Florida Power & Light $518 Million Behind in Fuel Expense Recoverygreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
Friday August 25, 9:12 am Eastern Time Press Release SOURCE: Florida Power & Light Company
Skyrocketing Cost of Oil and Natural Gas Puts FPL $518 Million Behind in Fuel Expense Recovery JUNO BEACH, Fla., Aug. 25 /PRNewswire/ -- Faced with skyrocketing oil and natural gas prices and heavy seasonal demand for electricity, Florida Power & Light Company has filed preliminary paperwork with the Florida Public Service Commission identifying $518 million in expenses above projections for fuel burned to produce electricity in 2000. FPL will file with the Commission in September for permission to recover the expense in customer bills beginning Jan. 1, 2001.
Part of this increase will be offset by a refund to customers that is currently estimated to be $75 million to $100 million. The refund is pursuant to an agreement reached in April 1999 with the Office of the Public Counsel and the FPSC that provides for revenue sharing between FPL and its customers, as well as a 6 percent annual rate reduction for three years. As a result of the forecasted fuel costs and the expected rebate, residential electric rates could increase by approximately 13 percent per kilowatt-hour. FPL is studying ways to limit the increase to 9 percent, including asking the FPSC to spread the increase over two years rather than the standard one-year recovery period.
``Since 1985, we have reduced our base rates -- which don't include fuel costs -- by 10 percent,'' said Paul Evanson, FPL president. ``So for the employees at FPL who have worked so hard to keep customers' bills low, it is very disturbing to incur these extraordinary and uncontrollable fuel costs. Both oil and natural gas prices have gone through the roof and are remaining at levels beyond what energy analysts had predicted.''
FPL does not profit from increases or decreases in fuel costs, which by FPSC rule are directly passed through to the customer. Unlike other businesses that can increase prices immediately in response to higher costs (such as the local gasoline station), FPL as a regulated utility can recover increased fuel expenses only through the fuel clause portion of customer bills following FPSC review and approval -- normally on an annual basis.
The cost of oil used to generate electricity has more than doubled since the first quarter of 1999 and has not been this high since the Gulf War in 1990. Since January 2000, oil prices have increased 44 percent per barrel. Natural gas prices also have risen unabated, climbing 77 percent since January 2000. With the onset of winter, natural gas prices may increase further as demand for heating fuel increases.
Since the oil embargo of the 1970s, FPL has worked to diversify its fuel mix and to increase the efficiency of its plants. At the end of 1999, nuclear power accounted for 27 percent of FPL's electricity generated, oil and natural gas each made up 25 percent, and purchased power and other resources totaled 23 percent. In addition, the company has increased customer participation in its energy conservation programs to offset the need to build additional plants.
Florida Power & Light Company is the principal subsidiary of FPL Group, Inc. (NYSE: FPL - news), one of the nation's largest providers of electricity-related services with annual revenues of more than $6 billion. FPL serves 3.8 million customer accounts in Florida. FPL Energy, LLC, FPL Group's U.S. and international energy-generating subsidiary, is a leader in producing electricity from clean and renewable fuels. Additional information is available on the Internet at www.fpl.com and www.fplgroup.com .
SOURCE: Florida Power & Light Company
-- Martin Thompson (firstname.lastname@example.org), August 26, 2000