JUNO BEACH, Fla., Aug. 27, 2015 /PRNewswire/ -- The Florida Public Service Commission (PSC) today approved a settlement agreement between Florida Power & Light Company (FPL) and the Office of Public Counsel, modifying FPL's proposed plan to acquire and phase out a coal-fired power plant. The plan approved today is projected to save FPL customers more than $70 million and avoid nearly 1 million tons of carbon dioxide emissions annually.
FPL is currently obligated to buy power through 2024 from the Cedar Bay Generating Plant, a 250-megawatt coal-fired facility located in Jacksonville, Fla., under a long-term contract that was initiated in 1988. The contract was based on the cost of power at the time; however, today FPL can generate electricity at a much lower cost. Upon taking ownership of the Cedar Bay plant, FPL plans to immediately terminate the purchased-power contract and reduce the plant's operations by 90 percent with the intention of eventually phasing the plant out of service.
"As we continue to look for ways to improve the efficiency of our system and keep costs down for our customers, this plan is another smart step forward to serve our customers with affordable clean energy now and in the future," said Eric Silagy, president and CEO of FPL. "Phasing this plant out of service is expected to save FPL customers more than $70 million and avoid nearly 1 million tons of carbon dioxide emissions every year."
In March, FPL petitioned the PSC with an initial proposal and then worked with the Office of Public Counsel to refine it. In July, FPL and Public Counsel jointly filed a revised proposal in the form of a settlement agreement, which the PSC approved today.
"We appreciate Public Counsel's willingness to work together with us on this. This is important recognition that smart investments can and do generate significant benefits for customers and for our state," added Silagy.
The plan also received support from influential environmental groups, including Audubon Florida, The Nature Conservancy, Sierra Club and the Natural Resources Defense Council.
"FPL and Public Counsel are to be commended for reaching a settlement in support of closing the Cedar Bay plant," said Audubon Florida Executive Director Eric Draper. "We applaud the PSC for approving this proposal that will reduce carbon emissions. Utilizing cleaner fuel sources like natural gas and solar result in lower emissions and groundwater use compared to coal-fired power plants."
Background
FPL has had a long-term purchased-power contract for the Cedar Bay plant since 1988. Under the 1988 contract, fixed payments for capacity and operating and maintenance expenses currently total more than $120 million a year with annual increases until the contract's expiration in 2024.
Like other purchased-power agreements, these fixed payments plus the cost of electricity generated by the plant are paid for through a utility's customers' rates. Once the acquisition is complete, FPL will terminate the purchased-power contract, eliminating the fixed payments that customers would otherwise pay through their rates. FPL then expects to decrease plant operations by about 90 percent so that it operates no more than about 5 percent of the time based on its true economics.
While the Cedar Bay plant is well-run, it nonetheless emits very high rates of carbon dioxide compared to FPL's current generation fleet, which has an overall CO2 emissions rate that is approximately 35 percent cleaner than the national average. Reducing the plant's operations will avoid nearly 1 million tons of carbon dioxide emissions every year. The U.S. Environmental Protection Agency calculates that this amount of carbon reduction is equivalent to saving more than 100 million gallons of gasoline or switching more than 23 million incandescent light bulbs to energy-efficient compact-fluorescent lights every year.
Based on the company's current analysis of operational needs, FPL expects to permanently decommission the Cedar Bay plant within the next couple of years. In 2017, when Florida's access to clean natural gas is expected to be enhanced by the new interstate natural gas pipeline entering commercial operation, FPL believes the Cedar Bay plant will no longer be economic to dispatch nor will it be needed for reliability. This means the plant will be retired nearly eight years sooner than it otherwise would have been were it not for the plan approved by the PSC today.
FPL's smart, innovative investments continue to deliver affordable clean energy for its customers. FPL has been strategically phasing out older, less efficient fossil fuel plants and replacing them with new, high-efficiency natural gas energy centers that use approximately one-third less fuel per megawatt-hour. Since 2001, FPL's investments in high-efficiency natural gas generation have enabled the company to cut its use of foreign oil by more than 99 percent – from more than 40 million barrels of oil in 2001 to less than 1 million barrels annually today. This has saved FPL customers more than $7.5 billion on fuel costs and prevented more than 85 million tons of carbon emissions.
FPL has also invested successfully to increase its use of zero-emissions nuclear and is currently working on tripling its use of solar energy by the end of 2016.
Florida Power & Light Company
Florida Power & Light Company is the third-largest electric utility in the United States, serving approximately 4.8 million customer accounts across nearly half of the state of Florida. FPL's typical 1,000-kWh residential customer bill is approximately 30 percent lower than the latest national average and, in 2014, was the lowest in Florida among 55 reporting utilities for the fifth year in a row. FPL's service reliability is better than 99.98 percent, and its highly fuel-efficient power plant fleet is one of the cleanest among all utilities nationwide. The company was recognized in 2015 as one of the most trusted U.S. electric utilities by Market Strategies International. A leading Florida employer with approximately 8,700 employees, FPL is a subsidiary of Juno Beach, Fla.-based NextEra Energy, Inc. (NYSE: NEE), a clean energy company widely recognized for its efforts in sustainability, ethics and diversity, including being ranked in the top 10 worldwide for innovativeness and community responsibility as part of Fortune's 2015 list of "World's Most Admired Companies." NextEra Energy is also the parent company of NextEra Energy Resources, LLC, which, together with its affiliated entities, is the world's largest generator of renewable energy from the wind and sun. For more information, visit these websites: www.NextEraEnergy.com, www.FPL.com, www.NextEraEnergyResources.com.
Cautionary Statements And Risk Factors That May Affect Future Results
This news release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical facts, but instead represent the current expectations of NextEra Energy, Inc. (NextEra Energy) and Florida Power & Light Company (FPL) regarding future operating results and other future events, many of which, by their nature, are inherently uncertain and outside of NextEra Energy's and FPL's control. Forward-looking statements in this press release include, among others, statements concerning adjusted earnings per share expectations and future operating performance, In some cases, you can identify the forward-looking statements by words or phrases such as "will," "may result," "expect," "anticipate," "believe," "intend," "plan," "seek," "aim," "potential," "projection," "forecast," "predict," "goals," "target," "outlook," "should," "would" or similar words or expressions. You should not place undue reliance on these forward-looking statements, which are not a guarantee of future performance. The future results of NextEra Energy and FPL and their business and financial condition are subject to risks and uncertainties that could cause their actual results to differ materially from those expressed or implied in the forward-looking statements, or may require them to limit or eliminate certain operations. These risks and uncertainties include, but are not limited to, the following: effects of extensive regulation of NextEra Energy's and FPL's business operations; inability of NextEra Energy and FPL to recover in a timely manner any significant amount of costs, a return on certain assets or a reasonable return on invested capital through base rates, cost recovery clauses, other regulatory mechanisms or otherwise; impact of political, regulatory and economic factors on regulatory decisions important to NextEra Energy and FPL; disallowance of cost recovery by FPL based on a finding of imprudent use of derivative instruments; effect of any reductions to or elimination of governmental incentives that support utility scale renewable energy projects of NextEra Energy Resources, LLC and its affiliated entities (NextEra Energy Resources) or the imposition of additional taxes or assessments on renewable energy; impact of new or revised laws, regulations or interpretations or other regulatory initiatives on NextEra Energy and FPL; effect on NextEra Energy and FPL of potential regulatory action to broaden the scope of regulation of over-the-counter (OTC) financial derivatives and to apply such regulation to NextEra Energy and FPL; capital expenditures, increased operating costs and various liabilities attributable to environmental laws, regulations and other standards applicable to NextEra Energy and FPL; effects on NextEra Energy and FPL of federal or state laws or regulations mandating new or additional limits on the production of greenhouse gas emissions; exposure of NextEra Energy and FPL to significant and increasing compliance costs and substantial monetary penalties and other sanctions as a result of extensive federal regulation of their operations; effect on NextEra Energy and FPL of changes in tax laws and in judgments and estimates used to determine tax-related asset and liability amounts; impact on NextEra Energy and FPL of adverse results of litigation; effect on NextEra Energy and FPL of failure to proceed with projects under development or inability to complete the construction of (or capital improvements to) electric generation, transmission and distribution facilities, gas infrastructure facilities or other facilities on schedule or within budget; impact on development and operating activities of NextEra Energy and FPL resulting from risks related to project siting, financing, construction, permitting, governmental approvals and the negotiation of project development agreements; risks involved in the operation and maintenance of electric generation, transmission and distribution facilities, gas infrastructure facilities and other facilities; effect on NextEra Energy and FPL of a lack of growth or slower growth in the number of customers or in customer usage; impact on NextEra Energy and FPL of severe weather and other weather conditions; threats of terrorism and catastrophic events that could result from terrorism, cyber attacks or other attempts to disrupt NextEra Energy's and FPL's business or the businesses of third parties; inability to obtain adequate insurance coverage for protection of NextEra Energy and FPL against significant losses and risk that insurance coverage does not provide protection against all significant losses; a prolonged period of low gas and oil prices could impact NextEra Energy Resources' gas infrastructure business and cause NextEra Energy Resources to delay or cancel certain gas infrastructure projects and for certain existing projects to be impaired; risk to NextEra Energy Resources of increased operating costs resulting from unfavorable supply costs necessary to provide NextEra Energy Resources' full energy and capacity requirement services; inability or failure by NextEra Energy Resources to manage properly or hedge effectively the commodity risk within its portfolio; potential volatility of NextEra Energy's results of operations caused by sales of power on the spot market or on a short-term contractual basis; effect of reductions in the liquidity of energy markets on NextEra Energy's ability to manage operational risks; effectiveness of NextEra Energy's and FPL's risk management tools associated with their hedging and trading procedures to protect against significant losses, including the effect of unforeseen price variances from historical behavior; impact of unavailability or disruption of power transmission or commodity transportation facilities on sale and delivery of power or natural gas by FPL and NextEra Energy Resources; exposure of NextEra Energy and FPL to credit and performance risk from customers, hedging counterparties and vendors; failure of NextEra Energy or FPL counterparties to perform under derivative contracts or of requirement for NextEra Energy or FPL to post margin cash collateral under derivative contracts; failure or breach of NextEra Energy's or FPL's information technology systems; risks to NextEra Energy and FPL's retail businesses from compromise of sensitive customer data; losses from volatility in the market values of derivative instruments and limited liquidity in OTC markets; impact of negative publicity; inability of NextEra Energy and FPL to maintain, negotiate or renegotiate acceptable franchise agreements with municipalities and counties in Florida; increasing costs of health care plans; lack of a qualified workforce or the loss or retirement of key employees; occurrence of work strikes or stoppages and increasing personnel costs; NextEra Energy's ability to successfully identify, complete and integrate acquisitions, including the effect of increased competition for acquisitions; NextEra Energy Partners, LP's (NEP's) acquisition of NET Holdings Management, LLC (NET Midstream) and other future acquisitions by NEP may not be completed and, even if completed, NextEra Energy may not realize the anticipated benefits of such acquisitions; environmental, health and financial risks associated with NextEra Energy's and FPL's ownership and operation of nuclear generation facilities; liability of NextEra Energy and FPL for significant retrospective assessments and/or retrospective insurance premiums in the event of an incident at certain nuclear generation facilities; increased operating and capital expenditures at nuclear generation facilities of NextEra Energy or FPL resulting from orders or new regulations of the Nuclear Regulatory Commission; inability to operate any of NextEra Energy Resources' or FPL's owned nuclear generation units through the end of their respective operating licenses; liability of NextEra Energy and FPL for increased nuclear licensing or compliance costs resulting from hazards, and increased public attention to hazards, posed to their owned nuclear generation facilities; risks associated with outages of NextEra Energy's and FPL's owned nuclear units; effect of disruptions, uncertainty or volatility in the credit and capital markets on NextEra Energy's and FPL's ability to fund their liquidity and capital needs and meet their growth objectives; inability of NextEra Energy, FPL and NextEra Energy Capital Holdings, Inc. to maintain their current credit ratings; impairment of NextEra Energy's and FPL's liquidity from inability of creditors to fund their credit commitments or to maintain their current credit ratings; poor market performance and other economic factors that could affect NextEra Energy's defined benefit pension plan's funded status; poor market performance and other risks to the asset values of NextEra Energy's and FPL's nuclear decommissioning funds; changes in market value and other risks to certain of NextEra Energy's investments; effect of inability of NextEra Energy subsidiaries to pay upstream dividends or repay funds to NextEra Energy or of NextEra Energy's performance under guarantees of subsidiary obligations on NextEra Energy's ability to meet its financial obligations and to pay dividends on its common stock; and effect of disruptions, uncertainty or volatility in the credit and capital markets of the market price of NextEra Energy's common stock. NextEra Energy and FPL discuss these and other risks and uncertainties in their annual report on Form 10-K for the year ended December 31, 2014 and other SEC filings, and this news release should be read in conjunction with such SEC filings made through the date of this news release. The forward-looking statements made in this news release are made only as of the date of this news release and NextEra Energy and FPL undertake no obligation to update any forward-looking statements.
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SOURCE Florida Power & Light Company