Hermine, Matthew Spawning A Power Struggle

Oct 14, 2016

Hurricanes Hermine and Matthew are igniting a power struggle that could affect millions of Florida electric customers.

Difficult recoveries after Hurricanes Hermine and Matthew are prompting a powerful lawmaker to reconsider the way local utilities are regulated.

More than 80 thousand Tallahassee residents lost power when Hermine’s Category 1 winds struck in early September. But it was the relative handful still in the dark a week later that has incoming Senate budget chairman Jack Latvala worried.

“You know, sometimes it takes a natural disaster like this to point out stuff that maybe you should have known all along…”

The Clearwater Republican thinks the long wait for some Tallahassee customers is a sign locally owned utilities aren’t up to the job of storm recovery. A week after Hurricane Matthew slammed into Northeast Florida, some Jacksonville Electric Authority customers are still in the dark.

Latvala says he’s considering expanding the oversight of the Public Service Commission, which regulates big, investor-owned utilities like Gulf Power and Florida Power and Light.

“So there very likely will be some legislation that will do one of a couple of things. Maybe put the municipals under the purview of the Public Service Commission, maybe in terms of their rates, emergency preparedness, whatever.”

About a quarter of all electric customers in Florida are served by locally owned utilities or cooperatives. To them, Latvala’s call sounds like a storm warning.

Florida Municipal Electric Association executive director Barry Moline says finance and legal costs would skyrocket under PSC regulation.

“Anytime a utility engages with the PSC, you have to effectively lawyer up. You have to have a team of high-priced attorneys. It’s a judicial setting. And you have to have the proper representation.”

Moline says on average, local utilities charge customers 15 percent less than investor owned utilities. Wall Street likes the way local utilities are regulated, and changing that structure, Moline says, could raise the cost of borrowing money.

Tallahassee Mayor Andrew Gillum says his constituents wouldn’t stand for it. They like being able to hold locally elected officials accountable for their utility service, Gillum says.

“I think it would be a hugely unpopular idea for citizens in Tallahassee.”

Gillum knows how badly accountability can sting.

Governor Rick Scott, a Republican eyeing a future U.S. Senate bid, slammed Tallahassee’s recovery efforts immediately after Hermine. Gillum, a Democrat, accused Scott of leveraging a disaster for partisan advantage. It may have worked.

During Hurricane Matthew briefings, Scott refused to discuss utility regulations.

“I’m not getting into that.  I want everyone to get their power back. This is not the time for politics, what they should do. I just want everyone to get their power.”

Latvala isn’t the first to suggest putting local utilities under the PSC. Vero Beach Republican Representative Debbie Mayfield thinks it could solve an unusual problem in her district.

Most customers of the Vero Beach utility live outside the city, Mayfield says.

“You know we have sixty-one percent of our residents that are on the City of Vero Beach that live in the unincorporated area and they have no representation. It’s almost like a taxation without representation.

Municipal customers may pay lower rates than investor-owned utilities on average, Mayfield says, but not Vero customers. Mayfield says her constituents would welcome PSC rate-setting authority.

But critics say Vero Beach already has a solution, a 2008 law calling for a referendum on setting up a local utility authority. City officials say the law, which doesn’t mention Vero by name, doesn’t apply to their city. The bill was passed by Mayfield’s former husband, Representative Stan Mayfield, shortly before he passed away.

Mayfield has vowed to keep up the fight.