FPL argues for new $1.2 billion power plant in Okeechobee County
Florida Power & Light told state regulators Tuesday that it should be allowed 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 state agency that represents consumers, a coalition of large industrial users, and two environmental groups fiercely oppose the proposal and argued that it is unnecessary overbuilding designed to guarantee the utility's profits and suppress the need for conservation and renewable energy.
FPL’s proposal “will result in the 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 cost for the plant will be $17.22.
The two-day hearing, known as a "determination of need," is the first step to approving a power plant in Florida. FPL said it will need an additional 1,052 megawatts of power generation by 2019, another 1,409 megawatts in 2020 and demand continuing to grow in the future.
But opponents want regulators to require utilities to increase energy conservation to reduce demand while also opening the state to more solar and renewable energy options to reduce Florida’s reliance on carbon-based fuels.
The hearing offered a glimpse into the arguments that are at the forefront of the state's energy dilemma as the state’s legacy utility companies face competition from solar and other renewable forms of energy. Meanwhile, FPL's dependence on natural gas, by contrast, is increasing -- 68 percent in 2014 and estimated to rise to 72 percent by next year.
In recent years the PSC, however, has allowed FPL to reduce its focus on conservation and instead approved controversial requests that were promised as cost savings to customers, but instead resulted in higher costs.
On Thursday, regulators will decide on fuel-buying program used by FPL and other utilities that allows them to hedge their natural gas purchases in an effort to save customer 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.
Last year, FPL also persuaded the PSC to allow it to 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 in August that the actual costs for 2015 was 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.
But FPL attorney Will Cox told the PSC that the proposal would build the “state of art” power plant to generate 1,622-megawatt plant that 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 new 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, which represents 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 required more solar energy.
“FPL’s testimony shows it has done nothing more than pay lip-service to utilitiy-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 for having enough capacity to have 20 percent reserve generation in the event of an emergency, and a requirement that at least half of that reserve coming from gas-fired power plants.
Whitlock called those projections, based on 16-year-old data, “anecdotal, self-serving, in-house analysis” that “no longer reflects reality.’’
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 increased the demand for new power plants by suppressing its conservation programs. For example, it has reduced the monthly credits given to consumers who volunteered to have their water heaters and air conditioning systems on the residential load management system.
For water heaters, for example, 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, the demand side management annual report shows that 94,700 participants were projected in the programs but the actual number of participants was nearly half of their projection in 2014 with 54,542 participants, with a 1.6 percent penetration rate.