Q&A of the Day – Why Does FPL Advertise?
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
Social: @brianmuddradio
iHeartRadio: Use the Talkback feature – the microphone button on our station page in the iHeart app.
Today’s entry: Brian, FPL is constantly advertising on radio and TV. I think their budget must be higher than Verizon. Why do they advertise as a public utility and why don’t they take that money and use it towards the proposed rate hike? My bill is approximately 25% higher than last year. It is getting crazy and the older Floridians will be priced out of their homes. Besides, I don’t have a choice in electric companies, so why advertise? They are a public utility.
Bottom Line: Ahh yes, I am picking up the Mike Rowe reference to Verizon in today’s note from his current competitive marketing campaign. I’ll circle back around to that dynamic in a minute, but I’ll start with specifically addressing the dynamic in play with FPL’s advertising and the relationship with rates. First, it’s important to note that while FPL is a regulated utility company, it is a wholly owned subsidiary of NextEra Energy, which is a publicly owned and traded company, meaning that in addition to being accountable to state regulators and its customers, it’s also accountable to its shareholders. That factors into a couple of important dynamics in play with the topic of advertising that’s been introduced in today’s question.
Due to NextEra’s status as a publicly traded entity, which must furnish regular reports to federal regulators and shareholders, we can fully account for FPL’s advertising expense. In NextEra’s most recent annual report, filed for 2024 with the Securities and Exchange Commission, a total of $33.16 million is listed under the heading of “Advertising expense, including costs to promote our brands”. With about 6 million customers the total advertising spend amounts to only about $5.53 per customer for the year.
Notably, it’s incumbent upon the Florida Public Service Commission to consider whether advertising or marketing expenses are excessive and could negatively impact consumers, so in theory those concerns are accounted for prior to rates being approved. As for why it is that FPL advertises, there are a few reasons that are evident based on their varying campaigns:
- Brand image
- Broader outreach
- Energy education
As a regulated utility that requires state approvals for service, it’s of benefit for FPL to maintain a positive brand image. Their advertising campaigns may not have that effect on you, however that is at times part of what they’re seeking to achieve. That also plays into the broader outreach campaign as FPL’s brand image can also affect their non-regulated utility services. In addition to providing electric power to homes and businesses, FPL Energy Services offers a host of unregulated commercial and residential services including insurance products, lighting systems, natural gas systems, generators and more. For example, I don’t live in FPL’s service area and yet FPL services are offered and advertised in my community (often through targeted mail).
Related to whether advertising is generally accretive to a business or is an added expense... Obviously a poor marketing campaign would be a net expense, however a recent Nielsen study found the average ROI is $3.70 per $1 spent. This, for example, is why Mike Rowe is literally using advertising to combat the advertising message of a competing company. It’s also how I’m able to communicate with you daily in a business that’s 100% paid for through advertising dollars. If advertising was a net expense for most companies, there wouldn’t be many supported mediums or many companies advertising. In other words, even to the extent that approximately $5.53 in expense per customer occurred with FPL, it most likely paid for itself and then some.
Specific to your situation, where you’ve experienced a 25% increase. The Florida Public Service Commission didn’t approve a rate increase for FPL between 2024 and 2025, however there has been a storm surcharge on bills for past hurricanes totaling $12.02 per 1,000-kWh used. The typical FPL residential bill is about 1,300-kWh monthly which has added $15.63 to the bills of typical residential customers per month. Having a quiet hurricane season this year will be helpful going forward in that regard.
While it likely won’t help you feel any better when it comes time to pay your bill, it is worse elsewhere. FPL’s current approved rate of 15.36/kWh is 10% lower than the national average price for an electric utility.
I understand this may not have been the response you might have been looking for and that it won’t help pay the bills, however hopefully it’s helpful in better understanding the situation.