Florida Power & Light Company
today announced that its evaluation of proposals for additional natural gas
transportation capacity determined that the best, most economical solution for
ensuring Florida's continued access to the clean, affordable, U.S.-produced
fuel necessary to meet the growing electricity needs of the state's residents
and businesses is a combination of a natural gas pipeline and interconnection
hub to be built by Sabal Trail Transmission, LLC, and a second natural gas
pipeline to be built by Florida Southeast Connection, LLC.
FPL's economic analysis showed that these projects will save FPL customers
nearly $600 million compared with the next closest proposal.
Sabal Trail Transmission is a joint venture of Spectra Energy Corp SE
and NextEra Energy, Inc. NEE. Florida Southeast Connection is a wholly
owned subsidiary of NextEra Energy.
Sabal Trail Transmission will invest roughly $3 billion in the construction of
a new natural gas pipeline that will access the abundant reserves of various
regions of the U.S. The Sabal Trail pipeline will originate in southwestern
Alabama and transport natural gas to Georgia and Florida. It will terminate at
a new Central Florida Hub south of Orlando, Fla., where it will interconnect
with the two, existing natural gas pipelines that currently serve peninsular
Florida. To connect with FPL's operations, Florida Southeast Connection will
invest approximately $550 million to construct a separate pipeline from Sabal
Trail's Central Florida Hub to FPL's Martin Clean Energy Center in Indiantown,
Fla.
"At FPL, we have worked hard to reduce our dependence on foreign oil and to
keep our customers' bills low. Since 2001, our investments in cleaner, more
efficient, natural gas power plants have saved our customers more than $6
billion on fuel costs. To continue meeting the growing needs of our customers
efficiently and reliably in the years ahead, we will need more natural gas
than the two existing major pipelines can deliver, which makes a third,
independently routed pipeline system absolutely essential," said FPL President
Eric Silagy. "Natural gas is vital to the reliability and affordability of
electricity in our state. Although Florida has essentially no natural gas
reserves, many areas of our country have a wealth of supply. This project is
not only about FPL and our customers – increasing access to clean, efficient,
U.S.-produced natural gas will benefit the entire state."
Florida uses more natural gas to generate electricity than any U.S. state
other than Texas, but it has minimal production, no storage capabilities and
only two major pipeline systems available to transport natural gas to the
peninsula. Both of these pipeline systems are approaching full capacity.
However, Florida's economy is projected to require additional electricity –
and, consequently, more natural gas – in the near future. To meet this need,
the new pipeline system will be built to provide the state with additional
natural gas transportation capacity beginning in May 2017.
FPL, the state's largest electric utility and largest natural gas user, will
be an anchor customer for the new pipelines. Other users will also be able to
contract for capacity and benefit from the increased access to abundant
domestic natural gas reserves. The proposed route of the new system will
maximize accessibility to all of Florida's major natural gas users and
increase the overall reliability of the state's natural gas transportation
network.
"Natural gas, especially when used in combination with solar energy, generates
far fewer emissions than coal or oil," said Eric Draper, executive director of
Audubon of Florida. "Audubon provided guidance on the proposed pipeline route,
and we commend FPL for working to avoid sensitive habitats."
The new pipeline system will expand the state's access to additional sources
of natural gas throughout the U.S. This will help reduce the state's reliance
on offshore sources and lessen its vulnerability to fuel supply interruptions
that can occur in the Gulf of Mexico region during severe tropical weather.
"Like a highway interchange connects intersecting roads, the new system's
Central Florida Hub will link the state's major natural gas transportation
infrastructure. This will effectively increase our state's energy security and
reliability by introducing important flexibility in the event that the supply
of one of the existing pipelines is interrupted," Silagy said.
Permitting is underway for both projects, and construction is expected to
begin in 2016 in order for operations to commence in 2017. In Florida, the
projects will create an estimated 8,600 direct and indirect jobs during
construction and generate more than $1.1 billion in new tax revenue for local
schools and governments over 60 years.
Regulatory Reviews
In December 2012, FPL issued a request for proposals (RFP) for new natural gas
transportation with an April 2013 deadline for responses. The RFP specified
FPL's preference for a northern pipeline that would connect from Transco
Station 85 in Alabama to a new market hub in central Florida and a second,
southern pipeline that would connect from the hub to FPL's operations in
southeastern Florida. Due to the substantial cost of building this new natural
gas transportation system, the RFP also noted that NextEra Energy would be
willing to consider financial involvement in support of a selected proposal to
facilitate timely construction to meet the critical May 2017 in-service date.
Bids to construct the new northern and southern pipelines were submitted by a
number of well-known, national pipeline companies. Through a competitive and
thorough evaluation process, the utility's selection team analyzed all bids
and determined that the Sabal Trail proposal for the northern project, and FPL
affiliate Florida Southeast Connection's self-build alternative for the
southern project, provided the greatest customer benefits at the lowest cost.
The obligations of Sabal Trail and Florida Southeast Connection to build and
operate, and FPL's obligations to be an anchor customer of, the pipelines are
subject to conditions set forth in precedent agreements executed by the
parties.
Both Sabal Trail and Florida Southeast Connection will be interstate natural
gas pipelines subject to Federal Energy Regulatory Commission approval and
oversight.
In conjunction with today's public announcement, FPL filed a petition for
prudence review with the Florida Public Service Commission (PSC). Subject to
PSC approval, FPL's cost of using the new pipelines to deliver natural gas for
its power plants will be factored into the fuel charge on customer bills
beginning in 2017, consistent with how the company's costs of using the two
existing pipeline systems are recovered.
Sabal Trail
The Sabal Trail project will include approximately 465 miles of interstate
natural gas pipeline (55 miles in Alabama, 196 miles in Georgia and 214 miles
in Florida). The Sabal Trail pipeline will be capable of transporting more
than 1 billion cubic feet per day of natural gas to serve local distribution
companies, industrial users and natural gas-fired power generators in the
Southeast.
Following FPL's selection of Sabal Trail through the RFP evaluation process, a
NextEra Energy subsidiary agreed to invest approximately $1 billion of the
system's projected cost of roughly $3 billion upon specified terms. NextEra
Energy was provided the option to invest with Spectra Energy in order to
facilitate on-time construction and enhance availability of financing for the
pipeline project.
"We are very pleased to partner with NextEra in providing the critical natural
gas infrastructure needed to help meet Florida's growing electricity demand,"
said Bill Yardley, president of U.S. transmission and storage for Spectra
Energy Corp. "This project will also make additional natural gas supplies and
new energy infrastructure available to power generators across Florida, thus
increasing the energy diversity, security and reliability across the state."
Florida Southeast Connection
The Florida Southeast Connection project will include approximately 126 miles
of interstate natural gas pipeline in Florida and is expected to cost
approximately $550 million to construct. The pipeline will initially be
capable of transporting 400 million cubic feet or more of natural gas per day
from Sabal Trail's Central Florida Hub to FPL's Martin Clean Energy Center.
The natural gas will be used to generate electricity for FPL's approximately
4.6 million customer accounts.
For more information, visit the following websites:
www.FPL.com/naturalgaspipelinesystem, www.SabalTrail.com and
www.FloridaSoutheastConnection.com.
Florida Power & Light Company
Florida Power & Light Company 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 serves approximately 4.6 million customer
accounts and is a leading Florida employer with approximately 10,000 employees
as of year-end 2012. During the five-year period ended December 31, 2012, the
company delivered the best service reliability among Florida investor-owned
utilities. As of year-end 2012, its typical residential customer bills are the
lowest in Florida, and based on data available in July 2012, are about 26
percent below the national average. A clean energy leader, 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, Inc. NEE. For more information, visit www.FPL.com.
NextEra Energy, Inc.
NextEra Energy, Inc. NEE is a leading clean energy company with
consolidated revenues of approximately $14.3 billion, more than 42,000
megawatts of generating capacity, and nearly 15,000 employees in 26 states and
Canada as of year-end 2012. Headquartered in Juno Beach, Fla., NextEra
Energy's principal subsidiaries are Florida Power & Light Company, which
serves approximately 4.6 million customer accounts in Florida and is one of
the largest rate-regulated electric utilities in the United States, and
NextEra Energy Resources, LLC, which together with its affiliated entities is
the largest generator in North America of renewable energy from the wind and
sun. Through its subsidiaries, NextEra Energy generates clean, emissions-free
electricity from eight commercial nuclear power units in Florida, New
Hampshire, Iowa and Wisconsin. For more information about NextEra Energy
companies, visit these websites: www.NextEraEnergy.com, www.FPL.com,
www.NextEraEnergyResources.com.
Spectra Energy Corp
Spectra Energy Corp SE, a FORTUNE 500 company, is one of North
America's premier pipeline and midstream companies. Based in Houston, Texas,
the company's operations in the United States and Canada include more than
22,000 miles of natural gas, natural gas liquids, and crude oil pipelines,
approximately 305 billion cubic feet (Bcf) of natural gas storage, as well as
natural gas gathering and processing, and local distribution operations. The
company also has a 50 percent ownership in DCP Midstream, the largest producer
of natural gas liquids and one of the largest natural gas gatherers and
processors in the United States. Spectra Energy has served North American
customers and communities for more than a century. The company's longstanding
values are recognized through its inclusion in the Dow Jones Sustainability
World and North America Indexes and the Carbon Disclosure Project's Global 500
and S&P 500 Carbon Disclosure Leadership Indexes. For more information, visit
www.spectraenergy.com.
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