Danny Cullenward: I was very interested to hear about utility cost recovery because there is already a literal gold rush in the renewable natural gas industry, thanks to lavish subsidies from California and the federal government. By the way, “gold rush” is The Wall Street Journal’s phrase — I just borrowed it.

I spoke to Emily Mahoney with the Tampa Bay Times about a bill in the Florida legislature that would enable Florida utilities to invest in renewable natural gas infrastructure and pass their costs along to customers. Buckle up, this is going to be a crazy thread.

Will natural gas made from manure increase Florida electric bills?www.tampabay.com A bill written by a utility company could expand ‘renewable natural gas’ in the state.

I was very interested to hear about utility cost recovery because there is already a literal gold rush in the renewable natural gas industry, thanks to lavish subsidies from California and the federal government. By the way, “gold rush” is The Wall Street Journal’s phrase — I just borrowed it.

California’s Green-Energy Subsidies Spur a Gold Rush in Cow Manurewww.wsj.com Money is pouring in to produce a type of natural gas made from methane from decomposing manure, and a host of developers, financiers and carbon-conscious corporations—including Amazon and Chevron—are interested.

Although utilities sometimes need permission to do what everyone else is already doing, they are also very good at getting a little extra slice of the action along the way. But I couldn’t figure out why cost recovery was needed in the first place, given how much money everyone else is making.

For those who aren’t familiar with utility cost recovery, utility investments that are approved by their regulator get collected from ratepayers — with a profit. That’s necessary to pay for the infrastructure customers share, like the distribution lines running to your home or workplace.

But when the underlying project is a net money-maker (due to insane subsidies from other governments), why is cost recovery needed? So I read the bill (SB 480) and, hoo boy, things do not look good. Follow along with me!

www.flsenate.gov

The bill text is pretty much unreadable to non-lawyers. It allows the utility regulator to authorize an “experimental mechanism” for cost recovery based on a cross-reference to a separate, existing authority.

So what is “the structure set forth in s. 366.96(7) and (8)” you might ask? It’s a provision to authorize cost recovery for storm protection investments, which is a big deal in places like Florida that are subject to extreme wind, rain, and flooding events.

Chapter 366 - 2022 Florida Statutes - The Florida Senate CHAPTER 366www.flsenate.gov

Here’s the part where I get extra concerned. In utility regulation, you always have to ask whether an investment is “prudent” — were the costs reasonable, did the utility do a good job w project management. That’s essential because it’s a regulated monopoly and it passes cost on to ratepayers.

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