HomeMy WebLinkAboutCC 1982-01-14 Discussion Item` . r 7 INTER -OFFICE MEMORANDUM V
to lion. Maurice A. Ferre
Mayor)
rtloM Geo c e F. Knox, Jr,
Cit Attorney
DAIF October 9, 1981 rlte
Florida Power & Light and
New Consumer Advocate
Position in Law Department
Ht I t Rt.tiI ".
I tirt r1511101 S
At the Public Works Department Budget hearing of Septem-
ber 2, 1981, you raised certain matters in connection with
Florida Power and Light billing procedures. All of these
concerns are addressed in the recent Public Service Com-
mission's Order Authorizing Certain Increases. Your concerns,
and the Public Service Commission's response to them will be
treated individually.
1. You expressed concern over FPL's advertising
budget. FPL requested $873,070.00 in advertising expenses
as operating expenses for ratemaking purposes. The PSC ap-
proved $749,281.00; sixty-nine percent of this amount is ad-
vertising in the general area of conservation.
2. You expressed concern over inclusion of ex-
penses of membership to clubs, entertainment and other activi-
ties. Staff members of the PSC have assured us that member-
ship to private clubs, etc.,, are not included in operating
expenses for ratemaking purposes. Industry association dues
for those associations involved in research (not lobbying)
are allowable. In this regard, FPL requested $1,523,104.00.
PSC approved $1,365,273.00.
3. You expressed concern over the cost of repairing
the I•larti.n Dam, which has been seriously damaged. FPL proposed
to include the casts of repairing the dam's breach and modifi-
cation costs in their operating expenses for ratemaking purposes.
The PSC noted that FPL was in litigation with the company that
built the dam. The PSC found that the costs arising as a result
of the breach to the dam should not be placed in the rate base
prior to the outcome of the litigation. However, PSC did allow
FPL to charge an allowance for funds used during construction
until the resolution of the litigation. Under that process,
the amount is capitalized and is eventually recouped in the
form of higher depreciation changes.
4. You expressed concern over including the costs of
construction work in progress in the FPL's operating expenses
~ 7
[ion. Maurice A. Ferre -2-
October 9, 1981
for ratemaking purposes. FPL requested a total $693,293,029,00
of construction work in progress in the rate base. The PSC
disallowed all of those costs related to nuclear projects, a
total of $471#966#874.00. They allowed a total of $221,326,155,00
in construction work in progress, reasoning that amount was
needed to provide the cash flow necessary and to insure FPL's
financial integrity.
As a result of your'inquiry, I have decided to institute a new
position in the Law Department: An Assistant City Attorney
will he assigned the duties of Consumer Advocate. -It is my
plan that this advocate will protect not only the City's posi-
tion, but will also protect the legitimate consumer interests
of all members of our community.
GFK/RJC/w13c/0
cc: Howard V. Gary, City Manager