PORT ST. JOHN, Florida — Florida Power & Light Company and key customer advocacy groups today announced a proposed agreement regarding the company’s pending rate request that would help secure low rates for customers through the end of 2016 while supporting FPL’s ability to provide safe, highly reliable service.
The proposed agreement was filed with the Florida Public Service Commission (PSC) today in a joint request by FPL and representatives of the Florida Industrial Power Users Group (FIPUG), the South Florida Hospital and Healthcare Association (SFHHA) and the Federal Executive Agencies (FEA) for Commission approval.
“We are pleased to propose a solution that would limit the increase for the typical residential customer to about 4 cents a day, including changes in base rates, fuel and other components of the bill. Under this proposed settlement, our customers are projected to continue to have the lowest typical bills in the state along with reliability and an emissions profile that are among the best in the country,” said FPL President Eric Silagy.
If approved by the PSC, the agreement will provide for base rate increases covering the capital and operating costs of new power plants at Cape Canaveral (located in Port St. John, Florida), Riviera Beach and Port Everglades when these plants go into service as expected in 2013, 2014 and 2016, respectively, together with a $378 million base rate increase in January 2013.
The 2013 revenue requirement for Cape Canaveral in Brevard County, Florida, which will come online in June, is approximately $170 million. At the same time these new plants go into service, customers will see decreases in the fuel portion of their bills that will significantly offset base rate increases. Combined, FPL says that the new, more efficient power plants are projected to save customers more than $1 billion in fuel and other costs over and above their cost of construction during their operating lifetimes.
As part of the proposed settlement, FPL would reduce its revenue request beginning in January 2013 by about 25 percent, from $517 million to $378 million, primarily through a reduction in the company’s requested return on equity from 11.5 percent to 10.7 percent. The remaining amount will offset the impact of the run-off of accelerated surplus depreciation amortization ordered by the PSC in 2010. The proposed 10.7 percent ROE is slightly below the average allowed ROE of 10.75 percent for the state’s investor-owned utilities, excluding FPL, and well below the average allowed ROE of 11.52 percent for other investor-owned utilities in the southeastern coastal United States. In addition, except as contemplated within the agreement, FPL will not seek any additional base rate increases for the four-year duration of the settlement agreement, provided its earnings remain within the allowed range.
Impact on Customer Bills
Lower projected fuel costs would minimize the projected bill impact for all customer classes when base rates are increased in 2013.
While FPL cannot control future fuel prices, its investments in efficient new power generation reduce overall fuel usage, which in turn lowers overall bills no matter what the price of fuel is. Industry experts agree that dramatic increases in the supply of natural gas in the U.S. are likely to keep natural gas prices moderate for many years to come. More than half of FPL’s fuel supply comprises natural gas.
FPL’s total residential customer bill is down 13 percent from 2006 to 2012 as a result of investments in more efficient power generation, the beneficial impact of lower fuel prices and the company’s strong cost controls. Typical commercial customer bills are down 14 percent over the same period. Under the proposed settlement, residential and most commercial bills are still projected to be down 12-16 percent, respectively, in 2013 as compared to 2006.
Under the terms of the proposed agreement, the typical 1,000-kWh residential customer bill is projected to increase by 93 cents per month, or about 3 cents per day, beginning in January 2013. When the new Cape Canaveral plant goes into service in June 2013, the bill would increase an estimated additional 28 cents a month, for a total combined increase of $1.21 per month, or about 4 cents a day. This equates to a 1.3 percent net increase.
Total typical bills for most commercial customers are projected to be flat to down 3 percent in January 2013 with most small business customers, representing 80 percent of all commercial customers, realizing a decrease.
As part of the agreement, FPL would increase its energy conservation credits to large commercial/industrial customers for load interruptions. As a result, total bills for customers who participate in the Commercial and Industrial Load Control program are projected to decrease by up to 10 percent, including the impact of lower fuel costs. The Commercial and Industrial Load Control program benefits all customers by helping FPL avoid the necessity of building costly additional peaking facilities.
Helping Florida’s Economy
All parties to the proposed agreement said it would benefit Florida’s consumers and economy by keeping bills low, reliability high and promoting economic development.
“This agreement will provide Florida’s largest industrial and commercial customers with predictable rates for the next four years, something that is important as the Florida economy emerges from the Great Recession. It is a fair deal that FIPUG strongly supports and, as reflected in today’s filings, joins FPL, key hospitals in South Florida and important military installations in jointly asking the Commission to consider and approve,” said Jon Moyle, representing FIPUG.
“This agreement helps secure low rates for four years not only for South Florida hospitals, but for all FPL customers, providing rate stability despite an uncertain economy. We believe it represents a responsible course for all parties,” said SFHHA President Linda Quick.
“We appreciate the willingness of these major advocacy organizations to work with us to craft a fair and balanced solution for Florida,” said FPL’s Silagy. “The success of their members is essential to economic recovery in Florida, and we are pleased to partner with them in a way that supports continued success for them and for our state.”
“We worked collaboratively with customer advocates to develop an approach that provides both commercial and residential customers with significant benefits by helping secure low rates for the next four years. Our customers will continue to receive bills that are the lowest in the state and well below the national average under the terms of this agreement. At the same time, the agreement provides us with a predictable, stable rate structure that will help us plan for the future and keep investing for the benefit of our customers. Our combination of low bills, high reliability, excellent customer service and low emissions is the best in the state today, and we are committed to improving it and keeping it the best for many years to come,” Silagy said.
NOW THEY CAN INCREASE DIVIDEND TO THERE INVESTORSGOD BLESS AMERICA,
NOW THEY CAN INCREASE DIVIDEND TO THERE INVESTORSGOD BLESS AMERICA,