Occasionally one of my older children will get officious with a younger sibling. My response to the young autocrat is that if he wants authority to boss his younger brothers around, fine, but he’ll have to be held responsible for whatever they do. Invariably there’s a pause, and then a retraction. That normally stops it.
The state has the same sort of problem when they put significant restrictions on part of a market. Utilities, for example, are highly regulated, and market forces don’t apply in many places — they’re shorted to ground, so to speak. Rates are fixed for years in advance, and special exceptions must be sought and granted for unavoidable business problems such as changes in fuel costs or unusual events. When the state takes that authority, they have to deal with the situations which develop, and I’m glad to see the Florida Public Service Commission is taking the right approach.
Last year, Florida Power & Light and Progress Energy Florida had the undesirable task of rebuilding their electrical grid not once but three times in six weeks following hurricanes Charley, Frances, Ivan, and Jeanne. Both FP&L and Progress did an outstanding job restoring power after each storm, flying in repair crews from as far away as Montana and California and bringing lights back on for millions customers in a matter of days after each storm; Progress Energy alone replaced over 1200 miles of wire, 6600 poles, and 4000 transformers and picked up an industry award for their efforts (as did FP&L).
While the two utilities had accumulated a combined total of just over $390 million in state-mandated storm funds, the remarkable storm season racked up over $1 billion in recovery expenses. Still they made the extra effort, brought in the distant resources, knowing that whether they could recover the expenses or not would depend on a decision by regulators maybe months in the future.
Quite reasonably enough the two companies are looking for permission to add a surcharge to the bills of their 5.6 million customers. FP&L’s surcharge proposal, by the way, amounts to about two Diet Cokes a month for most customers — just over $2 while Progress’ is a bit higher ? say four Cokes’ worth. Still, the Public Service Commission has been petitioned by consumer advocates claiming the surcharge request is a dastardly attempt to beat the rate regulations.
While one can debate what a perfect energy market should look like, the fact is that presently FP&L and Progress Energy are businesses like any other, with payrolls, suppliers, and stockholders to satisfy, but unlike other businesses, having no real power to adjust their prices to reflect the impact of major disaster — or the cost of providing outstanding service. Since the state has taken a supervisory role over the finances of these businesses, the state should exercise the reasonable judgment of allowing them to at least try to balance the ledgers before the next storm season begins. As an employee of Progress Energy myself (though not an official spokesman), I’m glad Florida PSC is willing to let the utilities make their case.
