TALLAHASSEE - A settlement that will lead to rate increases for customers of Gulf Power in Northwest Florida was recently approved by state utility regulators.
The Public Service Commission unanimously supported the settlement agreement, which was initially announced March 20 but continued to be negotiated and was put forward Tuesday without opposition from customer groups.
The proposed settlement would lead to a base-rate increase of $62 million --- with a $54.3 million net impact to customers --- through the end of 2019.
"We're addressing a variety of issues here that probably would not have resolved this way through a litigated case," said Commissioner Ronald Brise.
The agreement was signed by the state Office of Public Counsel, the Southern Alliance for Clean Energy and the Florida Industrial Power Users Group, which represents large electricity users.
The Office of Public Counsel is an arm of the Legislature that represents consumers in utility cases.
Jon Moyle, an attorney representing the Florida Industrial Power Users Group, called the settlement a "fair deal."
"A lot of times, it's about getting the pot right and ultimately this pot, this settlement pot, got right," Moyle said.
Due to the settlement, about $7 is expected to be added to the monthly bills of typical residential customers who use 1,000 kilowatt hours of electricity a month.
Starting July 1, the monthly bills for such customers are expected to go from $144 to $151.
The initial request from the utility sought to boost the typical monthly bill to $158 as Gulf Power ---a subsidiary of Atlanta-based The Southern Company --- first sought to raise overall base rates by $106.8 million.
Jeff Stone, Gulf Power general counsel, called the settlement "a reasonable compromise of the positions held by all parties."
The utility previously said it would use the increased money to help pay for infrastructure improvements, including work on transmission lines and substations.
The settlement was not signed by the Sierra Club, the Florida League of Women Voters, the Federal Executive Agencies and Walmart. But representatives for each said they do not necessarily oppose the agreement.
Robert Scheffel Wright, an attorney representing the Florida Retail Federation and Walmart, said the Arkansas-based retailer thinks that a potential "return on equity" remains too high. But he added that "on balance we believe it's a reasonable settlement."
In the agreement, Gulf Power will have a targeted "return on equity," a measure of profitability, of 10.25 percent, down from the original proposal of 11 percent. Gulf Power also agreed to take a one-time $32.5 million write down on costs related to a Georgia power plant, known as Plant Scherer.
Gulf Power in the past has sold electricity from the plant on the wholesale market but now uses power from the plant for its retail customers.
The Pensacola-based Gulf is one of four major investor-owned utilities in Florida. It serves about 450,000 customers in eight Northwest Florida counties.