alliance for Clean Energy.

A similar commentary was published in the Miami Herald on August 11th, 2010. This version appears here with the permission of Mr. Jacobs.
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