Bottom Line: As the peak of summer heat has arrived in South Florida, so have the highest utility bills we’ve ever seen. This has culminated in numerous listeners expressing various forms of frustration a la today’s listener. It was just a week ago I addressed skepticism regarding FPL’s power generation. Since then, I’ve continued to field notes regarding whether the increases in rates are at all justified. As I pointed out in the recent Q&A, over 70% of FPL’s power generation is derived from natural gas. You’re well aware of the 41-year high inflation rate we’re paying is led by energy. Well, it should come as no surprise that the wholesale cost of energy, used to generate energy, extends well beyond oil and unleaded gas. Specific to the wholesale cost nat gas, here’s the year-over-year change:
- July 2021: $4.27 per cubic foot
- July 2022: $6.81 per cubic foot
That’s a 59% increase in the wholesale price of the product used to generate over 70% of the electricity generated by FPL. And what has that translated to with regard to the monthly bills of customers? 18%. Quoting FPL: A typical 1,000 kilowatt-hour residential customer has a monthly bill of $120.67 in 2022; in 2021, that same customer’s bill was $101.70. In other words, FPL is eating most of the cost increase as opposed to passing it along resulting in outstanding relative value. Yeah, getting bills that are 18% higher stink, yes, it’s a heck of a lot better than getting a bill that’s close to 40% higher – which is what they would be if the net cost increase were passed along. But while cost increases commonly drive the frustration of many like the listener in today’s Q&A. But there's another dynamic introduced in today’s Q&A. The idea of FPL being a power monopoly in Florida.
Trivia time. What percentage of Florida’s power is provided by FPL? And for bonus points, how many total energy providers are there in Florida? The answers... 48% and 58. While the regulated utility model some characterize as a “regulated monopoly” may be debated, FPL itself is far from a monopoly within it as most Floridians aren’t FPL customers. Florida’s power is provided by...
- Five investor-owned providers
- 18 rural cooperatives
- 35 municipal-owned providers
And a partridge in a pear tree. So, there’s actually a great deal of diversity in power provided within our state, which also provides excellent opportunities for comparisons. Based on price per kilowatt hour, FPL’s rates over the past year have been cheaper than 74% of providers nationally and at a rate that is approximately 20% cheaper than the average other Florida power provider. None of that is going to make you feel good about getting a higher bill. But as always there remain two sides to stories and one side to facts and that’s what we operate with around here. Regarding the use of resources for marketing purposes. You can take it or leave it. Obviously, it's not effective to you. However, business 101 calls a percentage allowance of revenue for marketing purposes. And yes, FPL is a for-profit business with shareholders it's accountable to. But then again, all utilities are for-profit in their own way or they’re draining additional resources from taxpayers to cover their losses for power which isn’t used. The me to you in this is this. I’ve been an FPL customer and I’ve been served by a municipal-run utility. Be thankful you’re an FPL customer. There's nothing like paying more for a less reliable resource and in my experience, that’s been the case.
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
Gettr, Parler & Twitter: @brianmuddradio
iHeartRadio: Use the Talkback feature – the microphone button on our station’s page in the iHeart app.
Photo: Getty Images