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FPL Customers Set to Save Over $70 Million Annually with Cleaner Fuel

September 2, 2015 By Cheryl Kaften

The Florida Public Service Commission (FPSC) approved a settlement agreement between Florida Power & Light (FPL) and the Office of Public Counsel on August 27 that is expected to save the utility’s 4.7 million customers more than $70 million annually.

The FPSC ruling modifies FPL’s proposed plan – presented to the commission last March – to purchase and phase out the 250-megawatt (MW) Cedar Bay Generating Plant, a coal-fired facility located in Jacksonville, Florida. FPSC had targeted August 31 for completion of the deal, under which the power generator would operate the plant at just 5 percent of capacity before completely shuttering operations within a couple of years.

In 2017, when Florida’s access to clean natural gas is expected to be enhanced by the new interstate natural gas pipeline entering commercial operation, FPL believes the Cedar Bay plant will no longer be economic to dispatch nor will it be needed for reliability. This means the plant will be retired nearly eight years sooner than it otherwise would have been were it not for the plan approved by the PSC today.

 

The utility plans to rely on gas, which is cheaper than coal, to fuel its operations. When the Cedar Bay plant is closed, not only will the monetary savings be significant; but FPL estimates that its cleaner gas generation will eliminate 1 million tons of carbon dioxide (CO2) on a yearly basis. The U.S. Environmental Protection Agency calculates that this amount of CO2 reduction is equivalent to saving more than 100 million gallons of gasoline.

Until the agreement was approved by the FPSC, FPL had been obligated under a long-term contract that was initiated in 1988 to buy power through 2024 from the Cedar Bay Generating Plant. The contract was based on the cost of power at the time; however, today FPL can generate electricity much more cost-effectively.

Under the 1988 contract, fixed payments for capacity and operating and maintenance expenses were totaling more than $120 million annually, with yearly increases until the contract’s expiration in 2024.

Like other purchased-power agreements, these fixed payments plus the cost of electricity generated by the plant were paid for through the utility’s customers’ rates. Once the acquisition is complete, FPL will terminate the purchased-power contract, eliminating the fixed payments that customers would otherwise pay through their rates.

“As we continue to look for ways to improve the efficiency of our system and keep costs down for our customers, this plan is another smart step forward to serve our customers with affordable clean energy now and in the future,” said FPL CEO Eric Silagy, adding, “”We appreciate Public Counsel’s willingness to work together with us on this. This is important recognition that smart investments can and do generate significant benefits for customers and for our state.”

The plan also received support from influential environmental groups, including Audubon Florida, The Nature Conservancy, Sierra Club and the Natural Resources Defense Council.

“FL and Public Counsel are to be commended for reaching a settlement in support of closing the Cedar Bay plant,” said Audubon Florida Executive Director Eric Draper. “We applaud the PSC for approving this proposal that will reduce carbon emissions. Utilizing cleaner fuel sources like natural gas and solar result in lower emissions and groundwater use compared to coal-fired power plants.”

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