JUNO BEACH, Fla., March 15, 2016 /PRNewswire/ -- Consistent with its preliminary proposal announced in January, Florida Power & Light Company (FPL) today filed a comprehensive four-year request with the Florida Public Service Commission (PSC) for new base rates that would be phased in beginning in 2017, following the expiration of the company's current rate agreement.
With rates among the lowest in the nation, FPL's typical 1,000-kWh residential customer bill today is lower than it was 10 years ago – down approximately 15 percent compared with 2006 rates. At the same time, the company's service ranks among the cleanest and most reliable in the country. FPL's four-year base rate plan has been designed to continue to support investments to further modernize the electric infrastructure while keeping costs down for customers over the long term. Even with the plan's proposed base rate increase, FPL's typical residential and business customer bills are projected to remain lower than 2006 levels through the year 2020.
"Due to our consistent, system-wide investments in smart, innovative technology, the service we provide our customers today is cleaner and more reliable than ever before while our typical customer bills are lower than they were a decade ago and among the lowest in the nation," said Eric Silagy, president and CEO of FPL. "The fact that we've been able to achieve such demonstrable results is no accident, but rather the result of a long-term, deliberate strategy that today is yielding real and tangible benefits for our customers and the state of Florida. That said, we must continue building on our unparalleled combination of outstanding service and affordable rates for customers, and key to that is continuing to make smart, long-term investments in our system. Fundamentally, that's what our 2017-2020 request is all about."
Saving Customers Money Through Efficient Service
FPL ranks No. 1 among major U.S. utilities based on its non-fuel operating and maintenance (O&M) costs per kilowatt-hour of retail sales. Compared with what an average utility in the U.S. would spend to serve its customers, FPL's innovative practices and relentless focus on operating efficiently save customers nearly $2 billion per year, which equates to savings of about $17 a month on a typical customer's bill, or more than $200 per year that stays in the customer's pocket.
The company is committed to operating efficiently in order to deliver reliable service while keeping bill increases to a minimum, even while the costs of other essential products and services have risen dramatically. While FPL's typical bill is approximately 15 percent lower than it was a decade ago, the costs of many other consumer goods and services have risen substantially since 2006. For example, the prices of food and home insurance have increased by approximately 28 percent while the cost of medical care has increased by approximately 38 percent, according to U.S. Department of Labor statistics.
Similarly, the costs of many materials and products that FPL must purchase in order to provide affordable, reliable power to customers have increased. While FPL's focus on efficiency and productivity has lessened the impact, these increased expenses combined with the need to add infrastructure to serve significant customer growth are driving higher operating costs today and in the coming years.
Currently, FPL serves more than 4.8 million customer accounts, including approximately 135,000 that were added during 2014 and 2015. Customer growth is expected to continue in the months and years ahead, with the cumulative total of new accounts since the end of 2013 forecast to reach approximately 450,000 by the end of 2020.
Continuing to Invest in Improvements for Customers
FPL's current four-year rate settlement agreement, which went into effect in 2013, provided for limited base rate increases and deferred a general base rate proceeding for four years, but it did not avoid the underlying need for a general base rate increase in 2017. FPL's 2017-2020 request is driven in large part by billions of dollars in infrastructure investments since 2013 that are not reflected in rates under the current agreement but are necessary to serve customer growth, strengthen the electric grid, advance affordable clean energy and more.
"Under the current agreement, we have significantly improved on our already-high level of service and operational performance in a relatively short period of time. But more importantly, we have been able to sustain a long-term, customer-centric approach to our planning," said Silagy. "The investments we make – financed primarily through capital markets and supported by base rates – are designed to continue improving on the strong value we provide customers: high reliability, clean energy and low bills."
FPL's 2017-2020 base rate plan would support continued investments in long-term infrastructure and advanced technology, which improve service and help keep customer bills low. For the period of 2014 through the end of 2017, FPL plans to complete investments totaling nearly $16 billion, with additional significant investments expected in 2018 and beyond to continue delivering outstanding value for customers and meet the growing needs of Florida's economy.
In particular, FPL has increased its focus in recent years on further improving the reliability and resiliency of its grid – the power delivery infrastructure that transports electricity from power plants to millions of customers' homes and businesses. Although FPL's service reliability ranks approximately 44 percent better than the national average, the company continues to invest to make its grid stronger, smarter and more responsive to reduce day-to-day outages, shorten restoration times and prepare for severe weather.
FPL's updated storm hardening plan, also filed with the PSC today, outlines the company's 2016-2018 grid-strengthening initiatives, which build on the successes of improvements made since the program began in 2006 and incorporate lessons learned from major storms, such as 2012's Superstorm Sandy. By strengthening power lines and related infrastructure, hardening initiatives are designed to reduce outages and enable FPL to restore power for customers and help local communities recover more quickly when severe weather strikes.
Another key element of FPL's long-term strategy is the continued modernization of its power generation system, which has one of the cleanest emission profiles among comparable utilities nationwide. This includes smart, cost-effective investments such as the replacement of 1960s-era quick-start peaking units, upgrades to some existing combustion turbines and the addition of three large-scale solar energy centers in 2016. As other generation improvements FPL has made in recent years have demonstrated, these investments are projected to generate substantial savings over the long term by reducing fuel and other costs. Consequently, although these investments are supported by base rates, they are projected to result in net customer savings over their operating lives. Moreover, these investments are also environmentally friendly and will further improve FPL's industry-leading emissions profile.
The FPL Okeechobee Clean Energy Center, which is expected to begin serving customers in mid-2019, will use high-efficiency, combined-cycle natural gas technology to meet customers' growing energy needs. In fact, when complete, this new energy center will be one of the cleanest, most efficient plants of its kind in the world.
Overview of the Proposed Adjustments to Revenue Requirements
FPL's proposal includes three adjustments to base revenue requirements that would be phased in during the four-year period (2017-2020):
- In 2017, a base increase of $866 million, which would be an 8.2 percent increase on total revenue
- In 2018, a subsequent-year adjustment of $262 million – a 2.3 percent increase on total revenue
- In mid-2019, when the FPL Okeechobee Clean Energy Center begins powering customers, a base increase of $209 million – a 1.7 percent increase on total revenue to cover the cost of the new plant
- No further base increases through the end of 2020
Information for Residential Customers
Based on the proposed base rate adjustments and the company's current projections for fuel and other costs, FPL estimates that its typical residential customer bill will grow about 2.8 percent per year, roughly in line with inflation, from January 2016 through 2020. Even with this growth, FPL estimates its typical residential bill in 2020 will still be lower than it was in 2006 and remain among the lowest in the state and nation based on current bill comparisons.
For a 1,000-kWh residential customer bill, the total of the three base rate adjustments would be $13.28 a month or about 44 cents a day, phased in as follows:
- In 2017, an increase of $8.56 a month or about 28 cents a day on the base rate portion of a typical bill
- In 2018, a subsequent-year adjustment that would add $2.64 a month or about 9 cents a day on the base rate portion of a typical bill
- In mid-2019, when the FPL Okeechobee Clean Energy Center begins powering customers, an increase of $2.08 a month or about 7 cents a day on the base rate portion of a typical bill to cover the cost of the new plant
- No further base rate increases through the end of 2020
Most FPL customers power their homes for just a few dollars a day. FPL's residential customer monthly usage median is approximately 950 kWh, which means that the majority of FPL customer households consume less than the standard 1,000-kWh typical bill benchmark, which is about $92 as of April 2016.
To estimate what the proposed rates would mean for their own bills based on individual electricity usage, FPL residential customers can visit the online calculator at www.FPL.com/answers. In addition to the calculator, customers can find more information on FPL's four-year base rate proposal.
FPL's Typical 1,000-kWh Residential Customer Bill:
Staying Lower than 2006 Rates Through 2020
(actual bill, 10 years ago)
The 2020 figure reflects the current estimate for FPL's typical bill in 2020, which includes projected base rate adjustments as well as current projections for fuel and other clauses. All bill totals include the state's standard gross receipts tax but do not include any local taxes or fees that vary by community. All rates are subject to change.
Information for Business Customers
FPL business customers' typical bills have decreased about 20 percent on average over the past 10 years. The impact of the proposed base rate adjustments varies widely depending on rate class and customer usage. For small businesses, typical bills are projected to grow about 2 to 3 percent per year on average from January 2016 through 2020, depending on rate class and usage.
Large commercial and industrial customers with more complex rate structures may contact their FPL account managers for information about how the proposal would impact their bills.
The estimates above are based on the company's filed proposal and may change. In the coming months, the PSC is expected to conduct an extensive review of the request.
Florida Power & Light Company
Florida Power & Light Company is the third-largest electric utility in the United States, serving more than 4.8 million customer accounts or more than 10 million people 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 2015, was the lowest in Florida among reporting utilities for the sixth 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 8,800 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, and has been ranked No. 1 in the electric and gas utilities industry in Fortune's 2016 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 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 or policies 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, 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) acquisitions may not be completed and, even if completed, NextEra Energy may not realize the anticipated benefits of any 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; NEP's inability to access sources of capital on commercially reasonable terms could have an effect on its ability to consummate future acquisitions and on the value of NextEra Energy's limited partner interest in NextEra Energy Operating Partners, LP; and effects 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, 2015 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