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Dramatic increases in fuel costs compel FPL to ask for fuel-adjustment increase

Jun 3, 2008

JUNO BEACH, Fla.Dramatic increases in the cost of fuel, reflecting a worldwide trend in oil and natural gas markets, have required Florida Power & Light Company to propose to the Florida Public Service Commission (PSC) an increase in the pass-through fuel charge that will raise residential customer bills by approximately 16 percent.  

The price of natural gas, which fuels 50 percent of FPL’s electricity generation, has risen from $8.17 per million BTU in July 2007 (which formed the basis of FPL’s 2008 fuel filing) to $10.75 per million BTU in May 2008, a 32 percent increase. Fuel oil, which powers 8 percent of FPL’s electricity generation, has risen for the same period from $57.81 per barrel in July of 2007 to $89.02 per barrel in May of 2008, a 54 percent increase.

As a result, FPL projects that it will need $746 million to cover these additional costs through the end of 2008. The company is proposing to recover these costs through an increase of $16.28 in the pass-through fuel charge, which will increase a typical 1,000 kilowatt-hour monthly residential bill from $102.63 to $118.91, or approximately 16 percent.

“We recognize that higher electric bills will be a burden on our customers. We never like having to increase the price customers pay for electricity, and it’s especially painful during difficult economic times. However, the increase in fuel prices that we have been experiencing is extraordinary. This is not unique to FPL; utilities across the country are experiencing the same issue,” said FPL President Armando J. Olivera.

FPL has asked the PSC to vote on the adjustment at its July 1 meeting. If approved, the fuel adjustment would be reflected in customer bills from August through December 2008. FPL will file its 2009 fuel-price projections with the PSC this September.  

It is important to note that FPL customers pay only actual fuel costs that the company incurs. When fuel prices go up, the additional costs are passed through to customers, and when fuel prices go down, the savings are also passed through to customers. There is no profit of any kind for FPL on fuel, which represents 57 percent of the $118.91 typical 1,000 kilowatt-hour monthly residential bill.

FPL’s fleet is very fuel efficient and continues to improve

The company has taken numerous steps to mitigate the impact of fuel costs by improving the efficiency of its existing plants and building new generation facilities with low or no fuel costs:  

  • FPL’s fossil fuel power plant fleet is the most fuel efficient among large-scale utilities nationwide. The company has improved fleet fuel efficiency by 10 percent in the past five years and by 18 percent since 1990. As a fossil power plant increases in efficiency, it can generate the same megawatt hour of electricity with less fuel, thus saving money for FPL customers and producing fewer greenhouse gases.
  • Looking forward, FPL has proposed to modernize its power plants at Riviera Beach and Cape Canaveral, a move that will save customers roughly $450 million in fuel and other savings over the life of the project. The new units will be considerably more efficient than the existing facilities, using 33 percent less fuel to produce the same amount of power.
  • FPL is also in the process of upgrading its existing nuclear facilities to produce an additional 400 megawatts of power, which is the equivalent of a medium-sized fossil fuel plant. Fuel costs for nuclear plants are dramatically lower than for fossil-fuel generation, costing roughly half a cent per kilowatt hour compared to 7 cents for natural gas and 10 cents for fuel oil.
  • FPL has also proposed building new solar and wind generation facilities in Florida. The fuel used to power these renewable energy sources is free.  

FPL offers programs to help customers

FPL offers many programs and tips to its customers to help them manage their monthly electric bills. (Information is available on FPL’s website at www.fpl.com). For example, customers can sign up for Budget Billing, which allows them to smooth out the amount of their monthly bill over the course of the year. In addition, FPL offers programs to help customers control their energy use, such as:

  • Home Energy Surveys. A personalized analysis of home energy usage, along with a report providing energy-saving tips and recommendations.
  • On Call®. A program that automatically turns off major appliances when electricity demand is at its highest. Customers can save up to $8 a month.
  • A/C Buying Program. Because air conditioning alone can amount to more than half of total energy consumption in the summer months, FPL offers customers an incentive to install high-efficiency heating and cooling systems for homes.
  • Duct System Test and Repair. For a nominal fee, FPL will inspect a home's cooling and heating ducts for costly leaks and even help pay to have them repaired.
  • Photovoltaic Systems. FPL is committed to helping environmentally conscious customers offset some of their electricity costs by providing the means to interconnect their small photovoltaic systems to FPL’s power grid.
  • Energy Savings Toolkit. Customers can learn about common causes for high bills and solutions to help control energy usage and lower their bills.
  • Building Envelope Program: FPL will pay incentives to reduce the cost of installing new insulation on homes built before 1982 and to install a roof that reflects the sun’s rays.
  • BuildSmart®. FPL certified new construction homes save up to 30 percent on energy bills when built to the FPL BuildSmart standard. 

Tips for reducing your electricity usage

FPL also offers its customers a host of tips they can use to control their energy use. For example:

  • Cool your home at 78 degrees or warmer with the thermostat fan switch on “auto.” For additional savings, raise your thermostat to 82 degrees or warmer when you’re away from home.
  • Install a programmable thermostat to adjust the temperature automatically and maximize your energy savings.
  • Clean or replace your air conditioner’s filter monthly to trim your cooling costs.
  • Turn off your ceiling fan when you leave the room. A fan that runs constantly can cost up to $7 a month depending on size and age.
  • Avoid pre-rinsing dishes before putting in dishwasher. It can save nearly $6 a month.
  • Limit the time you run your pool pump to six hours a day in summer and four a day in winter.
  • Adjust the water level on your washing machine to match the load size, especially when using hot water. Always use a cold rinse.
  • Clean the lint filter in your dryer before every load to dry your clothes faster and save money.
  • Use the auto sensor function on your dryer, if you have one, to conserve energy by not over-drying your clothes.  

Florida Power & Light Company is a subsidiary of FPL Group, Inc. (NYSE:FPL), nationally known as a high quality, efficient and customer-driven organization focused on energy-related products and services. With annual revenues of over $15 billion and a growing presence in 27 states, FPL Group is widely recognized as one of the country's premier power companies. Florida Power & Light Company serves 4.5 million customer accounts in Florida. FPL Energy, LLC, FPL Group's competitive energy subsidiary, is a leader in producing electricity from clean and renewable fuels. Additional information is available on the Internet at www.FPL.com, www.FPLGroup.com and www.FPLEnergy.com.

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