Recently someone sent me James Tracy’s blog on an editorial written by the Palm Beach Post “Smart Media Phobia Sad, But Don’t Cut Power” regarding FP&L’s smart meters. The Palm Beach Post circulation covers the area for which FP&L maintains its headquarters. Essentially the editors feel that the Internet is a blessing and a curse because people, other than them, don’t know how to interpret data and they are reading things other than the mainstream media and are being “misinformed”. We apparently repeat these misunderstandings until they sound like “fact”.
The editorial goes on to repeat industry propaganda about how one can be continually exposed to smart meters for 375 years and that would equate to a 15-minute cell phone call. Dr. Tracy, in his blog post, details all the science he has previously provided FP&L that refutes such nonsense. I decided to call out the Palm Beach Post on other false information in their Op-Ed. Most likely they won’t print it, but luckily we have alternative media to by-pass their censorship power.
My response sent to the Palm Beach Post editorial was as follows.
Editors of the Palm Beach Post:
I am the lead petitioner in the action against the Florida Power & Light (FP&L) smart meter opt out fees currently before the Florida Public Service Commission (FPSC). I read your editorial published September 4, 2014 and shook my head, as it is nothing but another corporate propaganda piece that spreads misinformation.
First, I take exception to the insinuation that I suffer from “lack of training to parse data”. I am a CPA and trained auditor. I know how to research, source and interpret data. I also have a background in the regulatory process having worked 11 years for a telephone company. I have handled complicated transactions such as the AT&T divestiture to the planning and implementation of Sarbanes – Oxley regulations for a multi-billion dollar company. I have spent about 10 hours per day, 5 days a week for two years reading every governmental and industry report on the smart grid and smart meters. My computer is now overloaded with downloads.
Second, it is not a fact that “the vast majority of FP&L’s approximately 4.6 million customers have “adopted the new technology without a second thought”. The truth is the vast majorities don’t even know they have a smart meter or what it does differently. But what is true is that the claims of the smart meter giving people information to help manage their energy are a lie, as the current information provided to customers is useless. This can be supported by FP&L’s disclosure that the vast majority of customers have yet to even access their silly Energy Dashboard. But I am sure the editors of this paper do so every day, correct?
Third, the biggest lie in your is this statement “The facts are clear: Smart meters lower everyone’s utility bills by reducing the need for trucks, fuel, and meter readers. They reduce the length and extent of power outages. They pose no credible threat to health.”
Smart meters do not reduce the length and extent of power outages – smart technologies (sensors on equipment like transformers and substations and smart switches on feeders) do provide this benefit.
Regarding your statements of “credible threat to health”, where have we heard that phrase before? Ah, yes, the tobacco industry used that phrase for decades quite successfully, didn’t they? Now let’s look at the credibility of FP&L’s lead consultant on smart meter health, Dr. Peter Valberg. He claims that there is no “credible” science that shows RF harm. Your readers should know that he also testified on behalf of Phillip Morris in their light cigarettes deceptive marketing case. His testimony essentially stated that light cigarettes were just not being smoked properly, and also that the tobacco studies performed by Philip Morris were consistent” with what was known to the outside scientific community. No deception, right? How “credible” is this guy? Your readers can decide but they should also do an internet search on the BioInitiative Report before they make their decision.
But most importantly, smart meters have not lowered your bills – not one penny – they have actually increased them. Let me count the ways:
First, the old meters had a net book value (NBV) of $75 million and an estimated useful life of approximately 36 years. FP&L wrote off $101 million (includes cost of removal) when they threw the perfectly operational old meters in the garbage. The annual depreciation charges for these meters were around $7 million per year ($249 Million Gross value/36 yrs). The approximate annual return on investment FP&L received on the NBV of $75 million, using 9.48% pre-tax cost of capital was $7 million.
Contrast that to now. The smart meter project capital is $645 million with an estimated useful life of 20 years (and if you believe the 20 yr life, I have a bridge in Brooklyn I can sell you). This equates to depreciation charges of about $32 million per year ($645M/20yrs). The return on investment FP&L will earn on this new smart meter capital will be about $61 million per year ($645M at 9.48%), decreasing by about $3 million each year to reflect the lower NBV from depreciation.
Second, FP&L current rates are based on a 2013 test year and the 2012 rate case settlement agreement keeps the rates the same until at least 2017. The 2013 test year reflects an overall net Operations & Maintenance (O&M) cost of $3.4 million for the smart meter project. (Funny, in 2009 they estimated that the year 2013 would produce a net O&M savings of $20 million. I guess the project is overrunning its budget.) FP&L recently testified that once the project was completed in 2013 there would be about $40 million annual net savings in O&M.
When rate case settlements are made they are made for a period of time. Each party looks at that period of time to determine if anything needs to be considered and factored in before the final settlement is agreed to and finalized. FP&L raised its hand high, saying, look over here, I have new plants coming on line in these outer years and we need to raise rates to recover our investment and such was granted. But did FP&L raise their hand or did the FPSC insist that the smart meter savings of $40 million, which would start to be realized during that period, also be accounted for? No. FP&L was not required to reduce the rates in the outer years to reflect the savings.
Third, lets not forget to count all the new costs that are being incurred that did not exist with those old analog meters. Now you have communication costs to send the data wirelessly back to FP&L, cyber-security costs, software license and maintenance fees, data storage costs, big data consultants, settlements on fires and property damage, more equipment to be damaged in storms and the list goes on.
So Palm Beach Editorial Board, please disclose to your readers your facts to support your claim that smart meters have lowered our utility bills. The miscellaneous tariffs for all these activities – service connects/disconnects, reconnects for non-payment – are EXACTLY the same as they were when FP&L didn’t have smart meters. FP&L’s 2013 test year also included significant manual meter-reading costs as they still had over 800 thousand meters left to install in their assumptions and those costs are still baked into our current rates.
Your readers can decide for themselves, if FP&L, who made NO disclosure in their rate case settlement agreement that they planned to file these smart meter opt out tariffs (despite smart meters being an issue in the rate case), is deserving of an additional $2 million a year in revenue from these customers when they are keeping the $40 million in savings for three years and overcharging smart meter customers for truck rolls they are no longer performing. Is FP&L violating the rate case settlement agreement by trying to change rates for services already provided at the date of that agreement?
From my vantage point – if they are deserving of the $2 million in additional revenue because the project is over and we need to recognize a new ‘cost of service” – then it is only fair to re-price all activities affected by this fact and reduce the rates for all customers by $40-45 million.
There is no financial payback for me as I have sunk tens of thousand of dollars into this effort and countless unpaid hours of time. I do so for two reasons – 1) the many “Friedman’s out there who have no voice and are being harmed by this product and 2) to expose the illegal coordination and fraud/deception that took place between FP&L and FPSC as it pertains to this project.
The documented audit trail of deception is as long as the distance from my house in Venice to Tallahassee. Quite frankly, the conduct of our FPSC that I discovered on this journey is more disturbing than FP&L’s. I will take that item up with our state legislators when they return to Tallahassee for the next session.