Florida Power & Light (FPL), the largest utility company in the United States, has requested a $9 billion increase in customer rates over the next four years from the Florida Public Service Commission (FPSC).
This request has raised alarms among affordability advocates, who warn that it could become one of the largest rate hikes in U.S. history.
In 2024, FPL reported a net income of $4.543 billion, or $2.21 per share, while its parent company, NextEra Energy, posted a net income of $6.946 billion, or $3.37 per share. Base rates, which determine the price customers pay for electricity, are central to this request. These rates typically include various charges, such as fuel costs and other state-approved fees that cover expenses like hurricane recovery.
Additionally, the filing proposes increases for solar and solar energy storage projects planned over the next four years. A unique aspect of FPL and NextEra Energy’s operations in Florida is the state’s requirement for guaranteed profits for their shareholders, regardless of market conditions. The new plan would raise the guaranteed return on equity (ROE) to 12%, up from 10.6% in 2021, which is higher than the national average of 9.5%.
“Why should retirees in Miami subsidize Wall Street investors?”
As the largest utility in the U.S., FPL serves approximately 11.89 million customers. If the FPSC approves the proposed rate increase, customers would see their base rates rise by about $12 next year. By 2027, this could translate to an increase of approximately $19 per month.
What is NextEra Energy?
NextEra Energy is a major American energy company, with a generating capacity of about 58 gigawatts (GW) and 2024 revenues exceeding $24.8 billion. It is the world’s largest electric utility holding company by market capitalization. Its subsidiaries include Florida Power & Light (FPL), NextEra Energy Resources, NextEra Energy Partners, Gulf Power Company, and NextEra Energy Services. NextEra aims to increase its dividends by 10% annually through 2026, according to investor reports. Florida’s regulatory environment allows utilities like FPL to seek rate adjustments from the FPSC to maintain pre-approved profit margins, regardless of economic conditions.
What is Florida Power & Light (FPL)?
Florida Power & Light, the largest subsidiary of NextEra Energy, provides electricity to roughly 11.89 million people, serving nearly half of Florida. It is the third-largest electric utility company in the U.S.
Why Is FPL Seeking a $9 Billion Rate Hike?
FPL argues that the rate increase is essential to invest in its electric infrastructure, noting that the cost of components and labor to upgrade this infrastructure has risen significantly. The company is also seeking adjustments under the “Solar and Battery Base Rate Adjustment (SoBRA)” mechanism to cover costs related to solar generation and battery storage.
What Will This Rate Increase Mean for Customers?
Under FPL’s proposal, typical residential customers would pay about $12 more monthly in base rates next year. These increases would continue each year for four years, leading to a monthly increase of around $19 by 2027—adding hundreds of dollars to annual bills.
Who Approves the Rate Hike?
The Florida Public Service Commission (FPSC) is responsible for regulating utilities in the state, including electricity, natural gas, and water services. The FPSC is composed of five commissioners appointed by Florida’s Governor and confirmed by the Florida Senate. A 2022 analysis revealed that utilities have won 92% of their FPSC requests over the past decade, raising concerns about the commission’s accountability and responsiveness to public concerns.
“The FPSC acts as a rubber stamp”
Why is the FPSC Seen as Pro-Business and Anti-Customer?
Critics argue that the FPSC often approves rate hikes that benefit utility companies at the expense of consumers. The commission’s decisions are frequently criticized for prioritizing the profit margins of utilities over the financial well-being of households already facing rising living costs. The FPSC’s approval process has been scrutinized for its lack of transparency and perceived bias towards industry interests.
Forward Together
FPL’s request for a $9 billion rate hike has ignited a critical debate about the balance between utility profitability and consumer affordability in Florida. The outcome of this issue will affect millions of residents and may set an important precedent for future discussions on utility rates. As the process moves forward, the independence and effectiveness of regulatory bodies like the FPSC will come under greater scrutiny. Public engagement with elected officials and participation in public comment periods will be crucial as the decision-making process unfolds. The final decision could have lasting effects on electricity rates in Florida for years to come.
Source: Newsbreak