How Ron DeSantis helped Florida Power & Light raise electricity rates by $5 billion

Florida's first-term governor did more than any other elected official to help the state's biggest power company raise rates on customers by nearly $5 billion over the next four years.

Sep 7, 2022

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It was June 2020, and J.R. Kelly was in trouble.

Kelly was a veteran consumer attorney who had, for the past 12 years, led Florida’s Office of Public Counsel, a small-but-critical state agency that’s sort of like a law firm that represents the public whenever big power companies come looking to raise electricity rates.

For more than a decade, Kelly had been battling the state’s monopoly utility companies on behalf of the people and businesses who are forced to be their customers — particularly Florida Power & Light, the biggest monopoly utility of them all.

Now, FPL was getting ready to ask for another round of rate increases. And the Florida Legislature, where most lawmakers take money from FPL, had just passed a bill to help the company by getting rid of Kelly.

But there was still one person standing in the way: Florida Gov. Ron DeSantis.

The Republican governor could have saved Kelly’s job by vetoing the bill and coming out in support of one of the few public officials in Tallahassee who had proven willing to stand up to Florida Power & Light.

DeSantis signed the bill. Kelly resigned a few months later. And soon after Kelly left, the man hired to replace him as Public Counsel helped FPL negotiate a nearly $5 billion rate increase — the largest rate-hike the state of Florida has ever approved.

Signing the bill to oust Florida’s longtime Public Counsel was just the first of several steps DeSantis took that paved the way for FPL’s record-setting rate increase — an exceptionally generous deal that allows the company to earn fatter profits than other power companies, shifts costs off of businesses and on to households, and aims the biggest price hikes at people living in Pensacola and other communities across Northwest Florida.

In fact, no other elected official in Florida did more to help Florida Power & Light land its $5 billion rate increase than DeSantis — who is now running for re-election and who, campaign-finance records show, has raised more than $3 million from FPL and a network of big-business front groups and dark-money nonprofits that the company helps to fund.

So who’s in charge anyway?

We’ll come back to why getting rid of the old Public Counsel was so important in just a bit.

But first let’s talk about who, exactly, is in charge when FPL or one of the state’s other private power companies wants permission to raise rates.

Technically, the decision is up to an agency in Tallahassee known as the Public Service Commission. Most people call it the “PSC.” You can think of it like a court where power companies, the Office of Public Counsel and other organizations battle it out over proposed rate increases.

Presiding over this court are five PSC commissioners. They’re the judges who have the ultimate power to approve, reduce or deny a rate hike.

But those five PSC commissioners are each chosen by the governor.

Now, the Florida Legislature plays a big role here, too. The governor must pick from a pool of nominees submitted by a legislative committee. And the governor’s selection must then be confirmed by the full Florida Senate.

But the governor has enormous leverage over individual lawmakers. So the governor has far more power over the PSC appointment process than anyone else.

PSC appointments are some of the most important decisions a governor makes. They’re also some of the most coveted jobs in Florida politics — partly because they come with a public salary of $143,000 a year.

Consumer advocates have been warning for years that the PSC has become little more than a rubber stamp for the state’s big power companies, who, in addition to industry giant FPL, also include Duke Energy and Tampa Electric Co. A watchdog group called Integrity Florida even declared in October 2017 that Florida’s Public Service Commission had been “captured” by the power companies.

And yet, DeSantis has made the Public Service Commission even friendlier territory for FPL.

Stacking the deck

DeSantis did this through his PSC appointments — particularly his first one.

PSC commissioners are appointed to four-year-terms, and they can serve up to three consecutive terms in all. And in the summer of 2020, a PSC commissioner named Donald Polmann was approaching the end of his first term.

An engineer who used to work with a municipal water utility in Tampa, Polmann had been put on the PSC by former Republican Gov. Rick Scott. He’d been generally supportive of FPL and other utility companies. But he sometimes bucked them, too.

In July 2018, for instance, Polmann voted against a request from FPL to make the company’s customers — rather than its investors — foot the bill for FPL’s $185 million purchase of the city of Vero Beach’s electric utility. And in November 2019, Polmann voted against a bid by FPL and other power companies to slash energy-efficiency goals.

Even the Energy and Policy Institute — another watchdog group that is often critical of both FPL and the Public Service Commission — had noted Polmann’s independent streak. “Polmann has been vocal in questioning utilities’ proposals, often extensively,” the group wrote in an August 2020 report.

Polmann had applied for second a term on the PSC. But DeSantis decided to go in a different direction.

In August 2020, DeSantis replaced Polmann with state Rep. Mike La Rosa, a Republican from the Orlando area. Term limits were about to force La Rosa out of the state House — where he had been one of Florida Power & Light’s most reliable allies in Tallahassee.

For instance, in 2015, La Rosa helped FPL kill legislation that would have made it a bit harder for power companies to ram rate increases through the Public Service Commission. One proposal would have strengthened the power of the Office of Public Counsel. Another would have forced PSC commissioners to hold more public meetings around the state.

The Florida Senate tried to add both ideas to a broader bill dealing with utility regulation. But FPL opposed them. And La Rosa, who sponsored the House version of the legislation, made sure neither idea made it into the final bill.

A few years later, La Rosa was put in charge of the House Commerce Committee. That’s an important position, because the Commerce Committee handles legislation that affects electric utilities. La Rosa used his post to help FPL.

In 2019, La Rosa helped the company pass a bill that made it easier for FPL and other power companies to make money off of storm-hardening projects, like burying power lines underground. FPL executives told Wall Street that the legislation presented an “opportunity” for the company worth up to $35 billion.

And in 2020, La Rosa leaned on the Public Service Commission to approve a controversial new solar construction program that FPL had proposed. The PSC’s own staff had recommended that commissioners reject it, in part because the program would favor a small group of customers over everyone else. The Office of Public Counsel opposed it, too. PSC commissioners sided with FPL anyway.

A few months after that, DeSantis picked La Rosa for the PSC.

DeSantis made three more PSC appointments during his first term.

In May 2021, DeSantis tapped Gabriella Passidomo to fill an open seat. Passidomo was, at the time, a 29-year-old lawyer who had graduated from law school two years earlier. She was working as a $48,000-a-year PSC staffer when DeSantis decided to make her a $143,000-a-year PSC commissioner.

She was also the daughter of one of the most important politicians in Tallahassee: State Sen. Kathleen Passidomo, a Republican from Naples who is expected to become president of the Florida Senate after the November elections. Campaign-finance records show that Kathleen Passidomo has raised more than $150,000 from Florida Power & Light and its parent company, NextEra Energy, over the course of her legislative career.

And in September 2021, DeSantis made two more PSC picks when he decided to reappoint incumbent commissioners Andrew Fay, a lawyer and former staffer in then-Attorney General Pam Bondi’s office, and Art Graham, a former member of the Jacksonville City Council.

The PSC formally approved FPL’s $5 billion rate increase later that fall. All four of DeSantis’ appointees voted for the deal. (So did the fifth PSC commissioner, a holdover Rick Scott appointee.)

Co-opting the consumer advocate

This brings us back to the Office of the Public Counsel, the state agency that is supposed to look out for the public’s best interests before the Public Service Commission.

To understand why DeSantis’ decision to sign the bill ousting J.R. Kelly as Public Counsel was so important, it helps to recall what was happening at the time — and the full sequence of events that followed.

This bill passed during the 2020 legislative session. That was significant because Florida Power & Light was approaching the end of an existing rate agreement that the PSC had approved back in 2016. Everybody knew FPL was likely to apply in 2021 for new rate increases that would take effect starting in 2022

The initial version of the legislation would have barred anyone from serving as Public Counsel for more than 12 consecutive years. That number wasn’t picked at random: J.R. Kelly had just completed his 12th year as Public Counsel. So this would have kicked him out of the job immediately.

It was also clear that powerful forces wanted this bill to pass. It was personally sponsored by Sen. Wilton Simpson, a Republican from Pasco County who was about to become the president of the Florida Senate. (Simpson is now running for election as Florida’s commissioner of agriculture — bankrolled by hundreds of thousands of dollars from FPL.)

The original plan drew intense criticism from consumer advocates, newspaper editorial boards and others. So before the Legislature passed it, Simpson tweaked the bill to make the 12-year term limits prospective. That meant Kelly could have, in theory, remained as Public Counsel for another 12 years.

This was a fig leaf. That’s because the bill still required the Florida Legislature to hire a new Public Counsel by early 2021 — again, just before FPL was going to come looking for its rate increase.

Sure, Kelly was free to reapply for his job. But there was no chance the Florida Legislature was going to hire him again. The incoming Senate President had made it clear that he wanted Kelly gone — and there are a bunch of state legislators in both political parties who take tens of thousands, and sometimes hundreds of thousands, of dollars from FPL.

This is why Kelly’s fate was sealed when DeSantis signed HB 1095. That’s not just an opinion, either. Kelly himself says he wouldn’t have resigned if this bill hadn’t become law. “If the statute creating the term limits for the Public Counsel’s position had not been enacted, I would not have considered retiring in January 2021,” Kelly said.

(DeSantis, by the way, tried to bury his role in all this. The governor waited to sign the bill until the evening of June 29, 2020 — hours after he’d staged a public press conference to sign that year’s state budget, which DeSantis knew would consume the political media’s attention.)

After Kelly stepped down, the Legislature needed to hire a new Public Counsel.

Remember: This is one of the most important consumer-protection positions in all of Florida government. Yet the Legislature considered just one person for the job: Richard Gentry, a longtime lobbyist in Tallahassee whose clients had included Associated Industries of Florida — a big-business lobbying group that gets much of its money from Florida Power & Light.

Gentry was hired as Public Counsel in February 2021. The very next month — just like everyone expected — Florida Power & Light filed its application with the Public Service Commission to raise electricity rates.

This application process is known as a “rate case.” And rate cases usually take several months to complete, because the power company, the Office of Public Counsel and other interested parties need time to gather evidence and make their arguments to the PSC commissioners.

It initially looked like the Office of Public Counsel might continue to pose a problem for FPL under Gentry. The office brought in expert witnesses who testified that, not only should FPL be denied a rate increase for 2022 — the company should be forced to lower its rates by $71 million.

But just a few months later, after a round of secret negotiations, FPL announced that it had struck a deal with the Office of Public Counsel and several other parties. The four-year settlement agreement allowed FPL to increase rates by $692 million in 2022 — and by nearly $5 billion over the full four years.

In a matter of weeks, the Office of Public Counsel had flipped from arguing that FPL should reduce rates by $71 million in 2022 to endorsing a deal letting FPL raise rates by $692 million instead.

In a filing before the PSC, Gentry called the settlement a “a give-and-take global compromise” that was good for FPL customers because the company didn’t get as big a rate increase as it had initially asked for. (Gentry also told a website controlled by FPL consultants that he’d “bargained heavily” for more solar power.)

Having the Office of Public Counsel sign on to the settlement agreement was a coup for FPL. And not just because that made it easier for PSC commissioners to approve the deal.

Because here’s what happened next: Shortly after the PSC signed off on FPL’s $5 billion rate increase, a coalition of consumer groups filed a lawsuit asking the Florida Supreme Court to reject the deal, arguing that it allows FPL to charge far higher prices than it should.

But FPL is now using the Office of Public Counsel as a shield.

In a legal brief, lawyers for Florida Power & Light argue that the Supreme Court should uphold the company’s $5 billion rate increase in part because the Office of Public Counsel supports it. And that must mean it’s a good deal for customers, they say, because the Office of Public Counsel represents the public.

“In signing on to the settlement, OPC represented its view, on behalf of all FPL customers, that the settlement is in the public interest,” FPL’s lawyers said.

The Florida Supreme Court has yet to rule. But it’s probably worth noting that DeSantis has also appointed four of the court’s seven justices.