Florida PSC approves buy of now-doomed Cedar Bay coal plant

The Florida Public Service Commission (PSC) on Aug. 27 approved a settlement agreement between the Office of Public Counsel (OPC)—representing consumers in PSC proceedings—and Florida Power & Light (FPL) on FPL’s plan to buy and then quickly shut the coal-fired Cedar Bay power plant.

Filed with the PSC on July 24, the settlement will free FPL customers of the high cost of purchasing power from the Cedar Bay plant under a long-term power purchase deal. Although FPL is expected to pay $520.5 million for the 250-MW plant, purchasing Cedar Bay is more cost effective for customers than continuing the existing purchase power contract, which extends through 2024, the commission decided.

“Today the Florida PSC found that the Settlement Agreement is in the public interest. It will save FPL customers money and reduce CO2 emissions in Florida,” said PSC Commissioner Lisa Edgar.

With the expected plant purchase, FPL will terminate the contract and its customer costs. FPL also plans to decrease Cedar Bay plant operations by about 90%, thus reducing carbon dioxide emissions, and expects to retire the plant nearly eight years sooner than would have been the case without the purchase. 

In 1988, the PSC approved a purchased-power agreement between FPL and Cedar Bay plant owner, Cedar Bay Generating Co. LP. The contract–based on the cost of power at that time–includes fixed payments, with annual increases, for capacity and operating and maintenance that total more than $120 million each year until the contract’s 2024 expiration. FPL now generates electricity at a much lower cost.

Other recent events related to this deal include:

  • FPL filed on Aug. 19 with the Federal Energy Regulatory Commission an interim power purchase deal that would let it sell power to itself out of Cedar Bay in the limited time the plant will run after this plant purchase deal is completed. FPL noted that the selling party is CBAS Power Holdings LLC.
  • The members of the Federal Energy Regulatory Commission on July 2 approved this buy. FPL stated that CBAS Power Holdings is a subsidiary of The Carlyle Group, a global alternative investment management firm. FPL asserted that the capacity pricing of the Power Purchase Agreement is “far above” market prices and FPL’s avoided costs. FPL stated that it intends to contract with Cedar Bay Operating Services LLC to continue operating the facility and to preserve the corporate legal structure for ownership of the facility. FPL said that it anticipates dispatching the facility until at least 2016, but at an approximately 5% capacity factor instead of at the current approximately 50% capacity factor. Due to the expected availability of a new interstate natural gas pipeline system to fuel its natural gas-fired units, FPL projects that it will retire the Cedar Bay facility in early 2017.

U.S. Energy Information Administration data shows eastern Kentucky coal producer Nally & Hamilton as the contract supplier to the Cedar Bay plant, under a contract to expire in December of this year. For example, in May, the EIA figures show that Nally & Hamilton shipped 25,744 tons to the plant out of the Balkan origin point, and 12,372 tons out of its Manchester facility.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.