Florida regulators Thursday voted to allow Florida Power & Light to invest up to $500 million annually in the potentially risky natural gas business in what critics call a rich and precedent-setting giveaway to the utility.
The investments would not be financed by FPL's shareholders but by its 4.77 million customers, according to the proposal.
The unanimous decision by the Florida Public Service Commission does not directly impact Tampa Bay residents because the Palm Beach County-based utility does not have customers in the area. But it is nonetheless watched closely by other utilities, including Duke Energy, that may consider similar investments.
FPL said the projects in which it invests will ultimately result in significant cost savings by securing a stable supply of natural gas at lower prices, noting customers will finance the investment over 30 years. Those savings, the utility says, will ultimately far surpass the investment cost.
FPL said it will invest in projects that primarily use the controversial ''fracking'' process that injects liquids into the earth to free up natural gas.
But PSC staffers and the Office of Public Counsel, which represents utility customers, vehemently objected. PSC staffers said the magnitude of the proposal requires caution and that the PSC should approve such investments on a case-by-case basis rather than give the utility carte blanche.
The OPC said in a report to commissioners the proposal "would open the door for every other investor-owned utility to see a risk-free way to expand (the) rate base without a determination of need and without much scrutiny."
Commissioners added conditions to their approval that they said protect consumers. They limited the deal to five years and said it would have to be renewed after a review. They also required a third-party audit.
Commissioner Julie Brown said she supported the utility's proposal because it was a way to secure a reliable supply of low-cost fuel and said that FPL is an industry leader that had previously confounded skeptics.
"My understanding is the most important thing here is for customers to know that the fuel savings for these projects will more than offset the production costs so that there's a net benefit to the customers," said Brown, addressing PSC accounting and finance director Andrew Maurey. "That's correct? That's the philosophy?"
Maurey answered, "That's the company's position, yes."
Commissioner Lisa Edgar said she too felt safeguards made it unnecessary to force FPL to seek prior PSC approval for each individual investment. The company has noted it must move quickly to secure such investments and having to get pre-approval handcuffed the utility.
"I think that it is the responsibility of our professional staff to be cautious and conservative," Edgar said. "And sometimes it is our responsibility to maybe nudge that or push or pull or twist it around and consider what other approaches perhaps may also be worthwhile."
In December, the PSC voted to allow FPL to invest $191 million in a lone Oklahoma drilling project despite opposition.
The "decision approving FPL's guidelines puts nearly half of Florida's businesses and residents squarely in the risky oil and natural gas business in places like Oklahoma and Texas," said Jon Moyle, an attorney representing the Florida Industrial Power Users Group.
Florida utilities stand to make significant financial gains with the investment strategy.
FPL officials argue these projects greatly benefit customers by lowering the cost of the fuel.
"Proactive initiatives like this have been instrumental in helping us reduce customer rates, maintain reliability and provide clean energy for our customers," FPL spokesman Mark Bubriski said. "Since 2001, our investments in natural gas energy have saved customers more than $7.5 billion in fuel costs."
Duke has said it is watching the FPL case, though the utility says it is undecided on embarking on a similar investment.
On Thursday, company spokeswoman Suzanne Grant would not say if the utility is still considering similar natural gas investments. "It is not a focus for us right now," Grant said.
Contact William R. Levesque at email@example.com.