Under fire for overcharging Florida customers $6.6 billion in fuel costs since 2002, Florida's largest Investor Owned Utilities (IOU) agreed to reduce their fuel hedging program Thursday for the first time since the program began.
The decision by the Florida Public Service Commission allows the company to reduce the program that allows them to lock in fuel prices in advance by 25 percent but regulators rejected calls to eliminate the failed program.
The program, known as fuel hedging, has been a bad bet for customers since it began in 2002 after significant fluctuations in natural gas and oil prices led to unexpected increases in customers' utility bills.
Over that time, IOU’s locked in future fuel prices at high rates but then the market price dropped, leading customers to pay an estimated $6.6 billion more than the market costs.
In 2015, IOU’s charged customers $820 million more than the market cost for natural gas, according to PSC staff because of the hedging program and they are expected to lose another $560 million this year. FPL customers lost $504 million in hedging costs in 2015.
Lawyers representing utility customers urged regulators to discontinue the hedging program but the utilities argued they should only be required to reduce the program by 25 percent.
"The suggestion by the utility is putting a Band-Aid on a gaping gunshot wound and we would ask you to go further than what the utilities propose,'' said Jon Moyle of the Florida Industrial Power Users Group. "It's not working well for consumers. It's a big loser for consumers...Stop the bleeding."
"The cost of financial hedging activities still greatly outweigh any potential benefits that the companies may receive,'' said Eric Sailer of the Office of Public Counsel, which represents the public in utility matters.
Three PSC members said they would have preferred to see the company reduce the amount they hedge by 50 percent but instead agreed to the utility's request and approved the 25 percent reduction nonetheless.
"We are hedging now for 2017 and we are already pretty deeply into it,'' said John Butler, lawyer for FPL.