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Florida Power & Light Company
(FPL) today filed a petition with the Florida Public Service Commission (PSC)
to request approval to acquire a power plant that it has had under a long-term
contract to purchase power since 1988.
www.FPL.com
Upon taking ownership of the Cedar Bay Generating Plant, a 250-megawatt
coal-fired facility located in Jacksonville, Fla., FPL plans to immediately
terminate the contract and reduce the plant's operations by 90 percent, with
the intention of eventually phasing the plant out of service. This plan is
projected to save FPL customers an estimated $70 million and prevent nearly 1
million tons of carbon dioxide emissions annually.
"Although years ago it made sense to buy this plant's power to serve our
customers, times have changed. We have invested billions of dollars to improve
the efficiency of our system, reduce our fuel consumption, prevent emissions
and cut costs for our customers," said Eric Silagy, president and CEO of FPL.
"Now we're in a position to take ownership of the facility and effectively buy
out an outmoded contract with the goal of ultimately phasing the plant out of
service, which will mean reduced carbon emissions and millions of dollars in
savings for our customers. This proposal is another smart step forward in our
ongoing effort to serve our customers with affordable clean energy now and in
the future."
"The Nature Conservancy welcomes FPL's innovative approach to promote energy
solutions that will help reduce emissions in Florida," said Temperince Morgan,
executive director of the Florida Chapter of The Nature Conservancy.
In 1988, the PSC approved a long-term purchased-power agreement between FPL
and the direct owner of the Cedar Bay plant, Cedar Bay Generating Company,
Limited Partnership. The contract was based on the cost of power at the time;
however, today FPL can generate electricity at a much lower cost. Also, while
the Cedar Bay plant is well-run, it nonetheless emits very high rates of CO2
compared with FPL's current generation fleet, which has an overall CO2
emissions rate much lower than the national average.
Under the existing purchased-power agreement, fixed payments for capacity and
operating and maintenance total more than $120 million a year currently with
annual increases until the contract's expiration in 2024. Like other
purchased-power agreements, the fixed payments are paid for by customers
through their rates, in addition to the cost of energy when the plant is
operating.
In its filing with the PSC today, FPL proposes to purchase CBAS Power Inc.,
the indirect owner of the plant, from CBAS Power Holdings, LLC, for a price of
$520.5 million. FPL would then terminate the purchased-power contract,
avoiding the fixed payments that customers would otherwise pay through their
rates over the remaining life of the contract.
Upon taking ownership, FPL expects to decrease plant operations by about 90
percent so that it operates no more than about 5 percent of the time based on
its true economics. Reducing the plant's operations will prevent nearly 1
million tons of carbon dioxide emissions every year. The U.S. Environmental
Protection Agency (EPA) calculates that this amount of carbon reduction is
equivalent to saving more than 100 million gallons of gasoline or switching
more than 23 million incandescent light bulbs to energy-efficient
compact-fluorescent lights every year.
Based on the company's current analysis of operational needs, FPL expects to
permanently decommission the Cedar Bay plant within the next two to three
years. In 2017, when Florida's access to clean natural gas is expected to be
enhanced by the new interstate natural gas pipeline entering commercial
operation, FPL believes that the Cedar Bay plant will no longer be economic to
dispatch or needed for reliability, and therefore would be retired nearly
eight years sooner than it otherwise would have been.
FPL is requesting PSC approval of the purchase by July 31, 2015, so that the
purchase can be completed as soon as possible to maximize customer savings.
The fixed payments under the existing purchased-power contract are paid for
through the capacity cost recovery clause on a customer's electric bill, and
FPL requests that the costs and customer savings associated with its proposal
be handled through the same mechanism. Compared with the current fixed
payments, the net cost is expected to be slightly higher during approximately
the first three years, but then significantly lower over the remaining life of
the contract – producing total projected net savings of approximately $70
million for customers.
The proposed plan is consistent with FPL's ongoing strategy of making smart,
innovative investments to deliver affordable clean energy for its customers.
Since 2001, FPL's investments in high-efficiency natural gas generation have
enabled the company to cut its use of foreign oil by more than 99 percent –
from more than 40 million barrels of oil in 2001 to less than 1 million
barrels annually today. FPL has been strategically phasing out older, less
efficient fossil fuel plants and replacing them with new, high-efficiency
natural gas energy centers that use approximately one-third less fuel per
megawatt-hour. The company has also invested heavily to increase its use of
zero-emissions nuclear and solar energy and recently announced plans to triple
its solar capacity by the end of 2016.
Thanks in large part to the company's affordable clean energy strategy FPL is
well-positioned to meet the EPA's Clean Power Plan targets for reductions in
CO2 emissions – with no expected additional costs – unlike many electric
utilities across the country. Likewise, by lowering the state's overall
emissions rate, the plan filed today will help Florida meet the EPA's proposed
statewide CO2 emissions reduction goals.
"It's this kind of forward-thinking that not only identifies solutions that
are truly a win-win, but also contribute to our parent company's recognition
as one of the world's most admired companies and among the top 10 in the world
for innovativeness and community responsibility," noted Silagy.
Florida Power & Light Company
Florida Power & Light Company is the third-largest electric utility in the
United States, serving more than 4.7 million customer accounts across nearly
half of the state of Florida. FPL's typical 1,000-kWh residential customer
bill is approximately 25 percent lower than the national average and, in 2014,
was the lowest in Florida among reporting utilities for the fifth year in a
row. FPL's service reliability is better than 99.98 percent, and its highly
fuel-efficient power plant fleet is one of the cleanest among all utilities
nationwide. The company was recognized in 2014 as the most trusted U.S.
electric utility by Market Strategies International, and has earned the
national ServiceOne Award for outstanding customer service for an
unprecedented 10 consecutive years. A leading Florida employer with
approximately 8,700 employees, FPL is a subsidiary of Juno Beach, Fla.-based
NextEra Energy, Inc.
, a clean energy company widely recognized for
its efforts in sustainability, ethics and diversity, including being ranked in
the top 10 worldwide for innovativeness and community responsibility as part
of Fortune's 2015 list of "World's Most Admired Companies." NextEra Energy is
also the parent company of NextEra Energy Resources, LLC, which, together with
its affiliated entities, is the world's largest generator of renewable energy
from the wind and sun. For more information, visit these websites:
www.NextEraEnergy.com, www.FPL.com, www.NextEraEnergyResources.com.
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