It does become a bit boring to continue to respond the Post’s lack of understanding of basic economics. The Post continues to claim that electricity should be essentially free much as they seem to believe that FEMA funds come from trees.

The Post asks if better maintenance would have reduced storm damage. The answer is: probably. However, additional maintenance is not free. It will come as a surprise to the Post to learn that maintenance is included in the basic rate. If the basic rate has not increased in two decades, the amount of maintenance will also not substantially change. This is the old Fram commercial: “pay me now or pay me later�. The Post, however, doesn’t seem to believe we should ever pay. This is to deny basic economics.

Next, the Post complains about subsidizing the cost of providing an infrastructure for new customers. However, the Post never bothers to investigate the cost of providing the new infrastructure versus the payback period. If FPL actually had the option of refusing to provide service to these new customers, FPL could develop a business case to determine if it is a good opportunity and decline those that were not. However, they really don’t have that choice. Somehow, the economically illiterate editorial board believes that FPL should be forced to enter a money losing proposition rather than recoup their costs. Again, we could take the impact fee approach and push all the cost of the new infrastructure to the new customers, but so far Florida has not taken that approach. If the Post thinks that is a good idea, talk to the legislature.

Finally, the Post glosses over the difficulty of building new electricity plants. Everyone wants them, but not in their backyard. California caused their own problems by denying permits to build new electricity plants in the state and then regulating the consumer cost of electricity regardless of the wholesale price. This was not an Enron problem. Watching the Post complain about the cost of electricity and urging the PSC to deny price increases merely reflects the good judgment of FPL in building new plants rather than trying to buy on the wholesale market. The Post would be in high dudgeon if the wholesale price of that approach were to be passed on to the consumer. The Post notes that base rate revenues have doubled in two decades, but revenues are not profits. The casual observer wonders why the Post does not look at what happened to the costs of providing electricity over those same two decades. Even the same casual observer would not expect the costs to have remained static. But, maybe, in “Post World� the costs went down.

Look guys, these are not difficult analyses. It is fine to complain, but before you do, you need to understand the basics. Once again, the Post doesn't and is found wanting.

Rick

Hi again, Rick:

The FP&L corp.is a profit making venture and has investors known as stock holders who are supposed to take some of the risk. - Only they don't.

They have gotten profits from the firing of workers and the cutting back of services.

Here is a snippet from Randy Shultz' last column on the subject. I know you saw it, you responded to it..

FPL is allowed to make a decent profit in return for delivering affordable, reliable power. It is not supposed to make an excessive profit at the customers' expense. Fact: In August, FPL will have asked for three rate increases in less than a year, and a fourth request may come. Fact: FPL Group stock has outperformed the Dow Jones Industrial Average by almost 60 percent over the past five years.

Mr. Broadhead retired in 2001, not long after FPL Group paid $62 million in bonuses to him and a few other executives for a merger that fell through.

For a man that is NOT an economics major, and has already professed to being an FP&L shareholder, I marvel at Rick's ignorance.
There are so many people reviewing articles in the Post I doublt he could call the whole newspaper organization ignorant. His cheap thrill is blurping his opinion out in a blog, otherwise he has no facts.

Rick, from reading five years of Florida PSC documents of hedging, fuel nuclear add ons from the PSC and glorious depreciation benefits from power plants that they NEVER had the numbers for a "determination of need" to provide additional plants, you know nothing. Stop embarassing yourself.

Once again, Crist came in too late, will stand in his "citizens of Florida" speech like he did with the phone bill testimony and offer no concrete evidence.

And we might ask Charlie Crist, why did your office in 2003 omit four pages of complaints with the Ethics Comnission director against PSC Chairman Lila jaber before her Jan 2004 hearing? And why did he POSTPONE the SEARUC commissioner referral (including Jaber and Braulio Baez) to the Divn of Administrative hearings for NINE MONTHS in 2004 ? He allowed the legislature to write a bill, as WendY Holt said from the house rep utilities committee, with Jeb's office input, to insure the DISMISSAL of their complaint. His office ALLOWED the DOAH in Jun 2005 to release the SEARUC complaint to the Ethics Commission who promptly dismissed it.

We can't have an AG talk about people's justice and deny a day in court to those who might be guilty. Especially when my SEARUC report with 65 plus new emails shows perjury on the side of Jaber and Baez. The emails I have are riddled with Jaber and Baez' office co-ordination on PSC dockets with the Governor's. It's nice Crist takes care of the Governor's friends who give big business favors on the PSC dockets. I am over the dog and pony show.

Carol, it is good to hear from you again. We will take yours (and Randy’s) points one at a time. I will try to use FPL for the regulated utility and FPL Group for whole company.

First, you seem to have fallen into the same trap the Post did in their first editorial. FPL is the regulated utility that we know and love. FPL is a wholly owned subsidiary of FPL Group which also includes a wholesale producer of electricity (FPL Energy) and a fiber and cable service company (FPL Fibernet). So, stockholders of FPL Group own all three.

In the olden days, utilities stocks were for widows and orphans. There was little capital growth, but healthy, reliable dividends. That is not the case now. The dividend yield is 3.7%. That is about 50% of what yields used to be. There is risk and competition in building power plants for wholesale. There is also risk in laying fiber cable. Ask Global Crossing. I had 1000 shares (at 55 cents / share) thinking there was no way they could go bankrupt with all that fiber in the ground. Poor thinking.

Randy mentioned the increase in share price since 2001. Peggy pointed out that FPL was on the bankruptcy watch list in the 1990’s. With better management (and rate increases) they are now solvent. However, if you look at the last quarterly report for FPL, revenues went down by 1.2% even though the number of retail customers went up by 2.3%. FPL claims that was due to the weather. Utilities are at the mercy of the weather and that includes hurricanes. However, it looks as if the market believes that the wholesale production of electricity and their fiber business are growth business. Hence, the P/E is now 18.3. That is higher than the historical P/E of a stand alone regulated utility. It is difficult to know how much of the share increase was due to increased productivity and profitability of FPL compared with the other businesses of FPL Group. But, please do not make the same mistake as Randy of comparing apples to oranges to grapes.

Additionally, the growth of the FPL Group share price is trailing that of the industry. It shows only 50% of the industry growth. Besides, we already know that the editorial board of the Post (to be charitable) does not have a firm grasp on either economics or mathematics.

I am not sure what you mean by “…firing of workers and the cutting back of services�. I am still getting electricity which is the service I really want. What other services do you miss? Would you want to pay more for electricity so that FPL can keep unneeded workers?

As far as Mr. Broadhead, I don’t know of too many people (besides Mr. Broadhead) who thought those bonuses were a great deal. It was a time of CEO excess that has been, happily, reigned in.

Rick

Ah, I see Peggy slipped in her "ad hominems" and venom.

I am not embarrassed. My 112 shares of FPL Group stock is hardly a major influence on my thinking. I belive my arguments, unlike some postings, are logical and coherent. I would much prefer to live in the FPL service district than the Lake Worth service district.

Peggy seems to believe that if one did not major in economics, it is not possible to understand economics. That may be true for some. But, for we who majored in theoretical mathematics, it is no hill for a climber.

Ta Ta

Rick

Hello again, Carol and Peggy,

I enjoyed your posts, but they left me a little confused. First, Carol, you seem to be quoting another Post writer (Randy Schultz) as proof that this writer is correct. My initial reaction was, "so what?" All that really proves is that they both think the same. It doesn't prove that either one is right or wrong. It just proves they agree.

As to the specifics you quote from Schultz' column, he accuses FPL of making an "excessive profit," but never tells us how much profit they made -- or why it's excessive. The capital-letter "Facts" that he proudly harrumphs are completely irrelevant.

For instance, the "Fact" that FPL has asked for rate increases is trotted out triumphantly, as if it proves their profits are "excessive." Maybe they are, maybe they aren't, but this "Fact" doesn't prove it one way or the other. He's just grandstanding.

His other "Fact" looks at how FPL's stock price has performed compared to the Dow Jones Industrial average. Again, so what? The Dow Jones Industrial average includes everything from automakers to software companies. Why compare their performance with FPL's?

What's more, as anyone with even the slightest understanding of finance understands, a company's stock price and its profits are two completely different things. You could tell me that FPL's stock has outperformed the Dow Jones Industrials by 60 percent or 6,000 percent, it wouldn't mean a thing. It has nothing to do with whether FPL's profits are "excessive." To turn down FPL's rate request because its stock price has gone up would be like your boss turning down your request for a raise because the value of your home has gone up. One has virtually nothing to do with the other. It doesn't mean you deserve a raise or that you don't. It's completely beside the point.

A more meaningful measure would be to compare FPL's earnings (yes, Randy, THOSE are the profits, not stock price) with the earnings of similar utilities. You made me curious, so with three quick clicks on Yahoo I found the answer: Out of the 50 largest publicly traded utility companies, FPL is the sixth-largest. In terms of return on equity (a rough measure of profit) it ranks 19th out of 50. In other words, just about average for other comparable companies. In fact, on all eight key measures by which these companies are compared (such as earnings per share, revenue growth, etc.), FPL ranks between 16th and 33rd out of the top 50. In other words, right around the middle.

So where are all these "excessive" profits? It's just another example of the Post throwing out sinister-sounding statistics that have nothing to do with the point. Since all of us naturally dislike a big company that sends us a bill each month, they know most readers will just skim through the numbers and think, "Aha! I was right! They ARE getting rich at my expense." In fact, it's just one more cynical deception by the Post's editors, knowing they can rely on our natural envy and greed to let them get away with it.

Peggy, as to your post, I'm afraid I simply don't follow you. I'm not familiar with the various agencies and individuals you name (outside of the governor and Charlie Crist), so I'm simply not able to follow your point. You may call me ignorant if you want, and I'll agree. But could you explain who these people are, and what they did, and how that proves FPL's rate request is wrong? I just don't follow you. (And no, if it matters, I don't own any FPL stock.)

Well, Gary, who are you saying you don't know besides the Governor and Charlie Crist? Harold McLean as General Counsel of the FPSC from 2001-2003, had a Commissioner Lila Jaber and Director Mary Bane who he worked with at the PSC. Lila Jaber, before she became Chairman of the PSC in Aug 2001, met with FP&L and FP and Gulf Power CEO's and Lobbyists at Amelia Island WITH JEB in private meetings. She was on PSC electric dockets as PRE HEARING OFFICER, and with certain staff members, changed staff rec drafts BEFORE hearing, WITHOUT other commissioners knowing, to favor the power companies. The FBI official said, if I have half the emails I say I have, that is obstruction of justice and publuc corruption.

Because Jaber perjured herself in depositions and notorized affidavits in other lawsuits and investigations, and had ex partes at Amelia Island while on dockets, the matter does not go to Ethics Commission. Crist, as the advocate and the office that does the final report before the hearings, has used his office to manipulate the outcome, not once but twice. The next review will be in the press, AND the Florida Bar. Where Lila Jaber has a licinse to proctice law.

This will occur very painfully and slowly, and people like Harold McLean and Kathleen Shanahan and Brian Yablonski will most likely be interviewed. And I assure you, being an egotistical person (that Julia Johnson gave a job to her as assistant and created her career)
Lila Jaber will not go down alone. She will implicate a slew of "friends." All this will occur during major elections this coming year. Hopefully you understand the significance of these things I have been saying. If you don't know who these people are, ask Jeb and Crist. They will explain it to you. Jeb used his Department heads he picked to do deals. And alot of campaign contributions flowed from these companies to Republicans. And that is our "icky gooey mess" in Florida.