JUNO BEACH, Fla., July 26, 2013 /PRNewswire/ -- Florida Power & Light Company today announced that its evaluation of proposals for additional natural gas transportation capacity determined that the best, most economical solution for ensuring Florida's continued access to the clean, affordable, U.S.-produced fuel necessary to meet the growing electricity needs of the state's residents and businesses is a combination of a natural gas pipeline and interconnection hub to be built by Sabal Trail Transmission, LLC, and a second natural gas pipeline to be built by Florida Southeast Connection, LLC.
FPL's economic analysis showed that these projects will save FPL customers nearly $600 million compared with the next closest proposal.
Sabal Trail Transmission is a joint venture of Spectra Energy Corp (NYSE: SE) and NextEra Energy, Inc. (NYSE: NEE). Florida Southeast Connection is a wholly owned subsidiary of NextEra Energy.
Sabal Trail Transmission will invest roughly $3 billion in the construction of a new natural gas pipeline that will access the abundant reserves of various regions of the U.S. The Sabal Trail pipeline will originate in southwestern Alabama and transport natural gas to Georgia and Florida. It will terminate at a new Central Florida Hub south of Orlando, Fla., where it will interconnect with the two, existing natural gas pipelines that currently serve peninsular Florida. To connect with FPL's operations, Florida Southeast Connection will invest approximately $550 million to construct a separate pipeline from Sabal Trail's Central Florida Hub to FPL's Martin Clean Energy Center in Indiantown, Fla.
"At FPL, we have worked hard to reduce our dependence on foreign oil and to keep our customers' bills low. Since 2001, our investments in cleaner, more efficient, natural gas power plants have saved our customers more than $6 billion on fuel costs. To continue meeting the growing needs of our customers efficiently and reliably in the years ahead, we will need more natural gas than the two existing major pipelines can deliver, which makes a third, independently routed pipeline system absolutely essential," said FPL President Eric Silagy. "Natural gas is vital to the reliability and affordability of electricity in our state. Although Florida has essentially no natural gas reserves, many areas of our country have a wealth of supply. This project is not only about FPL and our customers – increasing access to clean, efficient, U.S.-produced natural gas will benefit the entire state."
Florida uses more natural gas to generate electricity than any U.S. state other than Texas, but it has minimal production, no storage capabilities and only two major pipeline systems available to transport natural gas to the peninsula. Both of these pipeline systems are approaching full capacity. However, Florida's economy is projected to require additional electricity – and, consequently, more natural gas – in the near future. To meet this need, the new pipeline system will be built to provide the state with additional natural gas transportation capacity beginning in May 2017.
FPL, the state's largest electric utility and largest natural gas user, will be an anchor customer for the new pipelines. Other users will also be able to contract for capacity and benefit from the increased access to abundant domestic natural gas reserves. The proposed route of the new system will maximize accessibility to all of Florida's major natural gas users and increase the overall reliability of the state's natural gas transportation network.
"Natural gas, especially when used in combination with solar energy, generates far fewer emissions than coal or oil," said Eric Draper, executive director of Audubon of Florida. "Audubon provided guidance on the proposed pipeline route, and we commend FPL for working to avoid sensitive habitats."
The new pipeline system will expand the state's access to additional sources of natural gas throughout the U.S. This will help reduce the state's reliance on offshore sources and lessen its vulnerability to fuel supply interruptions that can occur in the Gulf of Mexico region during severe tropical weather.
"Like a highway interchange connects intersecting roads, the new system's Central Florida Hub will link the state's major natural gas transportation infrastructure. This will effectively increase our state's energy security and reliability by introducing important flexibility in the event that the supply of one of the existing pipelines is interrupted," Silagy said.
Permitting is underway for both projects, and construction is expected to begin in 2016 in order for operations to commence in 2017. In Florida, the projects will create an estimated 8,600 direct and indirect jobs during construction and generate more than $1.1 billion in new tax revenue for local schools and governments over 60 years.
In December 2012, FPL issued a request for proposals (RFP) for new natural gas transportation with an April 2013 deadline for responses. The RFP specified FPL's preference for a northern pipeline that would connect from Transco Station 85 in Alabama to a new market hub in central Florida and a second, southern pipeline that would connect from the hub to FPL's operations in southeastern Florida. Due to the substantial cost of building this new natural gas transportation system, the RFP also noted that NextEra Energy would be willing to consider financial involvement in support of a selected proposal to facilitate timely construction to meet the critical May 2017 in-service date.
Bids to construct the new northern and southern pipelines were submitted by a number of well-known, national pipeline companies. Through a competitive and thorough evaluation process, the utility's selection team analyzed all bids and determined that the Sabal Trail proposal for the northern project, and FPL affiliate Florida Southeast Connection's self-build alternative for the southern project, provided the greatest customer benefits at the lowest cost.
The obligations of Sabal Trail and Florida Southeast Connection to build and operate, and FPL's obligations to be an anchor customer of, the pipelines are subject to conditions set forth in precedent agreements executed by the parties.
Both Sabal Trail and Florida Southeast Connection will be interstate natural gas pipelines subject to Federal Energy Regulatory Commission approval and oversight.
In conjunction with today's public announcement, FPL filed a petition for prudence review with the Florida Public Service Commission (PSC). Subject to PSC approval, FPL's cost of using the new pipelines to deliver natural gas for its power plants will be factored into the fuel charge on customer bills beginning in 2017, consistent with how the company's costs of using the two existing pipeline systems are recovered.
The Sabal Trail project will include approximately 465 miles of interstate natural gas pipeline (55 miles in Alabama, 196 miles in Georgia and 214 miles in Florida). The Sabal Trail pipeline will be capable of transporting more than 1 billion cubic feet per day of natural gas to serve local distribution companies, industrial users and natural gas-fired power generators in the Southeast.
Following FPL's selection of Sabal Trail through the RFP evaluation process, a NextEra Energy subsidiary agreed to invest approximately $1 billion of the system's projected cost of roughly $3 billion upon specified terms. NextEra Energy was provided the option to invest with Spectra Energy in order to facilitate on-time construction and enhance availability of financing for the pipeline project.
"We are very pleased to partner with NextEra in providing the critical natural gas infrastructure needed to help meet Florida's growing electricity demand," said Bill Yardley, president of U.S. transmission and storage for Spectra Energy Corp. "This project will also make additional natural gas supplies and new energy infrastructure available to power generators across Florida, thus increasing the energy diversity, security and reliability across the state."
Florida Southeast Connection
The Florida Southeast Connection project will include approximately 126 miles of interstate natural gas pipeline in Florida and is expected to cost approximately $550 million to construct. The pipeline will initially be capable of transporting 400 million cubic feet or more of natural gas per day from Sabal Trail's Central Florida Hub to FPL's Martin Clean Energy Center. The natural gas will be used to generate electricity for FPL's approximately 4.6 million customer accounts.
Florida Power & Light Company
Florida Power & Light Company is the largest rate-regulated electric utility in Florida and serves the third-largest number of customers of any electric utility in the United States. FPL serves approximately 4.6 million customer accounts and is a leading Florida employer with approximately 10,000 employees as of year-end 2012. During the five-year period ended December 31, 2012, the company delivered the best service reliability among Florida investor-owned utilities. As of year-end 2012, its typical residential customer bills are the lowest in Florida, and based on data available in July 2012, are about 26 percent below the national average. A clean energy leader, FPL has one of the lowest emissions profiles and one of the leading energy efficiency programs among utilities nationwide. FPL is a subsidiary of Juno Beach, Fla.-based NextEra Energy, Inc. (NYSE: NEE). For more information, visit www.FPL.com.
NextEra Energy, Inc.
NextEra Energy, Inc. (NYSE: NEE) is a leading clean energy company with consolidated revenues of approximately $14.3 billion, more than 42,000 megawatts of generating capacity, and nearly 15,000 employees in 26 states and Canada as of year-end 2012. Headquartered in Juno Beach, Fla., NextEra Energy's principal subsidiaries are Florida Power & Light Company, which serves approximately 4.6 million customer accounts in Florida and is one of the largest rate-regulated electric utilities in the United States, and NextEra Energy Resources, LLC, which together with its affiliated entities is the largest generator in North America of renewable energy from the wind and sun. Through its subsidiaries, NextEra Energy generates clean, emissions-free electricity from eight commercial nuclear power units in Florida, New Hampshire, Iowa and Wisconsin. For more information about NextEra Energy companies, visit these websites: www.NextEraEnergy.com, www.FPL.com, www.NextEraEnergyResources.com.
Spectra Energy Corp
Spectra Energy Corp (NYSE: SE), a FORTUNE 500 company, is one of North America's premier pipeline and midstream companies. Based in Houston, Texas, the company's operations in the United States and Canada include more than 22,000 miles of natural gas, natural gas liquids, and crude oil pipelines, approximately 305 billion cubic feet (Bcf) of natural gas storage, as well as natural gas gathering and processing, and local distribution operations. The company also has a 50 percent ownership in DCP Midstream, the largest producer of natural gas liquids and one of the largest natural gas gatherers and processors in the United States. Spectra Energy has served North American customers and communities for more than a century. The company's longstanding values are recognized through its inclusion in the Dow Jones Sustainability World and North America Indexes and the Carbon Disclosure Project's Global 500 and S&P 500 Carbon Disclosure Leadership Indexes. For more information, visit www.spectraenergy.com.
Cautionary Statements and Risk Factors That May Affect Future Results
This press 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 expected timing and amount of investments in pipeline development activities. In some cases, you can identify the forward-looking statements by words or phrases such as "will," "will 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 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. 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 an appropriate return on 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; risks of 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 renewable energy projects of NextEra Energy Resources, LLC and its affiliated entities (NextEra Energy Resources); 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; risks associated with 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; risk of lack of availability of adequate insurance coverage for protection of NextEra Energy and FPL against significant losses; 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 hedge effectively its assets or positions against changes in commodity prices, volumes, interest rates, counterparty credit risk or other risk measures; 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 hedging and trading procedures and associated risk management tools to protect against significant losses; 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; risks to NextEra Energy and FPL of failure of counterparties to perform under derivative contracts or of requirement for NextEra Energy and FPL to post margin cash collateral under derivative contracts; failure or breach of NextEra Energy's and FPL's information technology systems; risks to NextEra Energy and FPL's retail businesses of compromise of sensitive customer data; risks to NextEra Energy and FPL of 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; environmental, health and financial risks associated with NextEra Energy's and FPL's ownership 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 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; risk of 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 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, 2012 and other SEC filings, and this press release should be read in conjunction with such SEC filings made through the date of this press release. The forward-looking statements made in this press release are made only as of the date of this press release and NextEra Energy and FPL undertake no obligation to update any forward-looking statements.
SOURCE Florida Power & Light Company