Florida Power & Light Company (FPL), a subsidiary of
NextEra Energy Inc.
), will increase the monthly rates for its residential customers
based on the rate proposal, which Florida Public Service
Commission ("FPSC") is currently reviewing and considering.
The commission is expected to provide a proposed settlement
agreement on December 13, 2012. There are two possibilities -
firstly, if the commission approves the rate in December 2013,
then the base rates would increase $4.10 from $43.26 in January
2012 to $47.36 and the fuel charges would decline from $51.36 to
$47.23. Overall, this would bring the total bill amount to
$94.59, down 3 cents per month from $94.62 in January 2012 for a
residential customer using 1,000 kilowatt hours. This would keep
the bill approximately flat with the current rate.
Secondly, the base rates, if approved, would increase $1.74 in
June, 2013 and $2 each in 2014 and 2016. However, taking into
account the reductions in fuel and other costs, the total bill
would only increase by 94 cents to $95.56 as of June 2016.
However, if the commission does not approve the bill till
December, under the original proposal, the base rates would
increase by $5.23 from $43.26 to $48.49 and Fuel & other
charges would decline from $51.36 to $47.58. Overall, this would
bring the total bill amount to $96.08, up 5 cents per day from
$94.62 in January 2012 for a residential customer using 1,000
kilowatt hours. This would increase the rate to $1.45 per month.
If not approved, the base rates would increase $1.86 in June
2013, resulting in a total rise of $7.09 in 2013. Taking into
account other adjustments, net increase as of June 2013 would be
$2.54 that would bring the total bill amount to $97.16 in June
2013. In this case, the company would intend to file new cases if
it wants additional base rate increases after 2013.
If the commission does not approve the settlement agreement in
December 2012 and later approves a base rate that is lower than
the amount implemented in January 2013, the company would refund
the difference with interest to its customers.
Also if the rates are not approved in December 2012, it would
result in a huge decline in the company's finances and liquidity
position as the company's ability to offset expenses by the use
of non-cash surplus depreciation is very limited in 2013 and will
also expire very soon.
Cash and cash equivalents as of September 30, 2012, were $246
million, down from $377 million as of December 31, 2011.
Long-term debts of the company as of September 30, 2012, were
$22.7 billion versus $20.8 billion as of December 31, 2011.
NextEra Energy is a frontrunner in the U.S. utility industry
providing efficient power and energy services across various
states. The company is committed toward maintaining solid
financials and favorable credit ratings. The approval of
rates would provide the state with lowest electric bills for at
least four more years. Going forward, increase in base rates
balanced by decline in fuel charges would keep the company as
well as the customers contented.
However, we remain concerned about the commodity price
sensitivities and possibility of negative outcome for the new
proposed rate settlement case.
Like its peers,
American Electric Power Co. Inc.
), the company presently retains a short-term Zacks #3 Rank
(Hold) that corresponds with our long-term Neutral recommendation
on the stock.
Juno Beach, Florida-based NextEra Energy Inc. is a public utility
holding company engaged in the generation, transmission,
distribution, and sale of electric energy. The company has both
regulated and non-regulated energy-related products and
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