FPL Revives Capital Projects, But 425 Will Lose Their Jobs
The state’s largest power company, Florida Power & Light, announced Friday it will resume modernization efforts it threatened to discontinue after state regulators denied a $1.25 billion rate increase earlier this year, but about 425 employees will be laid off or take early retirement.
FPL, which serves South Florida and much of the Atlantic Coast, suspended work on its Riviera Beach and Cape Canaveral plants in January after the Florida Public Service Commission rejected most of its record rate increase request. The company said Friday it can move forward with the projects, though FPL president Armando Olivera said it did not mean the rate rejection was less harmful then predicted.
"Since the rate case decision, we have been downgraded by two rating agencies and are on negative watch by another,” he said in a statement. “We strongly believe that the Florida Public Service Commission underestimated the actual cost of FPL's equity in the recent base rate proceeding. This continues to be a source of concern to us. At the same time, an in-depth analysis has made it clear that the modernizations at Riviera Beach and Cape Canaveral continue to show a substantial benefit for our customers.”
The facilities will be completed as originally planned in 2013 and 2014. FPL said it will still delay a $1.6 billion natural gas pipeline the company proposed to build that the PSC ruled in a separate proceeding was too expensive, though the company said it would re-evaluate the pipeline again next year.
FPL had asked the PSC for a return on equity - the minimum profit margin the company is guaranteed - of 12.5 percent, but the commission took a populist turn in the wake of a conflict-of-interest scandal and approved a far lower ratio of 10 percent. The decision cut FPL’s increased profit margin to about $75 million, which Olivera said Friday will force the company to reduce its workforce by three percent.
The layoffs come at time when unemployment in the state has topped 12 percent, levels unseen in a generation. But Olivera said the layoffs, which he first suggested were possible immediately after the PSC decision, would not affect the company’s service.
“We had hoped to avoid the necessity of staffing reductions because we recognize the hardship this creates,” he said. “However, the most recent customer and sales projections for 2010 and beyond now have dropped even lower than the levels we had forecast as a part of our rate case filing, notwithstanding a short-term, weather-driven revenue increase in the first quarter.”
“New housing construction, which drives so much of our workload and growth, is at an all-time low - 69 percent below the levels we were seeing in 2007,” he continued. “We do not believe it will return to pre-2008 levels for a long time.”
FPL said about 220 of the eliminated positions will be buyouts for early retirees, and some positions will be filled later in the year, bringing the job loss down to 300.
"I recognize the hardship this creates for individuals, especially in a difficult economy, and I personally regret the impact of a job loss on any FPL employee," Olivera said.
The decision comes as lawmakers complete Friday a session that saw two members of the PSC who voted against the rate increases for FPL and Progress Energy rejected by the Florida Senate. The Legislature also appeared to have stalled legislation banning off-the-record communications between utility companies and PSC employees, which made headlines last year as the panel considered FPL’s rate increase.
The layoffs were announced Friday morning as lawmakers were consumed with the fast-moving final day of session, where the state’s $69 billion budget is up for a final vote and expected to be the focus at the Capitol.
A spokesman for Gov. Charlie Crist, who vocally opposed the FPL rate increase and doubted the company would lay people off in January, said that the layoffs would likely not change the governor’s stance on the company’s rates.
“I'm not certain the governor is aware they are moving forward with their capital projects, but I'm sure his previous comments still stand,” Crist spokesman Sterling Ivey said in an E-mail to the News Service of Florida.
With Crist having announced a populism-infused run for the U.S. Senate with no party affiliation, FPL’s decision to proceed with capital projects, but layoff employees, coupled with the Senate’s rejection of PSC Commissioners David Klement and Benjamin “Steve” Stevens, could become a potent campaign issue this summer.