NextEra talks gas pipeline, new plants, peaker upgrades

NextEra Energy (NYSE:NEE) and its electric utility, Florida Power and Light (FPL) are continuing their aggressive infrastructure expansion, company officials said during a quarterly conference call July 30.

The new 1,200-MW Cape Canaveral gas plant entered service ahead of schedule on April 24. That was more than a month early, said NextEra Vice Chairman and CFO Moray Dewhurst.

FPL continues to make progress on the two modernizations at the Riviera Beach and Port Everglades sites. The demolition of FPL’s Port Everglades facility took place July 16, and both the Riviera Beach and Port Everglades projects remain on schedule with expected in-service dates of June 2014 and June 2016, respectively.

FPL also filed a petition with the Florida Public Service Commission (PSC) last month, as part of the annual environmental cost recovery clause proceedings, requesting approval of an approximately $820m program to upgrade FPL’s peaking capacity to comply with new EPA regulations.

FPL determined that this program is the most cost-effective way to comply with the new nitrogen dioxide emissions standard. The program is expected to be completed by the end of 2016.

FPL is also seeking PSC permission for spending $400m to accelerate its existing storm hardening program through incremental investments.

Natural gas pipeline project called essential

Recently, FPL also announced the results of its analysis of the bids received under its request for proposals (RFP) for additional natural gas transportation capacity commencing in 2017.

FPL is seeking PSC approval to pursue a combination of the Sabal Trail Transmission proposal advanced by Spectra Energy (NYSE:SE) for a new pipeline originating in southwestern Alabama and terminating at a new Central Florida Hub, and the proposal submitted by Florida Southeast Connection, a wholly owned subsidiary of NextEra, to connect the Central Florida Hub to FPL’s Martin Plant.

“Initially, the pipeline will not be fully subscribed,” Dewhurst said.

FPL will be the principal customer for the “downstream portion” of the new gas pipeline. The “upstream” portion could serve a number of other customers over time, Dewhurst said.

“This is a Florida project,” Dewhurst said. “This is an absolutely critical project. It is a great project.”

FPL has said Florida is one of the nation’s largest users of natural gas for power generation but has limited gas transmission infrastructure.

FPL is seeking to obtain state regulatory approval by the end of 2013. NextEra would invest more than $1bn in the pipeline project.

On non-utility renewable power, the Canadian wind and U.S. solar programs on track, NextEra reported.

Subsidiary NextEra Energy Resources signed long-term power purchase agreements for nearly 650 MW of new U.S. wind projects, bringing the total 2013-2014 U.S. wind development program to approximately 975 MW, which is in the middle of the previously announced range of expectations of 500 to 1,500 MW. NextEra Energy Resources continues to expect to place approximately 800 MW of U.S. contracted solar into service through 2016, and expects to sign up to 300 MW of incremental solar projects to enter service over the same period. Year-to-date, NextEra Energy Resources has signed power purchase agreements on an incremental 40 MW of U.S. solar projects.

NextEra probably has a window of two or three months to sign up wind contracts for 2013 or 2014 in order to make use of the production tax credit (PTC), officials said.

NextEra officials said the capacity factor of wind energy has improved dramatically in the past decade thanks largely to improved technology.

On the regulated side, FPL wants to increase solar in Florida but there is no state solar incentive legislation either in place or contemplated, NextEra officials said. The realistic time frame is probably 2015 or 2016, the company said.

NextEra President and CEO Jim Robo said NextEra is shifting toward a more regulated business. The second half of 2013 probably won’t be as strong as the first half, Robo said.

NextEra reported 2013 second-quarter net income on a GAAP basis of $610m, or $1.44 per share, compared with $607m, or $1.45 per share, in the second quarter of 2012. On an adjusted basis, NextEra Energy’s earnings were $620m, or $1.46 per share, compared with $527m, or $1.26 per share, in the second quarter of 2012.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.