With Florida Power & Light in the middle of an aggressive program to add new gas-fired capacity, the utility said June 25 that it will invest in natural gas production to secure cost-effective gas supply for those new/rebuilt power plants.
By investing in natural gas production at the source rather than paying full market prices, FPL is projecting customer savings of up to $107m over the life of the first project.
“With a growing fleet of cleaner, fuel-efficient natural gas-fired power plants and contracts for reliable and diverse gas transportation in place, we believe this to be the next logical step in providing clean electricity for our customers at affordable prices,” said Eric Silagy, president and chief executive officer of FPL. “This investment in natural gas production is an important component for delivering lower, more stable natural gas prices for our customers, and we anticipate identifying additional investment opportunities, thereby benefiting our customers even more over the long term. Importantly, customers will realize the greatest amount of savings in the early years when wells typically produce the most natural gas.”
FPL is partnering with PetroQuest Energy on a new venture to develop up to 38 natural gas production wells in the Woodford Shale region in southeastern Oklahoma. PetroQuest, an independent oil and gas company, will oversee and operate those wells. FPL will receive a portion of the natural gas produced from each well for its use. FPL asked the Florida Public Service Commission (PSC) to approve guidelines for future natural gas production projects to allow the company, and in turn its customers, to take advantage of future beneficial natural gas investment opportunities.
FPL purchases up to 2 billion cubic feet per day of gas for its natural gas-fired power plants at prices that fluctuate based on market conditions. Through an existing PSC-regulated program, FPL can lower price volatility for customers by “hedging” a portion of its fuel in advance to protect against price fluctuations. However, this program benefits customers only through short-term agreements. Investing in gas production at the source will enable FPL to secure gas at a relatively low and stable cost for as long as the wells produce gas, which is typically 30-plus years.
Over the last five years, FPL has demolished three 1960s-era oil-burning power plants and is replacing them with ultra-modern, fuel-efficient clean energy centers that run on natural gas.
- The 1,250-MW Riviera Beach Next Generation Clean Energy Center began serving customers in the spring of 2014. This modernized, combined-cycle natural gas plant was constructed at a cost of approximately $1.3bn and replaced a 1960s-era, oil-and-gas-fired plant that was demolished in 2011.
- The 1,250-MW Cape Canaveral Next Generation Clean Energy Center is located in Brevard County, Fla., and was completed in 2013. In 2010, FPL took down its 1960s-era Cape Canaveral Plant to make way for this facility.
- The 1,237-MW Port Everglades Next Generation Clean Energy Center, which is going into construction this year and is due for completion in 2016, will replace an old facility at the site.
Florida Power & Light is the largest rate-regulated electric utility in Florida and serves the third-largest number of customers of any electric utility in the United States. FPL has one of the lowest emissions profiles and one of the leading energy efficiency programs among utilities nationwide. FPL is a subsidiary of Juno Beach, Fla.-based NextEra Energy (NYSE: NEE).