FPL

Hedging on energy contracts paid off for FPL last year. Its gross profits went up in spite of the fact that they had lost over 5,000 customers by mid-year due to customers affected by the recession thus less power consumption.

The company, saying that money doesn’t grow on trees, has asked for a $1.35 billion increase in base electric rate over the next 2 years. That amounts to a 12.5 % ROE and a 30% increase to its customers. If they don’t get the rate increase that they want, they say that modernization (capital projects) will halt and thousands of people will lose jobs. FPL’s biggest argument is that it gives exceptional value to its customers and it is the cheapest in the State. Customers will be paying $63 billion in nuclear costs next year.

In 2008, FPL had revenues of $16 billion and has over 15,000 employees in 27 States and in Canada. Collectively, FPL operates the third largest U.S. nuclear power generation fleet and is the number one producer of renewable energy. They will be building two new nuclear reactors near Miami at Turkey Point that will be built in 2021with a projected cost of $12 to $18 billion. Consumers will be paying for this now and a big percentage of them will not receive any value for this cost as FPL charges them years in advance of even obtaining any permits.

The CEO, Lewis Hay’s executive package was over $11.5 million a year in 2008.

Although we in Lake Worth have our own utility that has increased rates in order to operate its City budget, we all can relate to high energy costs. We hear of the neighbor that can’t afford his high electric bill. We learn of our neighbor whose electricity was turned off, not knowing that he had lost his job and was unemployed for 6 months but had always paid on time for years. When you read about corporate profits such as FPL’s and see what these executives are making along with the company plane, country club memberships and the “free lunch,” you have to wonder if regulators, who are continually lobbied and wined and dined themselves, are 100% looking after the consumer’s interests.

The Florida Public Service Commission says FPL should only get about one-quarter of the $1.35 billion and have asked the company to reduce in several areas such as executive compensation by $33.9 million. The rate hike comes up again on January 13 and the PSC will be voting on the amount of revenue it can collect.

I have often wondered how a company such as FPL can be the cheapest power in the State and its reliability 47 percent better than the national average when it spends so much. It seems to be an efficiently run company with energy conservation goals and they have a long-term plan for success by charging the consumer in advance.

It is just the exorbitant executive pay, stock options, that company plane and the big Christmas bonus that bothers me.