JUNO BEACH, Fla. – Florida Power & Light Company today notified the Florida Public Service Commission that it expects to ask for an increase estimated at $6.80 monthly, or about 23 cents a day, on the base portion of a typical residential customer bill. The increase would not take effect until 2013, and FPL expects that, even with the change, its customer bills will still be the lowest in the state and well below the national average.
The adjustment is needed to pay for increases in the cost of doing business and to begin paying for a new, high-efficiency natural gas power plant after it enters service in June 2013. The plant will use considerably less fuel to generate electricity, which in turn lowers customers’ total bills. The company’s existing rate agreement, which effectively froze base rates for three years, expires at the end of 2012.
“FPL customers have the lowest bill in the state, reliability that is among the best in the nation and award-winning customer service. That is an exceptional value proposition. We know there is never a good time for an increase, and we are particularly mindful of the impact of these uncertain economic times on our customers and our state. We have worked hard to reduce costs and improve our efficiency, and we will continue to do so to keep bills low and reliability high. We look forward to the opportunity to demonstrate how we will put these new rates to work for our customers,” said FPL CEO Armando J. Olivera.
How the Request Breaks Down
Most FPL customers power their homes for just a few dollars a day. FPL’s residential customer monthly usage median is 975 kWh, which means that the majority of FPL customer households consume less than the standard, 1,000-kWh typical bill benchmark, which is currently $94.62.
The company’s request is expected to reflect an adjustment to its base annual revenue requirements of approximately $695 million. This would translate into an increase of about $6.80 a month, or about 23 cents a day, on the base portion of a typical 1,000-kWh residential customer bill. However, because of fuel savings, lower fuel prices and other adjustments, the net increase that a typical customer would pay would be about $3.00 a month, or about 10 cents a day.
Until FPL files its formal request, expected to occur before the end of the first quarter of 2012, all rate, bill and revenue figures are estimates. When the request is filed, www.FPL.com/answers will feature an interactive calculator that will enable individual customers to see the proposed impact to their bills in 2013 based on their current actual electricity usage.
Delivering Service Efficiently
FPL is ranked as one of the most efficient utilities in the United States based on its operating and maintenance (O&M) costs per kilowatt-hour of retail sales. The company is committed to operating efficiently in order to deliver reliable service while keeping increases to a minimum, even while the costs of other essential products and services have risen dramatically.
Compared to prices in 2006, food and health care costs today are at least 20 percent higher while a gallon of gasoline is more than 40 percent higher. Meanwhile, FPL’s typical residential customer bill is about 13 percent lower today than it was in 2006.
Despite the company’s success in driving efficiencies, the costs of many of the materials and products essential to providing affordable, reliable power have increased. These increased expenses, combined with the projected addition of nearly 100,000 new customers between 2010 and 2013, are driving higher operating costs.
Investing in Florida
In addition, the rate adjustment will support FPL’s ability to invest in advanced technology that will help keep customer bills low and reliability high. FPL’s service reliability ranks in the top 25 percent of utilities nationally.
The adjustment will repay the company’s investment in the Cape Canaveral Next Generation Clean Energy Center after it goes into service in mid-2013. The new plant will use high-efficiency, combined-cycle natural gas technology to generate power with 33 percent less fuel per megawatt-hour and far fewer emissions than the former plant. Over its 30-year operational lifetime, the energy center is expected to provide FPL customers with fuel savings of about $600 million over and above the cost to build it.
Over the three-year period from 2011 to 2013, FPL plans to invest approximately $9 billion to strengthen and improve Florida’s electric generation and delivery system, which spans more than 27,000 square miles.
This level of investment far exceeds FPL’s annual earnings, making the company’s financial strength, particularly its allowed return on equity (ROE), critical to financing these important improvements on behalf of customers. Today, despite superior performance, FPL’s allowed ROE is the lowest in Florida and one of the lowest among comparable utilities nationally. Without a rate adjustment that incorporates a fair return, the company’s earnings are expected to drop significantly, making it more difficult and more expensive to attract investors necessary to support investments for FPL customers.
As part of its base rate request, FPL expects to propose that its allowed ROE midpoint be set at 11.25 percent, near the current average allowed ROE of 11.19 percent for Florida’s other investor-owned utilities. FPL also expects to propose a 0.25 percent ROE adder that would only apply if the company can keep its typical residential customer bill the lowest of all 55 electric utilities operating in Florida – as it is today.
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 4.5 million customer accounts in Florida and is a leading employer in the state with approximately 10,000 employees. The company consistently outperforms national averages for service reliability while its typical customer bills are 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 Note Regarding Forward-Looking Statements
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 the terms and conditions of FPL's anticipated rate request and the timing of such request. 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 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 business operations; inability to recover, in a timely manner, certain costs, a return on certain assets, or an appropriate return on capital from customers through regulated rates and cost recovery clauses; significant compliance costs and exposure to substantial monetary penalties and other sanctions as a result of federal regulatory compliance and proceedings; impact of increased governmental and regulatory scrutiny or negative publicity; risks associated with legislative and regulatory initiatives; capital expenditures, increased cost of operations and exposure to liabilities attributable to environmental laws and regulations; potential effects of federal or state laws or regulations mandating new or additional limits on the production of GHG emissions; risks of fines, closure of owned nuclear generation facilities and increased costs and capital expenditures resulting from the construction, operation and maintenance of nuclear generation facilities; failure to proceed with projects under development or inability to complete the construction of (or capital improvements to) generation, transmission, distribution or other facilities on schedule or within budget; risks involved in the operation and maintenance of power generation, transmission and distribution facilities; operating risks associated with the natural gas and oil storage and pipeline infrastructure of NextEra Energy and FPL and the use of such fuels in their generation facilities; development and operating risks affecting NextEra Energy’s competitive energy business; dependence of NextEra Energy’s competitive energy business on continued public policy support and government support for renewable energy (particularly wind and solar projects); credit and performance risk from customers, counterparties and vendors; risks of slower customer growth and customer usage; risks associated with severe weather and other weather conditions; effects of disruptions, uncertainty or volatility in the credit and capital markets on the ability of NextEra Energy and FPL to fund their liquidity and capital needs and to meet their growth objectives; financial and operating risks associated with the inability of NextEra Energy, FPL and NextEra Energy Capital Holdings, Inc. to maintain their current credit ratings and with the inability of their credit providers to maintain their current credit ratings or to fund their credit commitments; risks in the use of derivative contracts by NextEra Energy and FPL to manage their commodity and financial market risks, and the impact of any regulation of such derivative instruments traded in the OTC markets; effect of increased competition for acquisitions on NextEra Energy’s ability successfully to identify, complete and integrate acquired businesses; inability of subsidiaries to upstream dividends or repay funds or of NextEra Energy to perform under guarantees of subsidiary obligations; effects of changes in tax laws and in judgments and estimates used to determine tax-related asset and liability amounts; risk of compromise of sensitive customer data; impact of any failure in the operational systems or infrastructure of NextEra Energy or FPL or of third parties; operating and financial effects of terrorist acts and threats and catastrophic events; availability of adequate insurance coverage for protection against significant losses; service and productivity impacts of the lack of a qualified work force, work strikes and stoppages, and increasing personnel costs; investment performance of NextEra Energy’s and FPL’s nuclear decommissioning trust funds and defined benefit pension plan; increasing costs associated with health care plans; and changes in market value and other risks associated with certain of NextEra Energy's and FPL's investments. 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, 2010 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.