Florida Power & Light told state regulators Tuesday that it should be allowed to build a $1.2 billion gas-fired power plant on land it owns in Okeechobee County to meet what it projects will be a growing demand for energy by 2019.
But the proposal has drawn fierce opposition by the state agency that represents consumers; the Florida Industrial Power Users Group; and two environmental groups who argue that the move would bring unnecessary overbuilding designed to guarantee the utility’s profits and suppress the need for conservation and renewable energy.
FPL’s proposal “will result in uneconomic generating capacity and add cost to ratepayers under the guise of reliability,” said James Whitlock, lawyer for the Southern Alliance of Clean Energy, which advocates for renewable energy in Florida.
Testimony showed that for the average FPL customer, who is expected to use 14,118 kw hours in 2020, the additional annual cost for the plant will be $17.22.
The two-day hearing, known as a “determination of need,” is the first step toward approving a power plant in Florida. FPL said it will need an additional 1,052 megawatts of power generation by 2019 and another 1,409 megawatts in 2020, with demand continuing to grow in the future.
But opponents want regulators to require utilities to increase energy conservation and reduce demand, while also opening up the state to more solar and renewable energy options and reducing Florida’s reliance on carbon-based fuels.
The hearing offered a glimpse into the arguments that are at the forefront of Florida’s energy dilemma as the state’s legacy utility companies face competition from solar and other renewable forms of energy.
In recent years, the Public Service Commission has allowed FPL to reduce its focus on conservation, approving controversial requests that were promised as cost savings to customers, but instead resulted in higher costs.
On Thursday, regulators will decide on a fuel-buying program used by FPL and other utilities that allows them to hedge their natural gas purchases in an effort to save customers money. Documents filed with the PSC, however, show that between 2002 and 2014, FPL’s handling of those fuel purchases have resulted in $4 billion in losses, requiring customers to pay more in pass-through fuel costs. The company’s projected loss for 2015 is nearly $700 million.
By next year FPL will generate 72 percent of its electricity from natural gas. Last year, FPL persuaded the PSC to let it charge customers to invest $191 million in natural gas fracking projects in Oklahoma. The utility predicted the project would save customers millions, but in August it told regulators that the actual costs for 2015 amounted to a $5.8 million loss.
Critics argue that as the energy market becomes more diverse and competitive in other parts of the nation, FPL has relied on regulatory policies that allow it to boost its spending on infrastructure costs, like power plants, that generate earnings for shareholders.
FPL attorney Will Cox told the PSC that the proposal would build a state of the art plant to generate 1,622 megawatts and would be “the most efficient in the state.”
He said the new plant, planned for property the company owns in Okeechobee County, would create 30 jobs, save customers money and provide the lowest cost generation of any similar gas-fired plant — $754 per kilowatt.
Cox said that in addition to burning carbon-based fuels at its power plants, the company’s long-term plans include adding 223 kilowatts of utility-scale solar online by 2016 and using all the “conservation reasonably available.”
But opponents — which include the Office of Public Counsel representing consumers, the Florida Industrial Power Users Group, the Southern Alliance for Clean Energy and the Environmental Confederation of Southwest Florida — argue that the power plant is not needed, especially if regulators require more solar energy.
“FPL’s testimony shows it has done nothing more than pay lip-service to utility-scale solar and energy efficiency to placate the commission,” Whitlock said.
He and others also disputed a claim by FPL that it needs the additional plant to meet its goal of being able to provide 20-percent reserve generation in the event of an emergency — with the requirement that at least half of that reserve is coming from gas-fired power plants.
Patricia Christensen of the Office of Public Counsel, which represents consumers before the PSC, said those reserve ratios are outdated and “unnecessary” and, if sanctioned by regulators, will lead to the “uneconomic overbuilding of generation.”
Bradley Marshall, a lawyer for the Environmental Confederation of Southwest Florida, also argued that the new plant is unnecessary because FPL’s fleet of generation plants is already up-to-date and efficient.
“They have an incredibly reliable system,” he said.
FPL has decreased conservation incentives it offered to customers who volunteered to have their water heaters and air-conditioning systems on the residential load management system.
For water heaters, FPL lowered the credit from $3 a month to $1.50, and for air-conditioning from $6 to $3 per month. At the same time, an annual report shows that 94,700 customers were projected to participate in the program, but the actual number of participants in 2014 was 54,542.
Mary Ellen Klas: @MaryEllenKlas and email@example.com