Florida utility bills could rise to pay for new natural gas technology

Lawmakers are moving forward a proposal despite appeals from some over increasing electric bills.
A burner on a stove emits blue flames from natural gas. A Florida bill would create incentives for the development of renewable natural gas.
A burner on a stove emits blue flames from natural gas. A Florida bill would create incentives for the development of renewable natural gas. [ TIM BOYLE | Getty Images North America ]
Published March 29, 2023|Updated March 30, 2023

TALLAHASSEE — Floridians could see their electric bills increase again in the next two years so that utility companies can build infrastructure that captures methane emitted from solid waste and turns it into natural gas under a measure getting approval from legislators.

The Senate Community Affairs Committee gave unanimous approval to SB 1162 on Wednesday, despite appeals from residential customers who complained about rising electric bills. The bill would create incentives for the development of renewable natural gas and green hydrogen and allow utility companies to add the cost of building the new technology to customer bills.

Alberto Salvi, a Florida Power & Light customer from Pembroke Pines who uses a wheelchair, told the committee that he is facing a 22% increase in his utility bill in April but his Social Security check is not going up to cover it.

“I’m strongly opposing SB 1162 today because of the undue hardship it is going to create on folks like myself, the vulnerable elderly, and people on fixed income,” he said, adding that he was not opposed to renewable technology. “But what I am opposing is my utility bill outpacing my cost of living and that’s going to create undue hardship for myself, my family and loved ones and also folks that are vulnerable. … I don’t see a benefit that’s going to help me.”

The bill allows the Public Service Commission to let electric and natural gas public utilities pass on to customers the cost of building renewable natural gas facilities and hydrogen fuel infrastructure projects or to purchase those fuels from vendors and recover the costs.

In its analysis of the bill, the Public Service Commission noted that it already has the authority to allow utilities to recover the cost of using alternative fuels to promote fuel diversification. It said: “The plain language of the bill appears to constrain the Commission’s authority to limit costs to be recovered from customers.”

Capturing methane from landfills

The process of producing renewable natural gas attempts to capture methane gas from decomposing waste in landfills, municipal treatment plants that process human waste and agriculture operations that generate animal waste.

The renewable natural gas is purified and, according to the U.S. Department of Energy, the gas is “fully interchangeable with conventional natural gas,” although it is more expensive to produce than conventional natural gas.

According to the Senate staff analysis of the bill, if approved, consumer costs would rise because renewable natural gas and hydrogen fuel are more expensive to produce and transport than other sources and “customers of public utilities will pay higher rates than they would otherwise have paid.”

The staff analysis notes that when the Public Service Commission sets utility rates, based on a “reasonable” rate of return on equity for each utility, it generally does not include the cost of fuel production. If the measure is approved, however, the cost of the renewable natural gas and hydrogen projects would be added to the rate base, resulting in higher customer bills and higher utility profits.

Ronald Brisé, a lobbyist for Chesapeake Gas, a former legislator and Public Service commissioner, told the Senate committee that there could be a reduction in rates because the fuel source “will be local.” He cited the Virginia law on which the Florida proposal is modeled, and emphasized it will be up to the Public Service Commission to “make sure there is not an undue impact on consumers.”

However, a footnote in the application from the Roanoke Gas Co. to Virginia regulators indicated that there was no guarantee that rates would decline when it uses renewable natural gas.

Sen. Lori Berman, a Boynton Beach Democrat, asked the bill sponsor, Sen. Nick DiCeglie, R-St. Petersburg, what the impact of the bill would be to customer bills.

“That’s a great question,” he answered. “We’re looking to get away from traditional energy sources, right. So this bill, when we talk about renewable natural gas, hydrogen, this is the future. … As to the question of if this will lead to increased rates, we don’t know.”

Utility bills high and going higher

Bradley Marshall, a lawyer with the environmental advocacy group EarthJustice who represents residential customers before the Public Service Commission, said Florida’s electric bills are already the ninth-highest in the nation, and if the fuel was economical for utility companies to use, they would be purchasing it already.

“Far from promoting renewable energy, the only thing this bill would promote is further increases in customer bills and utility profits,” Marshall said last week at a meeting of the House Energy, Communications & Cybersecurity Subcommittee.

He said the increases in Florida’s bills are the result of a ballooning rate base as state regulators allow investor-owned utilities to invest in projects that are “overbuilding our system.”

Zayne Smith, director of advocacy for AARP Florida, opposed the bill and said the cost of utilities has been rising for the last 15 years in Florida. She urged legislators to at least cap the total amount utility companies could pass on to customers and not to allow a return on investment for the fuel. Berman and Sen. Rosalind Osgood, a Tamarac Democrat, said they would also like to see a cap.

The bill sponsors say natural gas is cleaner for the environment than oil and coal by using a fuel that leads to fewer carbon emissions. However, many climate activists don’t agree that renewable natural gas is carbon neutral, saying that it ultimately greenwashes the gas industry.

“We still have to oppose the bill because the last thing we need is more methane, which is essentially CO2 on steroids,” said David Cullen, lobbyist for the Sierra Club of Florida.

Arguing for renewable energy

Adam Basford, a lobbyist for Associated Industries of Florida, which represents the state’s largest utilities, said the bill was “important to the business community” because “in order to move forward, we have to find new ways to produce energy and renewable ways like this are going to do that.”

Last year, Associated Industries of Florida was among the supporters of a bill written by Florida Power & Light that would have slashed financial incentives for rooftop solar installation and imposed new fees on users.

Surprising supporters of the bill, DeSantis vetoed the bill, citing cost pressures on homeowners. “The state of Florida should not contribute to the financial crunch that our citizens are experiencing.”

It is not known where the governor will land on the natural gas measure this year. Like the bill to restrict residential solar expansion, the proposal has the support of House and Senate Republican leaders and the governor has buoyed the natural gas industry by backing another bill to prohibit local governments from restricting gas stoves or furnaces.

For the last decade, state regulators and legislators have allowed the state to increase its reliance on natural gas-related fuels.

The Public Service Commission gave Florida Power & Light the ability to build not only new power plants that use gas from Pennsylvania and Texas but approved the $3 billion Sabal Trail Transmission Pipeline to pump natural gas from Alabama to Central Florida. And last fall, Florida Power & Light’s parent company, NextEra Energy, agreed to purchase a large portfolio of facilities that convert landfill gas to electricity, expanding its portfolio of renewable natural gas assets.

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