Floridians may have a better chance of keeping their lights on after a major storm under legislation on its way Gov. Ron DeSantis. But they’ll likely pay for that protection with higher utility bills.
With little opposition, the Legislature backed a measure (SB 796) that will allow the private utility companies like Florida Power & Light Co. to directly pass along the cost of burying utility lines and other storm-protection measures to their customers. About 40 percent of the power lines for the state’s three largest private utility companies are now underground. The legislation would expand that. One rough estimate placed the cost of the new storm charges at $30 billion.
Utilities are among the most influential groups in Tallahassee, with legions of lobbyists. They say customers will benefit from underground power lines because it’s more likely the power will stay on during a storm, and crews will be able to restore power faster once the storm passes.
Opponents – including seniors on fixed incomes – say creating a separate “cost recovery” mechanism for underground lines and other “storm-hardening” measures will hurt consumers.
The legislation had bipartisan support during the 2019 session. Only four lawmakers voted against the final bill.
Some lawmakers say their constituents repeatedly called for more underground lines following a series of four damaging hurricanes since 2016 that caused widespread power outages.
One example: The state entity that regulates utilities, the Florida Public Service Commission, says that when Hurricane Irma swept across most of the state in September 2017, it knocked out 62 percent of Florida’s 10.5 million electric customers at its peak, and power was fully restored in about 10 days.
“This bill addresses a critical problem that we have in the state of Florida,” said Rep. Randy Fine, a Brevard County Republican who sponsored the House bill. “Namely when we have storms, the power goes out. It affects people’s lives. It affects people’s safety.”
Fine told the House Commerce Committee that the legislation will require the utility companies to develop 10-year storm-protection plans, and that any storm expenses charged to customers will be reviewed yearly by the Public Service Commission.
He said it will lead to the “vast majority” of Florida’s electric grid being protected from storm damage.
But opponents say allowing the utilities to collect a special storm recovery charge each year is not necessary. They say the utilities can continue to seek reimbursement for underground power lines through their base electric rates, which are subject to approval by the PSC.
Jon Moyle, a lobbyist for Florida Industrial Power Users Group, said allowing utilities to assess special storm-protection charges will have a series of negative effects. For instance, he said the legislation allows the companies to shift the cost of projects to their entire customer base, rather than having local governments and developers pay for the improvements, which is what happens now.
Moyle’s clients include major electricity users like pulp mills and chemical plants. He said the separate storm charge, which has profit built in for the utility companies, will be charged to customers annually. That’s different from how utilities charge customers now. Under current law, utilities have to get PSC approval for rate increases every four or five years, weighing a variety of factors. The legislation offers streamlined approval for utilities to charge customers every year for storm protection measures.
“It is a significant rate increase,” Moyle said. “It’s an annual (charge). So, every year they come in say ‘Here’s what we spent.’ There’s going to be a rate increase. And it’s going to go on for a very long time.”
The exact cost of installing more underground lines and hardening other portions of the statewide electrical grid is unknown. Utilities run by Florida cities were not included in the legislation.
But a House analysis cited Florida Power & Light’s three-year program to install 158 miles of underground lines for $100 million, or a cost of $633,000 per mile.
Moyle said, based on that estimate, it will cost FPL about $14.5 billion to bury all of its lines. Since the utility provides electricity to about half the state, Moyle said it would mean it could cost in the range of $30 billion to convert the entire state.
“It’s a big number for rate payers to digest,” he said.
Fine called Moyle’s estimate “ridiculous” and said the storm-protection costs would be spread out over decades. And he said the costs must be balanced against the economic loss that occurs when homes, businesses and schools go without power for days.
“There is the cost to do the upgrades, but think about the benefits,” he said.
Fine also acknowledged that creating a separate annual storm-recovery charge will be profitable for the utility companies.
“I’m OK if they make a little bit more money because my power doesn’t go out and the power of my constituents doesn’t go out and people don’t get hurt and can’t go to work,” he said.
Zayne Smith, a lobbyist for AARP Florida (which represents seniors), told legislators that her group opposed the bill because of its impact on residents who may be pressed to pay higher utility bills.
“AARP certainly supports a harder, stronger, more-resilient (electric) grid,” Smith said. “Our members depend on power more than probably many people do. But the way this bill is written will also shift costs to consumers more than it already is.”