May 25, 2007
FPL agrees with PSC staff primary recommendation to approve the need for the company's proposed advanced clean coal technology power plant

JUNO BEACH, Fla. -- Florida Power & Light Company said today that it is pleased to see that the primary recommendation from the Florida Public Service Commission staff recognizes the utility’s need to build an advanced clean coal technology power plant to meet customers’ future energy demands.

Armando Olivera, president of FPL, said, “For several years, we have received strong encouragement from the Florida Energy Plan, the Florida Legislature and the PSC to diversify our fuel mix.  We believe our proposed advanced clean coal technology plant is the only viable generation option for the near term to achieve that objective.”

In its primary recommendation, the PSC staff agreed with FPL on every key issue regarding its need petition for the FPL Glades Power Park (FGPP).

  1. YES: There is a need for the proposed generating units, taking into account the need for electric system reliability and integrity.
  2. YES: There is a need for the proposed generating units, taking into account the need for adequate electricity at a reasonable cost.
  3. YES: There is a need for the proposed generating units, taking into account the need for fuel diversity and supply reliability.
  4. YES: FPL has appropriately evaluated the cost of CO2 emission mitigation costs in its economic analysis.
  5. YES: FGPP generating units include the costs for the environmental controls necessary to meet current state and federal environmental requirements, including mercury, NOx, SO2, and particulate emissions.
  6. YES: The proposed generating units are the most cost-effective alternative available.

“Our proposed FPL Glades Power Park will provide our customers greater reliability and price stability. Incorporating state-of-the-art pollution control equipment, this advanced clean coal technology plant will be one of the cleanest coal plants in the nation,” Olivera said.  “This plant will help keep customers’ bills down and help our country achieve energy independence.”

The Commission staff’s primary recommendation also acknowledged that energy conservation measures could not mitigate the need for the proposed generating units. In its ten-year plan submitted to the PSC in April, FPL noted that it will meet approximately 26 percent of customers’ projected demand with energy conservation and energy management programs.  According to the U.S. Department of Energy, FPL leads the nation in energy conservation, delivering 13 percent of the utility industry’s efforts while serving only 3 percent of the country’s electricity customers.

“Despite our energy management and conservation programs, we need to build power plants to meet future customer growth and energy requirements,” said Olivera.

“We applaud the PSC staff’s primary recommendation and appreciate the staff’s need to provide alternatives.  However, in this case, a delay in the project in effect is a veto of the proposed plant,” he said.

“We disagree with the PSC staff’s proposed alternative recommendation to deny our petition, and we believe it would place our customers at too much risk to rely on the possibility that natural gas prices might moderate over time.  If we are not able to proceed with our proposed clean coal plant, our only option for the near-term is to build more natural gas-fired plants, increasing our dependency on natural gas to more than 70 percent and subjecting our customers to greater price volatility.  Furthermore, the supply of natural gas we get from the Gulf of Mexico is susceptible to interruption from hurricanes such as we experienced with Katrina and Wilma in 2005.  Such a situation could present significant reliability issues. ”

The company also said it disagrees with the PSC staff’s second alternative recommendation to defer the final determination of need for the FPL Glades Power Park and instead, accept a lower reserve margin.

“Delaying a decision on the FPL Glades Power Park for a year puts the project into great jeopardy of ever being built,” said Olivera.  He said there are numerous factors that could prevent the project from being built if the start is delayed.  The cost of materials and services will likely increase substantially, the equipment and service providers selected for the project would no longer be bound by contract and renegotiated contracts are likely to be considerably more expensive, the site selected may not be available and the development of a fuel delivery infrastructure will be more challenging than it is today.

FPL said that it also is concerned with the implication in the PSC staff’s second alternative recommendation that perhaps the advanced clean coal technology plant would not be needed if the reserve margin were lowered from 20 percent to 15 percent.  The PSC increased the reserve margin to 20 percent years ago as a response to the California energy crisis and to ensure that Florida would have a reliable and adequate supply of power.  “Failing to grant a determination of need for our coal project would result in an inadequate supply of electricity to serve our customers during peak demand periods or when equipment is brought out of service for required maintenance.”

The company said that if it is faced with this lower reserve margin, customers who have signed up for FPL’s demand side management programs could expect to see an increased occurrence of power interruptions.  It is possible that even under normal conditions, there would be a greater likelihood that FPL would not be able to meet demands of our customers.   Should there be an unexpected or unplanned plant shutdown, it increases the possibility of customer outages. The PSC staff acknowledged that if customers participating in voluntary load management programs experience increased interruptions, they may opt out of the program. That would result in an even lower reserve margin and greater reliability concerns.

“For several years, the Public Service Commission, the Florida Legislature and the Florida Energy Plan have called for increased fuel diversity within Florida to ensure energy independence and price stability for Floridians,” said Olivera.  “Our proposed advanced clean coal technology power project clearly meets that objective, and we are hopeful that the PSC will acknowledge the need for this project when it rules on the matter in June.” 

Florida Power & Light Company is the principal 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 nearly $16 billion and a growing presence in 26 states, FPL Group is widely recognized as one of the country's premier power companies. Florida Power & Light Company serves 4.4 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.