As inflation, interest surge, Florida utility to seek $2.5-bil rate hike for 2026-27: CEO

To cope with significant inflation and interest rate hikes, plus population increases, NextEra Energy's Florida Power & Light plans to request a rate hike to boost revenue almost $2.5 billion 2026-27, plus a solar and battery rate adjustment effective 2028 and 2029.

In a Dec. 30 letter to Florida Public Service Commission Chairman Mike La Rosa, FPL President and CEO Armando Pimentel noted that the utility's current plan, which serves about 6 million customers, ends December 2025. NextEra Energy filed the letter Dec. 30 with the US Securities and Exchange Commission.

"The last four years were unlike any other in our recent history," Pimentel said. "Over this period, we experienced meaningful and unanticipated increases in inflation and interest rates, which rose by 21% and over 180%, respectively. This, combined with significant migration to Florida, presented new challenges for FPL to navigate."

FPL's "preliminary estimates" are for the base rate adjusting to increase by $1.55 billion in 2026 and $930 million in 2027, Pimentel said.

"The proposal also includes a Solar and Battery Base Rate Adjustment ('SoBRA') mechanism in 2028 and 2029 to allow FPL to recover the costs of building and operating additional cost-effective solar and battery projects," Pimentel said. "Utility-scale solar and battery projects are currently the lowest-cost form of new power generation, providing not only clean and reliable energy to customers, but also mitigation of fuel price volatility and savings in the form of reduced fuel costs."

FPL plans to add 5.4 GW of new solar generation capacity and 3.4 GW of new battery storage, 2026-29, Pimentel said.

In a base rate increase request likely to be filed around Feb. 28, FPL proposes to set its approved return on common equity midpoint at 11.9% with a band of plus or minus 1%, Pimentel said.

Bills to rise 2.5%/year

The typical residential customer bill would rise by an average annual rate of about 2.5% January 2025 through 2029, Pimentel said. FPL proposes to use 2026 and 2027 as test periods, with rate increases effective at the beginning of each year. FPL expects to add about 330,000 new customer accounts 2025-29, Pimentel said.

The $1.55 billion increase is the net impact after deducting productivity improvements and revenue growth from the approximate $1.9 billion 2026 revenue requirement needed to defray FPL's investment of more than $36 billion, 2022-25, "in smart, efficient and resilient infrastructure," Pimentel said.

Continued investment in infrastructure growth and technology upgrades adds about $930 million the to revenue requirement, Pimentel said.

Since 2021, FPL's prices paid for transmission and distribution has increased substantially:

• Transformers: 101%
• Poles: 49%
• Wires and cables: 20%
• Labor: 11%

"A utility's ability to earn a fair return rate and maintain a strong balance sheet are crucial in obtaining capital under dynamic operational and market conditions, which in turn provides us with the ability to continue to meet customer needs in virtually all financial climates," Pimentel said.