THE NEWS SERVICE OF FLORIDA: Crist says PSC jobs could hinge on FPL vote

This article was published by The News Service of Florida on September 14, 2009

By KEITH LAING
THE NEWS SERVICE OF FLORIDA

Gov. Charlie Crist has said before that he does not think the Public Service Commission should grant Florida Power & Light’s request for a $1.3 billion rate hike.

Monday he said he may not reappoint any sitting PSC commissioner who feels differently.

Speaking to reporters before an event commemorating Florida’s Missing Children’s Day, Crist said he did not agree with Sen. Mike Fasano, R-New Port Richey, that the hearings should be postponed because of a flurry of controversy surrounding potentially inappropriate communications between the utility and the commission.

But Crist, who has called the rate increase request “excessive,” said he will be paying close attention to the hearings as he considers appointments for the seats currently held by PSC Chairman Matthew Carter and Commissioner Katrina McMurrian.

“Let’s see what the commissioners want to do and then I can have a better handle on who to appoint or reappoint,” Crist said.

Asked by a reporter if he heard the not-so-veiled threat correctly, Crist said: “You did. Yeah. I’m trying to appoint members that will be sympathetic to the people and the economic challenges that they are facing. So that’s a factor, Of course.”

Carter and McMurrian recently survived the first step toward returning to the panel next year. Appointed by former Gov. Jeb Bush in 2006 for four-year terms that end this year, the pair were among the nominees sent to Crist by the PSC’s nominating council earlier this month.

Other candidates included former PSC inspector general John Grayson, University of South Florida Institute for Public Policy & Leadership director David Klement, Escambia County Sheriff’s Department Chief Financial Officer Benjamin Stevens III and former PSC staff attorney Felicia West.

Crist’s PSC deliberations – and the panel’s consideration of a $1.3 billion rate increase from the state’s largest power company – are taking place as the commission is being pummeled by conflict-of-interest questions that started when a PSC employee admitted attending at a party hosted by a senior FPL executive.

Allegations that the panel was too close to the companies it regulates continued to mount as one PSC commissioner fired her aide after newspaper reports that he had admitted giving his BlackBerry messaging information to an FPL attorney, which could allow the company official to text message the staffer during meetings, and two other aides were placed on administrative leave.

The various flaps caused Carter to defend his three-and-a-half year tenure at the helm of the PSC by identifying specific individual votes against FPL, which has not been accused of any wrongdoing. Late Friday, McMurrian proposed that PSC commissioners be held to the higher standards of courtroom judges instead of the looser norms for legislators, who are allowed to be influenced by participants.

“The commission was designed to be a quasi-legislative and quasi-judicial body,” she said in a statement. “At times, however, these two roles diverge with respect to rules governing our conduct and communications during various proceedings. Switching from one function to the other has become increasingly confusing and inefficient. Thus, in order to ensure consistency and clarity for how the Commission communicates with the parties that come before it, I believe a new set of rules is needed.”

Neither Carter’s nor McMurrian’s response was enough for Fasano, an outspoken critic of the PSC who said late last week that the panel should hold off on deciding FPL’s rate increase request and a similar $500 million bid from Progress Energy until a slew of internal and external conflict-of-interest reviews can be completed.

Fasano said Monday that Crist was right to say the rate increase votes would determine the fate of PSC commissioners.

“He’s laying the gauntlet down,” Fasano said in a telephone interview with the News Service. “He’s making it very clear that he’s opposed to these rate increases and that anyone who supports these ridiculous rate increases shouldn’t be sitting on the commission.”

Fasano plans to file a bill that would end appointments to the panel in favor of a return to PSC elections.

The PSC used to be elected in statewide elections. But beginning in 1979, the PSC was expanded from three to five members and they were appointed to the panel by the governor and had to be confirmed by the state Senate.

Proponents of the switch argued then that ending PSC elections would remove politics from the regulatory process, but Fasano said last week that politics never left, a suggestion seemingly proven by Crist’s Monday assertion that commissioners’ fates would be decided by their upcoming FPL vote.

But Fasano said that was OK with him.

“You could have two commissioners be reappointed and not have to worry about anything for four years,” he said. “(Lawmakers) have to come before the voters after we vote on things, so let’s see how they vote on this.”

A member of the Senate committee that will confirm Gov. Crist’s PSC appointments who has said he wants to question current commissioners under oath, Fasano said the PSC should implement recommendations from a 1992 grand jury investigation spurred by another swirl of charges of an improper relationship between the panel and FPL.

That inquiry, inspired by charges that the Southern Bell Telephone Company was unfairly keeping money that should have been repaid to customers and a sitting PSC commissioner resigning to take a job with an FPL affiliate, led to a report that echoed many of McMurrian’s recommendations.

“Individuals charged with responsibilities similar to those of a judge must conduct themselves in a manner that exhibits fairness,” the 1992 report said. “A judge cannot meet with one party alone to discuss an issue of importance if the judge is the final arbiter of that issue. Judges are required to avoid even the appearance of impropriety.”

“The important issues decided by members of the PSC include the interpretation, revision and development of rules related to ratemaking,” the report continued. “It is clear that the rulemaking function is an integral part of the ratemaking function. Since they cannot be separated, the procedures normally applied to rule makers must bow to the requirements applicable to members of the judiciary.”

However, the grand jury recommendations were largely ignored by the PSC and the Legislature, which instead asked the panel to craft its own communication rules. But Fasano said Monday that the recommendations should be the starting point for new reforms when lawmakers return to Tallahassee.

“At the start, we need to look at putting in place legislatively some of the 1992 grand jury recommendations,” he said.

FPL officials did not immediately respond to requests for comment Monday, but the company has said before that it is not accused of breaking any rules and that its rate increase request is reasonable. Company officials have also said they don’t expect the conflict-of-interest firestorm to make the PSC more inclined to vote against the request.

There will be opportunities for that theory to be tested this fall. In addition to the base rate cases, the PSC held hearings last week to determine whether or not the costs of new nuclear power plants planned by FPL and Progress Energy at Turkey Point and in Levy County respectively should be passed on to their customers. FPL wants to add 67 cents a month per 1,000 kilowatt hours to generate $62.7 million and Progress Energy proposes adding $2.38 per 1,000 kilowatt hours to bring in $236.4 million. The commission will also consider a $1.6 billion proposed FPL underground natural gas pipeline.

A decision on the nuclear cost recovery is expected in October and final rulings in the base rate cases are likely to come in November. All the new rates would take effect in January 2010.