Florida Power & Light (FPL) on Feb. 2 filed a request with the Florida Public Service Commission (PSC) to reduce customer rates beginning April 1, 2016, in tandem with the commissioning of the new FPL Port Everglades Next Generation Clean Energy Center.
The fourth rate decrease in 16 months, the April reduction will trim $1.65 off a typical 1,000-kWh residential customer’s monthly bill – for a total reduction since 2014 of nearly $10. Importantly, FPL said its typical bill in April 2016 will be more than $16 lower than it was 10 years ago.
“Our long-term strategy of investing in fuel-efficient modernizations, including phasing out old, oil-fired power plants and replacing them with advanced clean energy centers that run on clean, low-cost, U.S.-produced natural gas, continues to pay off meaningfully for our customers,” said Eric Silagy, president and CEO of FPL. “Today, our typical customer bills are more than 15 percent lower than they were a decade ago, and our continued investments in fuel efficiency will help keep fuel costs low over the long-term.”
The company confirmed that the FPL Port Everglades Next Generation Clean Energy Center is expected to enter service on April 1, bringing the benefits of high-efficiency natural gas generation to customers about two months ahead of schedule and on budget. Built at the site of existing capacity demolished earlier this decade, the new Port Everglades plant will use high-efficiency, combined-cycle technology to produce up to 1,277 MW.
“As many utilities across the country look at significant costs to comply with the EPA’s Clean Power Plan, our history of smart, long-term investments in clean, fuel-efficient technology have positioned us well, mitigating the need for our customers to pay more for compliance,” noted Silagy. “By investing strategically over many years in clean, U.S.-produced natural gas, zero-emissions nuclear and solar energy, FPL has proven that it is possible for an electric utility to deliver service that is clean, reliable and low-cost.”
In January, FPL initiated the process of setting new base rates to take effect when the current base rate settlement agreement expires at the end of 2016. In March, FPL plans to formally file a four-year rate plan proposal to include three base rate adjustments during the period 2017 through 2020 to support continued investments in advanced infrastructure and clean generation, including the FPL Okeechobee Clean Energy Center, which is scheduled to begin serving customers in 2019.
The Florida Department of Environmental Protection issued Jan. 12 draft documents for public comment related to air permitting by FPL for its Okeechobee Clean Energy Center, to be located in Okeechobee County, approximately 27 miles north-northeast of Okeechobee and 24 miles west of Vero Beach. The Florida PSC on Jan. 5 approved the need for this project. Estimated to cost $1.2 billion, the facility will generate 1,633 MW at summer peak. Pending other federal and state approvals, work will begin in 2017.
Florida Power & Light is the third-largest electric utility in the United States, serving more than 4.8 million customer accounts across nearly half of the state of Florida. FPL is a subsidiary of Juno Beach, Fla.-based NextEra Energy (NYSE: NEE).
Natural gas prices fell by 21% over the last few months
FPL in a Feb. 2 filing in an annnual fuel cost case asked the Florida commission to approve a $285,525,014 decrease in the amount to be recovered in 2016 through its Fuel and Purchased Power Cost Recovery (FCR) Clause. This mid-course correction will have the effect of decreasing the levelized FCR factor from 2.837 cents per kWh to 2.495 cents per kWh, and decreasing time differentiated rates from 3.952 cents per kWh to 3.271 cents per kWh for on-peak periods and from 2.369 cents per kWh to 2.173 cents per kWh for off-peak periods. FPL requests that the commission consider this petition at its March 1 Agenda Conference and, at that time, approve these new FCR factors and the accompanying tariff sheets, to become effective when the Port Everglades Energy Center goes into commercial operation, which is expected to be April 1.
FPL’s currently authorized 2016 fuel factors were approved by the commission in December 2015. The factors are based on projected fuel costs for 2016 plus the actual/estimated true-up amount for 2015. FPL based its original 2016 projected fuel costs on a forward curve as of July 27, 2015. For the mid-course calculations, FPL has used a forward curve as of Jan. 4, 2016.
“Between July 27, 2015 and January 4, 2016, natural gas prices for 2016 have declined substantially,” the utility noted. “For example, the average 2016 cost of natural gas in the July 27, 2015 forward curve was $3.14 per MMBtu whereas the average 2016 cost in the January 4, 2016 forward curve is $2.48 per MMBtu, a decrease of 21.0%. For 2016, FPL projects its generation mix will be approximately 71% natural gas. Therefore, a decrease in the projected cost of natural gas for FPL can significantly decrease its fuel factors. FPL now projects that its current 2016 FCR factors will produce an over-recovery of $255,757,764 by the end of the year. Additionally, FPL has calculated an under-recovery of $37,050,993 as its final true-up for 2015. This $37,050,993 under-recovery is $29,767,250 lower than the actual/estimated true-up under-recovery of $66,818,243 for the same period. When the projected over-recovery for 2016 of $255,757,764 is combined with this reduction in the 2015 under-recovery, FPL expects to be over-recovered by $285,525,014, or 9.7% by the end of 2016.”