Regulators and the state's largest utilities have reached an agreement for a moratorium on "hedging" of natural gas purchases, a gamble on future fuel prices that has cost customers billions.
The practice was intended to reduce the volatility of electric bills by eliminating wide price swings in energy costs. Utilities agreed to buy future fuel at a fixed cost; if natural gas prices rose, the locked-in price would benefit utility customers. If prices fell, those customers would end up paying too much.
It has been a consistent money-loser for customers — topping $6 billion since 2002 and $1.38 billion since the start of 2015.
"We hear the opinions of the interveners and staff and want to have a good-faith conversation of what the future of hedging should look like," Duke Energy Florida said in a statement. "We are pausing to allow for those conversations to occur and seek the best outcome for our customers."
The state Public Service Commission on Wednesday approved an agreement among Duke, Tampa Electric Co., Gulf Power Co., the Office of Public Counsel, the Florida Industrial Power Users Group and the Florida Retail Federation. The agreement calls for a moratorium on hedging through 2017 while the parties study and negotiate the issue.
In a separate case, the state's largest utility, Florida Power & Light of Juno Beach, agreed to halt hedging.
"We will work with other utilities and customer representatives at a PSC workshop in 2017 to determine the next steps for hedging," Tampa Electric said in a statement.
Jon Moyle, an attorney representing the Florida Industrial Power Users Group, a group of large commercial users, said the utilities should "pay at the pump."
"My clients have been urging that hedging be stopped, period," he said. The moratorium is "a step in the right direction from our perspective. We're hopeful that when the review is done, the result will be that hedging is something that doesn't make a lot of sense now," Moyle said.
Contact Jerome R. Stockfisch at email@example.com.