UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: March 16, 1999
Exact name of Registrants as specified in their IRS Employer
Commission charters, addresses of principal executive Identification
File Number offices and Registrants' phone number Number
- ----------- ----------------------------------------------- --------------
1-8841 FPL GROUP, INC. 59-2449419
1-3545 FLORIDA POWER & LIGHT COMPANY 59-0247775
700 Universe Boulevard
Juno Beach, Florida 33408
(561) 694-4000
State or other jurisdiction of incorporation: Florida
Item 5. Other Events
Reference is made to Item 1. Business - FPL Operations - Retail Ratemaking
and Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Results of Operations in the 1998 Form 10-K for FPL
Group, Inc. and Florida Power & Light Company (FPL).
On March 16, 1999, the Florida Public Service Commission (FPSC) approved an
agreement between FPL, the State of Florida's Office of Public Counsel
(Public Counsel), The Florida Industrial Power Users Group (FIPUG) and The
Coalition for Equitable Rates (Coalition) regarding FPL's retail base
rates, authorized regulatory return on equity (ROE), capital structure and
other matters. As a result of the approval of this agreement, all matters
raised in Public Counsel's petition to the FPSC to conduct a full rate
proceeding are resolved. The agreement has a three-year term, beginning
thirty days following the date of FPSC approval.
The agreement provides for a $350 million reduction in annual retail base
rate revenues allocated to all customers on a cents-per-kilowatt-hour
basis. Additionally, the agreement sets forth a revenue sharing mechanism
for each of the three years covered by the agreement, whereby retail base
rate revenues in excess of a stated threshold will be shared with customers
on the basis of two-thirds refunded to customers and one-third retained by
FPL. Retail base rate revenues in excess of a second threshold will be
refunded 100% to customers.
The thresholds for the three years are as follows:
First Second Third
Twelve Twelve Twelve
Months Months Months
------ ------ ------
(Millions of Dollars)
Threshold to refund 66 2/3% to customers $3,400 $3,450 $3,500
Threshold to refund 100% to customers $3,556 $3,606 $3,656
In addition to the revenue reductions, the agreement lowers FPL's
authorized ROE range to 10% to 12% (down from the current 11% to 13%).
During the term of the agreement, the achieved ROE may, from time to time,
be outside the authorized range and the sharing mechanism described above
is intended to be the appropriate and exclusive mechanism to address that
circumstance. The agreement establishes a cap on FPL's adjusted equity
ratio of 55.83%. The adjusted equity ratio reflects a discounted amount
for off-balance sheet obligations under certain long-term purchase power
contracts. The agreement also includes an allowance for special
depreciation of up to $100 million at FPL's discretion, in each year of the
three-year agreement period to be applied to nuclear and fossil generating
assets. The current special amortization program will be terminated when
the new agreement becomes effective. Finally, included in the agreement
are provisions which limit depreciation rates and accruals for nuclear
decommissioning and fossil dismantlement costs to currently approved levels
and limit amounts recoverable under the environmental cost recovery clause
during the three-year term of the agreement.
The agreement states that Public Counsel, FIPUG and Coalition will neither
seek nor support any additional base rate reductions during the three-year
term of the agreement unless such reduction is initiated by FPL. Further,
FPL agreed to not petition for any base rate increases that would take
effect during the three-year term of the agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
FPL Group, Inc.
Florida Power & Light Company
(Registrants)
Date: March 17, 1999 K. MICHAEL DAVIS
----------------
K. Michael Davis
Controller and Chief Accounting Officer of FPL Group, Inc.
Vice President, Accounting, Controller and
Chief Accounting Officer of Florida Power & Light Company
