In response to a federal order, Florida Power & Light Company today will propose a fully independent, incentive-driven transmission company that is expected to provide continued reliable electrical service to peninsular Florida. Florida Power Corporation and Tampa Electric Company joined FPL in the proposal filed with the Federal Energy Regulatory Commission (FERC).
The companies are responding to an order issued earlier this year by the FERC requiring all investor-owned utilities to submit plans to create Regional Transmission Organizations (RTO) that would become operational by Dec. 15, 2001. The FERC said its goal is to ensure that all electricity suppliers have equal access to the transmission grid.
The three Florida utilities said the proposed transmission company (Transco) would be responsible for the lines carrying electricity from power generating plants primarily within the state to substations in peninsular Florida. Responsibility for the power plants and the distribution substations and lines that carry power directly to homes and businesses will remain with the utilities.
"We believe our joint proposal today will meet the FERC's requirement and allow us to continue to provide reliable electrical service to our customers," said Paul Evanson, president of FPL.
The three utilities, which have been working closely with more than 35 other interested parties for more than eight months, propose a fully independent transmission company versus an alternative form of RTO known as an independent system operator.
"FPL favors the transmission company form of an RTO for peninsular Florida because it uses a traditional for-profit business model which aligns the interests of customers, management and shareholders," Mr. Evanson said.
A Transco would be organized and governed much like any corporation with a board of directors to whom management is accountable for operating efficiently and maximizing shareholder value. It has the incentive to be cost efficient, to expand transmission facilities to meet customer and market needs and to provide reliable service. It also provides an effective means to raise capital for construction of new transmission assets to improve system access and reliability.
Some issues on the operation of the Florida Transco remain and meetings with the stakeholders will continue. The final details of the Transco will be filed with the FERC on Dec. 15.
Under an RTO, FPL will contribute its transmission assets to an independent transmission company, a limited liability corporation, that will own and operate the system. A separate corporation will be formed that will own and manage the transmission company, and it will be the corporation that may issue publicly traded stock. In return, FPL will receive a non-voting ownership interest in the company. None of the market participants will be allowed to own voting shares in the corporation.
While the proposed Transco would be a for-profit company, it will be regulated by the FERC with oversight by the Florida Public Service Commission. The FPSC provides oversight for planning, construction responsibility, reliability and operations. The FERC would set rates, terms and conditions for the operations of the company. In addition, the Florida Reliability Coordinating Council would remain a reliability oversight organization.
"Working closely with the FPSC and the Florida Public Counsel, we have been able to provide our customers with a highly reliable, low-cost system," said Mr. Evanson. "Our proposal for a Transco, coupled with our efforts to increase our power reserve margin from 15 to 20 percent, will further ensure that the people of Florida do not encounter the high rates and power shortages faced by people in California and other states that have adopted other approaches."
Florida Power & Light is the principal subsidiary of FPL Group, Inc. , one of the nation's largest providers of electricity-related services with annual revenues of more than $6 billion. The company serves 3.9 million customer accounts in Florida. FPL Energy, LLC, FPL Group's U.S. and international energy generating subsidiary, is a leader in producing electricity from clean and renewable fuels. Information is available on the Internet at www.fplgroup.com and www.fpl.com . For the complete filing, see www.flatransco.com .
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SOURCE: Florida Power & Light Company