The cost of power in Florida

It's time once again for us to take the Marketplace Economic Pulse. That’s our series where we check in with reporters from local public media outlets across the country to tell us about the economic stories they’re following in their communities and states.

This week, “Marketplace Morning Report” host Kimberly Adams spoke with Jessica Meszaros. She’s a climate and environment reporter at Florida’s WUSF. She and her team have been working on their own series called The Cost of Power, which explores why energy bills are so high in the Sunshine State. The following is an edited transcript of Kimberly and Jessica’s conversation.

Kimberly Adams: Jessica, you found in your reporting that energy bills in Florida have jumped by as much as 70% over the past 10 years. What explains that?

Jessica Meszaros: Yeah, bills are so high, mostly because of consecutive rate hikes. You know, it’s every three years or so, companies are allowed to ask for a rate hike, and sometimes they would, sometimes they wouldn't in the past. But it's been consecutive; every time, we know that they will. There's also something called pass-through costs and other surcharges, which have pushed up prices faster than household incomes. And then Florida — in particular, Florida utilities — they're allowed to make the most return on equity than anywhere else, according to my sources. Like Florida Power & Light — it's the highest in the country of any major utility.

Adams: Well, say more about the role of utility companies in all of this. That feels like quite the outlier.

Meszaros: Well, Florida has four major investor-owned utilities, and at the same time that these bills have been climbing, these investor-owned utilities made more than $6 billion in profits last year. Consumer advocates are pretty upset about that, and they think that profits should be capped, and that that's contributing as well to these bills rising.

Adams: What are some alternatives to this for-profit model?

Meszaros: Well, utilities can be run by a municipal government. We've seen that happen in Florida before. The last time was, I think, over a decade ago. But it can be costly. There are lawsuits. We know that two in particular in this region, in Saint Petersburg and in Clearwater, the cities were looking to remove themselves from Duke Energy Florida and run their own utility to bring down costs. But Clearwater decided to back off from that because the cost would be too much, in terms of that kind of transition and the lawsuits. But Saint Petersburg is still researching that, so that can be an alternative if the city is so willing. And we've heard from people in the community meetings during public hearings, saying that they want this.

Adams: Beyond the utility companies, there's also this government-appointed commission that is in charge of approving rate hikes. What have they been doing this whole time?

Meszaros: Yeah, so it's called the Florida Public Service Commission. It's five commissioners appointed by Florida's governor, and they've been accused of rubber-stamping a lot of these rate hikes and surcharges that have been tacked on. And there's been some call — like bipartisan support, really. Last year, we had two pieces of legislation — one from a Republican and one from a Democrat — trying to revamp this commission to get those caps on profits, as well as getting some people on the commission who specialize in utilities and specialize in the environment.

Adams: When the utilities are putting in for these rate hikes, what are they saying justifies it?

Meszaros: So, one of the big things is that Florida has the second-highest electricity consumption in the country, and the population keeps growing, so that leads utilities to continuously expand their rate base. And then also they're allowed to pass on capital expenditures onto customers, like when you build a power plant, for example. So, they're really incentivized to expand, but they're saying like, in order to expand, we need more money, basically.

Adams: This is affecting people all over Florida, but you and your colleagues focused on one man, Thaddeus Williams. Why did you feel it was important to highlight his story?

Meszaros: We felt it was important to highlight Thaddeus' story because, one, he's a renter, and electric bills don't just impact homeowners; it impacts everybody — people who rent, anyone who lives in Florida and pays an electric bill. And so, he's a 75-year-old retired veteran. He's living off Social Security, and he's also a single dad to an eight-year-old daughter. He pays about $200 to $300 a month for power, and it's his second-highest bill next to rent. Let's hear Thaddeus explain what he hears from his community members.

Thaddeus Williams: Everybody I talk to talks about, “Oh man, my electric bill is higher than it was last month,” and I know people who just wouldn't even pay the bill. They just said, “Well, I'm not gonna pay them.” And they live in the house with candles.

Adams: Candles, wow.

Meszaros: Yeah, it's important to note that Thaddeus himself turns off the lights and lives by candlelight to try to save on his energy bill. And he basically says sometimes his efforts don't work, and his bill has actually been higher sometimes after using less electricity.

Adams: How have communities been responding to these rising costs?

Meszaros: Over the past few years, community advocates have been rising and protesting the rising cost of electricity and taking it to county commission meetings and town halls, just where people can air their grievances and talk about what they're going through. And it just seemed to be something that the entire community was going through. So, we thought, let's do this series.

Adams: The midterms are coming up early next month. What, if anything, are you hearing on the campaign trail about this?

Meszaros: So, the four major investor-owned utilities in Florida, what we've been hearing is they've spent over $80 million in lobbying and campaign contributions.

Take Byron Donalds for example; he's the Republican frontrunner for Florida's governor. Donalds’ campaign received nearly $2 million from the four companies as of June. And one of my colleagues, Steve Newborn, asked him the question, you know, what he would do differently, and he thinks that the commission is running well, the Public Service Commission that's been accused of rubber-stamping these rate hikes and surcharges.

And so that's kind of what we've been hearing about in terms of when affordability is brought up. I wouldn't say like it's a front-and-center debate right now, but when it is brought up, electric bills come up.

Adams: You've written about clean energy alternatives as a way of possibly lowering costs. What's the prospect for those solutions?

Meszaros: While Florida is primarily using, let's say, 75% to 90% natural gas and about 10% solar, and they're looking to increase that as well, their solar input. What I didn't realize was that they're actually having to stabilize the grid. So, the more solar they put online, they're only utilizing it when the sunshine is out. So, to stabilize the grid when the sun is not out, they're putting on more combustion turbines to burn more natural gas, and that's expensive. And that also gets onto people's bills. So, it's not necessarily bringing down the cost; it's actually expanding the grid and could be increasing the use of fossil fuels while increasing people's bills.