FPL, key customer advocacy groups ask PSC to approve proposed rate settlement that would help secure low rates for FPL customers for four years
JUNO BEACH, Fla., Sept. 27, 2012 /PRNewswire-FirstCall/ — Today, the Florida Public Service Commission is scheduled to begin reviewing a proposed settlement agreement in Florida Power & Light Company’s 2013 base rate proceeding. The settlement, if approved, is expected to help secure low rates for FPL customers through the end of 2016 while supporting FPL’s ability to provide safe, highly reliable service.
“Compared with current rates for Florida’s 55 electric utilities, our residential customers are projected to continue to have the lowest typical bills in the state under the proposed settlement, along with reliability, an emissions profile and customer service that are among the best in the country,” said FPL President Eric Silagy. “We believe this four-year agreement makes sense for all of our customers and provides a predictable, stable rate structure that will help FPL plan for the future and keep investing in Florida.”
In January, FPL notified the PSC of the company’s need for a base rate increase in 2013. The formal request was filed in March. In August, FPL joined key customer advocacy groups to file a proposed settlement designed to limit the impact to customers while maintaining FPL’s financial strength and ability to invest billions of dollars in Florida’s infrastructure in the coming years.
The settlement agreement is supported by FPL, the Florida Industrial Power Users Group, the South Florida Hospital and Healthcare Association, the Federal Executive Agencies and Algenol Biofuels. If the PSC does not approve the settlement agreement, a decision on FPL’s original request would likely be made in November.
As part of the proposed settlement, FPL agreed that it would reduce its January 2013 revenue request by about 25 percent, from $517 million to $378 million, primarily through a reduction in the company’s requested return on equity (ROE) from 11.5 percent to 10.7 percent. This is slightly below the average allowed ROE of 10.75 percent for Florida’s other investor-owned utilities and well below the average allowed ROE of 11.52 percent for other investor-owned utilities in the southeastern coastal United States.
The agreement would also provide for appropriate base rate increases covering the capital and operating costs of new, highly efficient power plants at Cape Canaveral, Riviera Beach and Port Everglades when these plants go into service, which is expected in 2013, 2014 and 2016, respectively. The costs and benefits of these projects were carefully considered by the PSC in prior proceedings that resulted in approval of these power plants. In addition, when these plants go into service, customers are expected to see decreases in the fuel portion of their bills that would significantly offset the base rate increases due to the plants’ advanced efficiency improvements. Combined, the more efficient power plants are projected to save customers more than $1 billion in fuel and other costs during their operating lifetimes over and above the plants’ cost of construction.
Also, except as contemplated in the agreement, FPL would not seek any additional base rate increases for the four-year term of the settlement agreement, provided its earnings remain within 100 basis points of the allowed 10.7 percent ROE midpoint.
2013 Customer Bills
Today, FPL’s typical residential customer bill is down approximately 13 percent compared with 2006 as a result of investments in more efficient power generation, the beneficial impact of lower fuel prices and the company’s strong cost controls. FPL’s typical commercial customer bills are down 14 percent over the same period.
Under FPL’s original request, the company’s typical 1,000-kWh residential customer bill would increase by roughly $2.50 a month, or about 8 cents a day, in 2013, including the impact of FPL’s latest projections for fuel and other charges. The proposed settlement would reduce the net increase in 2013 for FPL’s typical residential customer by about 40 percent, to roughly $1.50 a month, or about 5 cents a day.
This net increase of less than 2 percent compared with current rates would keep FPL’s typical bill the lowest in the state, based on current rates for other utilities, and more than 10 percent less than it was in 2006.
FPL's Typical Residential Customer Bill - Proposed Settlement Agreement ----------------------------------------------------------------------- 1,000-kWh Residential January January June Increase/Decrease 2012 2013 2013 --- ---- ---- ---- Base Rate $43.26 $47.36 $49.03 Increase of $5.77/month ($4.10 in January, $1.67 in June) --- -------- -------- Fuel Charge $33.43 $27.89 $26.33 Decrease of $7.10/month (-$5.54 in January, -$1.56 in June) --- -------- -------- All Other Charges* $17.93 $20.73 $20.82 Increase of $2.89/month ($2.80 in January, $0.09 in June) --- -------- -------- TOTAL BILL $94.62 $95.98 $96.18 Net increase of $1.56/month or 5 cents/day in 2013 --- -------- -------- *"All Other Charges" include FPL's filed projections for capacity, environmental and conservation clause recovery, West County Energy Center 3 recovery, the storm charge, base rate increase for completed nuclear upgrades and state gross receipts tax. All of these rates require PSC approval and are subject to change until approved. All January 2013 rates are expected to be finalized by early December 2012 and will be posted at www.FPL.com. ------------------------------------------------------------------------------------------------------------------------------------------------------------------
Under the proposed settlement agreement, total typical bills for most commercial customers are projected to be flat to down 3 percent in 2013.
For small businesses on FPL’s standard non-demand commercial rate – approximately 80 percent of FPL’s business customers – there would be no base rate increase in January 2013. Because FPL has filed to reduce its fuel charge, a typical small business using 1,200-kWh/month would see its total bill decrease by approximately 2.5 percent in 2013.
Indeed, lower projected fuel costs are expected to reduce the overall impact for all customer classes. 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 may be. 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 is comprised of natural gas.
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 and Commercial Demand Reduction programs are projected to decrease by up to 10 percent, including the impact of lower fuel costs. These programs benefit all customers by helping FPL avoid the necessity of building costly additional peaking facilities.
Parties to the proposed settlement have noted that the agreement would benefit Florida’s consumers and economy by keeping bills low, reliability high and promoting economic development.
“The settlement agreement is a win for all of our customers and for the state of Florida. It reduces the base rate increase for all business and residential customers while maintaining FPL’s ability to continue investing in the infrastructure to keep reliability high and bills low for the long term,” Silagy said. “Smaller businesses would see their bills decrease, and most larger business customers would see their bills remain flat or decrease, helping to support their ability to continue to invest in our economic recovery and create jobs.”
FPL’s projected 2013 rates for fuel and other components of the bill are subject to change until reviewed and approved by the PSC in November. For more information, FPL customers can visit www.FPL.com/answers, which features frequently asked questions and an online bill calculator that shows residential customers how much their 2013 bills would be based on their actual kilowatt-hour usage and the company’s latest projections.
Florida Power & Light Company
Florida Power & Light Company is the largest electric utility in Florida and one of the largest rate-regulated utilities in the United States. FPL serves approximately 4.6 million customer accounts and is a leading Florida employer with approximately 10,000 employees. The company consistently outperforms national averages for service reliability while its typical residential customer bills, based on data available in December 2011, are about 25 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.
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. In some cases, you can identify the forward-looking statements by words or phrases such as “will,” “will likely 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 OTC financial derivatives and to apply such regulation to NextEra Energy and FPL; capital expenditures, increased cost of operations and exposure to liabilities attributable to environmental laws and regulations 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 and FPL’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, 2011 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