Duke Energy Florida residential ratepayers will not have to pay about $75 a year each in surcharges to restore power and cover damages the utility absorbed during Hurricane Michael’s Category 5 romp across the Panhandle last October.
The Florida Public Service Commission [PSC] Tuesday agreed to allow Duke to use $223.5 million in savings from the 2017 Tax Cuts & Jobs Act to bolster its depleted storm reserve, following precedents set in similar agreements with Florida Power & Light [FPL] and Tampa Electric Co. over Hurricane Irma damages.
Duke, which provides electricity to approximately 1.8 million residential, commercial and industrial customers across central and north Florida, said it needed more than 5,500 out-of-state workers and suffered more than $200 million in damages in Michael’s wake.
Had the PSC, the state commission which regulates utilities, not allowed Duke to “repurpose” savings from federal tax reform – which lowered corporate income tax rates from 35 to 21 percent – residential utility customers would have paid an additional $6.95 per 1,000 kWh of electricity on a typical monthly bill.
According to the U.S. Energy Information Administration, the average U.S. residential customer uses approximately 909 kWh per month of energy, or around 10,909 kWh per year. This would have amounted to about $76.45 a year for the “average” residential ratepayer.
“Ratepayers are getting a tremendous benefit here from the tax savings,” PSC Commissioner Julie Brown said, thanking the Charlotte, N.C.-based utility giant for its “collaboration” with state officials in documenting damages, costs and “repurposing” offer.
PSC’s Tuesday agenda originally included a review of FPL’s – Florida’s largest utility with more than 5 million customer accounts – costs to restore power after Hurricane Irma.
In May, the PSC agreed to allow FPL to keep $772 million in “windfall” tax savings to cover the $1.3 billion it says it spent to restore power following Hurricane Irma.
The ruling was opposed by the Florida Office of Public Counsel [OPC], Florida Retail Federation [FRF] and Florida Industrial Power Users [FIPUG], which had petitioned the PSC to enforce its own policy requiring utilities to share savings from 2017 tax reform.
The commission – against the advice of its staff, which recommended FPL deduct Irma costs but pass tax savings onto ratepayers – ruled FPL can use the money to replenish a reserve account used to pay for Hurricane Irma’s costs, which it estimated at $1.3 billion.
The OPC, which represents state ratepayers before the PSC, prevailed on the commission to require FPL to provide in greater detail its costs related to Irma, which stormed across a wide swath of the state in September 2017.
But on June 6, FPL and the OPC jointly filed a proposed settlement with the PSC.
“The agreement fairly and reasonably balances the interests of FPL’s customers and FPL,” FPL and the OPC said in a motion asking the PSC to approve the settlement.
“Approving the agreement is consistent with the commission’s long-standing policy of encouraging the settlement of contested proceedings in a manner that benefits the customers of utilities subject to the commission’s regulatory jurisdiction,” the motion reads.
“Accordingly,” it continues, “OPC and FPL submit that the agreement is in the public interest, and respectfully request that the commission review and approve the agreement in its entirety and without modification.”
The FRF and FIPUG, however, declined to sign off on the agreement without a hearing before the PSC.
Earlier this month, the PSC issued an order accommodating them, rescheduling the hearing for July 9.
“Due process requires that both FRF and FIPUG be given an adequate opportunity to review the settlement prior to taking a position on it,” the order said.
FPL maintains it used money from a reserve to pay Irma restoration costs and needs the tax savings to replenish its reserve. Replacing the expended reserve with the tax “windfall” will mean customers won’t have to pay for Irma recovery costs, FPL said.