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Florida vulnerable to energy price spikes, group warns

TALLAHASSEE – Florida's overwhelming dependence on imported fuel for electricity and transportation makes the state vulnerable to spikes in prices and should lead to a renewed emphasis on energy efficiency and conservation, researchers and environmentalists told a House committee Wednesday.

The presentation of the latest study of the Florida Energy Efficiency and Conservation Act garnered increased attention from the members of the House Energy & Utilities subcommittee at a time when the state is weighing diversification of its energy mix against the high costs of building new power plants.

"What's the more important societal goal: reliability or cost?" asked Rep. John Wood, R-Winter Haven.

Added Rep. Alan Williams, D-Tallahassee: "What should we be doing?"

Edward Regan, of the Public Utility Research Center at the University of Florida, told the committee that use of energy efficiency helps "you avoid building generators."

Florida utilities want to build as many as four new nuclear plants that would cost customers $50 billion. State leaders have seen nuclear as a way to diversify energy sources in Florida, where the bulk of electricity comes from natural gas plants.

While natural gas prices remain near historic lows, state officials worry that the over dependence on one energy source could make utility customers susceptible to high utility bills if prices began to rise.

But Susan Glickman, a lobbyist for the Southern Alliance for Clean Energy, an environmental group, told the committee that many of the state's energy needs could be met with energy efficiency and effective planning, rather than building expensive new nuclear plants.

New power plants, Glickman added, benefit the utilities because power companies make money based on the capital cost of building a new electricity generator, rather than trying to conserve energy.

"What the utilities do is understandable because that is their business model," Glickman told the committee. "We don't use energy efficiency as a primary resource."

Instead, the state has put it eggs in the nuclear basket with an advance fee that enables utilities to charge their customers upfront for proposed nuclear plants, whether they build the projects or not.

For example, Duke Energy has spent more than $1 billion of customers' money for a proposed nuclear plant in Levy County, although the utility has yet to decide whether it will actually build the plant. If Duke does build the new plant, it wouldn't come online until at least 2024 and would cost $24 billion.

"You pick winners and losers when you shift 100 percent of the risk from shareholders to ratepayers," Glickman told the lawmakers.

Robert "Schef" Wright, a lawyer for the Florida Retail Federation, said the state could add to its energy diversity if it would allow retailers to compete in the electricity market. Wright said retailers would like to produce power with renewable energy such as solar on their rooftops and sell that power to the grid. But the state allows utilities to control the electricity market, so no one else can make money.

"Let market forces work in the private sector," Wright urged the lawmakers. "Don't exempt them, which the advance nuclear cost recovery does."

Williams said the energy efficiency study gives support for making changes to the state's energy policies, but it remains unclear whether lawmakers want to act on it.

"We have a (state energy efficiency study) we can use to hit them over the head with," Williams said. "The question is, is there the political will to do it?"

Rep. Michelle Rehwinkel Vasilinda, D-Tallahassee, said the questions from the committee highlighted the concern lawmakers have about the issue and that they are paying attention.

"This was refreshing," Rehwinkel Vasilinda said. "This was the most engaged meeting I've been at this year."

Ivan Penn can be reached at ipenn@tampabay.com or (727) 892-2332.

Florida vulnerable to energy price spikes, group warns 01/23/13 [Last modified: Wednesday, January 23, 2013 4:27pm]
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