Stipulations, the Consumer Advocate and Utility Regulation in Florida

Relatively little is known about the practice of settlement rather than litigation in US utility regulation, or about the activities of consumer advocates. This paper presents evidence from Florida. During 1976-2002, over 30 per cent of earnings reviews were settled by stipulations involving the Office of Public Counsel but only 5 per cent of other cases. Over three quarters of the rate reductions associated with earnings reviews derived from these stipulations, and in the decade 1976-86 the proportion was over 95 per cent. The average value of a rate reduction was seven times higher with a stipulation than without. Only 1 per cent of the rate increases associated with company requests derived from stipulations. In these few cases the stipulation typically provided for a lower proportion of the requested rate increase than a litigated outcome allowed (about one third compared to one half). A companion paper investigates the nature and effects of these stipulations. This research suggests that settlements deserve consideration in utility regulation generally, even outside the US context. JEL classification: L51 Economics of regulation, L97 Utilities general, L94 Electric utilities, L 95 Gas utilities, pipelines, water utilities.