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FPL to Buy and Phase Out Coal-Powered Plant, Saving Customers $129M

June 24, 2016 By Cheryl Kaften

Florida Power & Light Company (FPL) filed a petition (Docket No. 160154-EI) on June 20 with the Florida Public Service Commission (PSC) to request approval to purchase a coal-fired power plant with operations in Indiantown, Florida, with which FPL has an existing long-term contract. If approved, the proposal is projected to save FPL’s 4.8 million customers in the Sunshine State an estimated $129 million.

Upon taking ownership of the 330-megawatt (MW) Indiantown Cogeneration facility – which now is the property of Calypso Energy Holdings, FPL immediately plans to reduce the plant’s operations by 95 percent, with the intention of eventually phasing the plant out of service.

In 1991, the PSC approved a long-term purchased-power agreement between FPL and the Indiantown Cogeneration plant that does not expire until 2025. The contract was based on the cost of power at the time; however, today, FPL can generate electricity at a much lower cost. Also, while the utility said that the Indiantown Cogeneration plant “is well-run,” it nonetheless emits very high rates of carbon dioxide compared with FPL’s current generation fleet.

In its filing with the PSC this week, FPL proposed to purchase the ownership interest in the Indiantown Cogeneration facility for $451 million (including existing debt). The utility is requesting PSC approval of the purchase by December, so that the purchase can be completed as soon as possible , in order to maximize customer savings.

If approved by the PSC, this will be the second coal power plant in two years that FPL has bought to phase out while saving customers money in the process. In September 2015, the PC approved a settlement agreement that enabled FPL to purchase and phase out the 250-MW Cedar Bay Generating Plant, a coal-fired facility in Jacksonville. The move was expected to save ratepayers over $70 million annually.

“We are delivering power to our customers that is cleaner and more reliable than ever before at a price that is lower than it was 10 years ago and among the lowest in the nation.” Stated FPL CEO Eric Silagy, adding, “That is no accident – it’s because of our forward-looking strategy of smart investments that improve the efficiency of our system, reduce our fuel consumption, prevent emissions and cut costs for our customers.

“While many years ago it made sense to buy this plant’s power to serve our customers,” Silagy explained, “we’re now able to purchase the facility and phase it out of service, preventing potentially harmful carbon emissions while saving our customers millions of dollars.”

Based on the company’s current analysis of operational needs, FPL expects to operate the facility minimally through the end of 2018 as needed. After the expected addition of a new natural gas pipeline system into Florida in 2017 and with the high-efficiency natural gas-fired FPL Okeechobee Clean Energy Center entering service in 2019, FPL said the company believes that the Indiantown Cogeneration plant will no longer be economical and plans to retire the facility years sooner than it otherwise would have.

At this time, no decision on future use of the site has been made; however, the property’s close proximity to the existing Martin Next Generation Clean Energy Center’s solar and natural gas infrastructure provides the opportunity for future solar or natural gas generation.

This year, FPL also is building three new solar power plants that, it claims, will be among the largest solar power facilities ever built in the eastern United States. Comprising more than 1 million solar panels, the new plants will begin powering FPL customers later this year, tripling the company’s use of energy from the sun.

 

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