FPL customers could see monthly bills hiked $4 or more to pay for Hurricane Ian restoration

The bill for Hurricane Ian continues to mount, even for those who remained well outside of its path of destruction.

As property insurers tell Florida homeowners to brace for Ian-related rate hikes next year, Florida Power & Light said it expects to seek $1.1 billion in electricity restoration costs from its residential customers, officials of the utility’s parent company, NextEra Energy, told investors during the company’s third-quarter earnings call.

Pending approval by the Florida Public Service Commission, all 4.6 million of FPL’s residential customers could soon see surcharges of $4 or more added to their monthly bills to cover costs of restoring power to 2.1 million customers.

The surcharge would be the latest in a string of steep cost increases shouldered by FPL customers in recent months.

Under terms of FPL’s current four-year rate agreement, the utility is allowed to collect $4 for every 1,000 kilowatt-hours of power used by residential customers.

That’s the consumption level that FPL says is “typical” for its residential customers, but many customers, especially families in larger houses, pay much more each month. Their surcharge will be pro rated based on how many 1,000s of kWh they consume.

In addition, because the restoration cost exceeded $800 million, the rate agreement allows FPL to seek more than $4 per 1,000 kWh, Kirk Crews, NextEra executive vice president and chief financial officer, said during the earnings call.

FPL’s $1.1 billion estimate was preliminary and subject to a review by the Florida Public Service Commission, Crews said. About $220 million of the $1.1 billion would be used to replenish FPL’s storm reserve, he said.

FPL has not yet decided when it will submit its request to the PSC, FPL spokesman Christopher McGrath said by email on Tuesday.

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Richard Gentry, who represents ratepayers as Florida’s Public Counsel, said the request will face questions by members of the Public Service Commission and analysis by an independent auditor.

Assuming FPL submits its surcharge request by the end of the year and it’s approved by the PSC, the surcharge could begin appearing on bills next spring, Gentry said.

The $1.1 billion that FPL estimates it cost to restore 2.1 million accounts is only 18% less, not adjusted for inflation, than the $1.3 billion FPL determined it spent restoring power after Hurricane Irma struck the state in 2017.

Irma knocked out 90% — or 4.4 million — of FPL’s customers. Ian knocked out less than half that amount.

Although FPL planned to impose surcharges for the post-Irma restoration, it ultimately agreed to absorb the cost from revenue generated when corporate tax rates were reduced from 35% to 21% in 2017.

McGrath gave several reasons that the restoration costs are comparable even though the number of restored outages are not.

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“Ian’s strength and approach from the west, for example, generated substantially more coastal storm surge than Hurricane Irma, which approached Florida from the south,” he said.

Ian impacted the state for 72 hours and also inundated inland communities along both coasts with long-duration flooding — “delaying our ability to get into certain areas,” he said.

“Generally and historically speaking, labor and logistics are the biggest drivers of storm-cost expenses — from mobilizing and pre-positioning a restoration workforce from numerous U.S. states to keeping workers fed, housed and equipped leading up to, during and after a storm.”

And in the five years since Hurricane Irma struck, costs of labor, food and other supplies critical to a storm response have all significantly increased, McGrath said.

Crews pointed out in the earnings call that FPL’s transmission and generation infrastructure sustained minimal damage. The company did not lose a single transmission pole or tower and its generation facilities, including 38 solar sites exposed to storm conditions, “sustained almost no structural damage,” he said.

[ RELATED: Get ready for your FPL bill to go up by $20 or more per month in January ]

McGrath said that FPL has not yet calculated the number of months its residential customers will have to pay the surcharges.

They would be imposed on top of two other adjustments this year that significantly raised the price of enduring Florida’s heat this year.

On Jan. 1, the first of four annual rate increases approved under FPL’s latest four-year rate plan took effect, increasing that “typical” 1,000 kWh bill from $101.70 to $113.85, excluding local taxes and fees.

An additional pass-through adjustment reflecting higher costs of natural gas used to fuel power-generation plants throughout the state further increased that typical bill by $6.82 a month, increasing it to $120.67.

In addition, the second of the four annual increases is slated to take effect in January. This one will increase that typical bill another $2.33. If a $4 surcharge is approved and takes effect by spring, that 1,000 kWh FPL customer will be paying about $127 — a 25% increase since December 2021.

That bill could get even bigger if FPL asks for another fuel-cost adjustment. In April, the utility told the PSC that it continues to face higher-than-expected costs for natural gas. It said it would not immediately seek an additional adjustment but reserved the right to do so in the future.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at rhurtibise@sunsentinel.com.