Res No 103-12-13660RESOLUTION NO. 103-12-13660
A Resolution of the City of South Miami, Florida, opposing
the proposed base rate increase by Florida Power and
Light; authorizing the mayor to file this resolution with the
Florida Public Service Commission; providing for
distribution by the City Clerk.
WHEREAS, Florida Power and Light ( "FPL ") provides electricity within the City
of South Miami ( "City "), and the City and its residents have no alternative but to purchase
services from FPL; and the City government purchases electricity from FPL to power City
Hall and numerous municipal buildings in order to provide services to residents; and
WHEREAS, the residents and businesses of the City must also purchase electric
service from FPL; and
WHEREAS, the City, its residents and businesses continue to face a depressed
economy with limited resources wherein jobs are being lost, incomes and revenues are
static or declining, and home mortgages are being foreclosed, requiring the City, its
residents and businesses to live within their means and budget accordingly; and
WHEREAS in March 2012, FPL proposed a 16% base rate hike in order to ensure
up to a 12.5% return on equity for its shareholders, currently at 11.25 %; and
WHEREAS, FPL benefits from more pass - through cost recovery mechanisms
than any other regulated utility in the United States of America, including the Storm Cost
Recovery Surcharge, the Fuel Cost Recovery Clause pass - through, the Environmental
Cost Recovery Clause pass- through, the Capacity Cost Recovery Clause pass - through, the
Conservation Cost Recovery Clause pass - through, and the Nuclear Cost Recovery Clause
pass - through, which pass - through mechanisms increase FPL's current cash flow without
the scrutiny employed in a traditional rate case; and
WHEREAS, currently, approximately 52% of the rates paid by FPL customers are
paid pursuant to these cost recovery mechanisms instead of through base rates; and
WHEREAS, in 2009 the Florida Public Service Commission ( "PSC ") awarded
FPL only 7% of its requested base rate relief, yet FPL continued in 2010 and 2011 to
report substantial earnings growth, including an increase of 14% in 2010 and 13% in
2011; and
WHEREAS, October 4, 2010, the PSC Staff recommended that the PSC order
FPL to hold $400 million for possible refund to customers and that the PSC investigate
over earning by the company, however the customers never received a refund; and
WHEREAS, the proposed rate increases will adversely affect the residents of the
City and further strain limited resources.
Res. No. 103-12-13660
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA, THAT:
Section 1. The foregoing "WHEREAS" clauses are hereby ratified as true and
correct and are incorporated herein by this reference.
Section 2. The City hereby objects to and opposes the Public Service
Commission ( "PSC ") approving FPL's request for a base rate increase.
Section 3. The Mayor, or an alternate member of the City Commission if the
Mayor is unavailable, is authorized on behalf of the City to file this Resolution with the
PSC and present this Resolution opposing the rate increase at any public meeting,
conference or hearing, including those scheduled for the purpose of discussing or
considering any matters under consideration in PSC docket number 120015 -EI
Section 4. The City Clerk is hereby directed to distribute a copy of this
resolution via mail to the PSC Clerk, Attention: Docket 120015 -EI, 2540 Shumard Oak
Blvd., Tallahassee, FL 32399 -0850, and via electronic mail to the PSC at
contact@psc. state. fl. us
Section 5. If any section, subsection, sentence, clause, phrase, or portion of
this Resolution, or application hereof, is for any reason held invalid or unconstitutional by
any Court, such portion or application shall be deemed a separate, distinct, and
independent provision, and such holding shall not affect the validity of the remaining
portions or application hereof.
Section 6. All Resolutions made in conflict with this Resolution are hereby
repealed.
Section 7. This Resolution shall be effective immediately upon its adoption.
Passed and adopted this 1 st day of May , 2012.
ATTEST:
C CLERK
READ AND AP'PWVED AS TO FORM,
LANGUAG �GA1..1TY AND
SUFFIC Y: r
RNEY
Page 2 of 2
APPROVED:
Igmil
• '� y L
COMMISSION VOTE:
3 -2
Mayor Stoddard:
Yea
Vice Mayor Liebman:
Yea
Commissioner Newman:
Nay
Commissioner Harris:
Nay
Commissioner Welsh:
Yea
Dr. Hector Mirabile
Manager, City of South Miami
6130 Sunset Drive
South Miami, Florida 33143
Dear Dr. Mirabilef
I am writing to make you aware that today we filed the required petition, testimony and
data supporting our request for a January 2013 change in base rates.
With the proposed base rate increase and the latest estimates for fuel and other
`components of electric service,- FPL's typical 1,000 -kWh residential bill is projected to
increase by about$2.48 a month, or about 8 cents per. day compared with today's bill.
This includes the proposed base rate increase of $6.97 a month, or about 23 cents a
day, offset in part by an estimated $4,49 a month net decrease in. other components-,of
a typical 1,000 -kWh residential customer bill in 2013.
Most small businesses, which comprise more than 80 percent of all commercial
customers in FPL's territory, would see little change in their bills in 2013. Ih fact; many
would actually see a net decrease on their bills based: on currently.projected reductions
in the fuel charge and other bill components, more than offsetting the base rate
increase.
The increase would not take effect until 2013, and we expect that, even with the
change, our customer bills will still be the lowest in the state and well below-the national
average.
In fact, from 2006 to 2012; FPL's 1.,000 -kWh residential customer bill has decreased 13
percent. FPL's business customer bills have decreased, on average, 14 percent during
the same time period.
Also today we launched a new, online calculator atmww.FPL:eom /.answ.ers.,so that
residential customers can see the impact on their bills of the company's requested rate
adjustment. Business customers also will find updated information on this site.
Key elements underlying the company's request include:
• The need to address the impact of the accelerated amortization of non -cash surplus
depreciation, which was part of a 2010 base rate case settlement and which was a
temporary solution to avoid a base rate increase
• Cost recovery for the new Cape Canaveral Next Generation Clean Energy Center,
which will use 33 percent less fuel per megawatt-hour of power generated
• The impact of inflation on the cost of many materials and products needed to provide
affordable, reliable power
Florida Power & Light Company
4200 West Flagler Street, Miami, FL 33134
Florida Power & Light Co.
Media Line, 305 -552 -3888
March 19, 2012
FOR .t.MM EDIATE .REI.EAS.E
Florida Power & Light Company files request for base rate increase
• Total bill impact, for 9, 000 -kWh residential customer expected to be about 8 cents a day
• Company launches online tool so residential customers can calculate their personal bill impact
• Despite increase, typical FPL customer bill expected to remain lowest in state and lower than
the national average
JU:NO BEACH,•Fla..— Florida Power & Light Company today filed its formal request for a base rate
increase with the Florida Public Service Commission: (PS.C). The requested.increase would not take
effect until Jan. 1, 2013.
Today's filing was consistent with the company's notice to the PSC in January that an adjustment
would be necessary because the company's existing rate agreement, which effectively froze base
rates for three years, expifes at the end of 2012.
FPL expects that, even with the change, its customer bills will still: be the lowest in the state and, well
below the national average.
The company is requesting a base rate increase of $6.97 a month, 'or about 23 cents a day,: on the
base portion of a typical 1,000 =kWh residential customer bill offset in part by an estimated $4.49 a
month net decrease in other components of a typical bill, including lower fuel usage, lower fuel
prices and other adjustments.
As a result, the typical residential customer'bill would increase about $2.48 a month, or about 8
cents a day — a 2.6 percent increase,:
The adjustment'is needed to pay for increases in: the cost of doing business and to begin paying for
a new, high - efficiency natural gas power plant after it enters service In June 2013, The plant will use
considerably less fuel t6 generate electricity, which in turn helps to keep customer bills low over the
long term and reduces the impact of the base rate request,
s.
"We've worked hard to minimize the required increase, and we're committed to working equally
hard to make sure our customers continue to have the lowest electric bills in the state, excellent
reliability and top -notch customer service. In today's - competitive economy, clean, low -cost, high -
quality electric service is an advantage for our customers and our state," FPL President Eric Silagy
said.
The majority of FPL residential customers use less.than 1,000 kilowatt -hours of electricity a month,
although usage varies from household to household.
To enable residential customers to see the specific impact on their bills based on their individual
use of electricity, FPL launched a new, online calculator at._wwwFPL.com/an.sw..er Residential
www.FPL.com /bill
Explaining your residential electric bill
Below are explanations of the items related to your monthly_ electric bill. The Florida Public
Service Commission (PSC) regulates each non -tax item.
Customer charge *: A fixed monthly amount to cover
the cost of providing service to your location. This charge
includes the cost of the meter, billing and providing customer
service. It is applicable whether or not electricity is used.
Fuel charge *: The cost for fuel required to provide each
kilowatt -hour (kWh) of electricity. FPL makes no profit on
fuel costs, which are adjusted at least once a year.
Non -fuel charge *:
» Base energy charge: The costs other than fuel to
produce and deliver electricity, including the cost of
operating power plants, and maintaining the grid.
» Energy Conservation Cost Recovery Charge
(ECCR): Cost of programs designed to reduce electric
demand and consumption through efficiency measures
n Capacity Payment Recovery Clause (CPRC):
Cost for purchasing electricity from non -FPL owned
resources as well as certain nuclear - related expenses.
» Environmental Cost Recovery Clause (ECRC): Cost
to meet environmental laws and regulations.
Storm charge *: Used to repay the:bonds and taxes issued
during the 2004 and 2005 hurricane restoratipn efforts and
to partially replenish the storm damage reserve fund for
future storms.
Gross receipts tax *: A tax of about 2.56 percent on a
customer's electric bill that is paid to the State of Florida.
Other taxes and fees: Vary by area, with amounts not
established by FPL. FPL collects these fees and taxes for
distribution to the appropriate entities and does not profit
from them.
» Franchise fee *: FPL competes with municipalities and
county governments for the right to serve customers. If
a local government chooses, it can enter into a contract
with FPL that enables the government to charge
residents a contractual amount, the franchise fee, In
exchange for its agreement to not form an electric utility
for the term of the franchise.
» Utility /municipal tax *: A tax imposed by a municipality
or county government on the sale of electricity.
Base rate: Consists of the customer charge and base
energy charge and is not a separate item on the bill.
Items listed on the bill
"" Based on currently available comparisons of the state's 55 utilities
21938
South Miami municipal FPL bill $204,856
FPL Franchise Agreement pass- through
payment to City of South Miami $1,197,000
Franchise fee effective rate 5.29%
Estimated annual FPL bill for all South
Miami rate payers (excl county bldgs) $22,832,455
Median residential bill
$94,62
base portion of bill
$48.49
proposed rate increase
$6,97
expected fuel savings
($4.49)
net bill increase
$2.48
Total annual FPL bill for all South
Miami ratepayers:
Return to South Miami economy from
FPL's projected fuel savings without rate
increase $1,083,468
Net cost to South Miami economy from
rate increase (factoring in FPL's
projected fuel savings) >�
Increased return to FPL from rate
increase (to benefit shareholders) at
expense of South Miami rate payers $1,681,909
total bill
100.00%
7.37%
-4.75%
2.62%
rate portion
100.000Z