In 2009, the Florida Public Service Commission rejected Florida Power & Light’s proposed $1.5 billion natural gas pipeline. This year, FPL is requesting a $3.5 billion pipeline project. Why does FPL think that this time will be different?
For starters, an FPL spokesman says, this actually is a cheaper pipeline from a customer standpoint. The commission rejected the 2009 project because it was deemed not to be the most cost-effective method of delivering gas. According to FPL, transportation costs of the new project are lower. Customers would pay those transportation costs, not for construction.
This project is different in other ways. FPL would have owned the pipeline proposed four years ago, running from northern Florida to FPL’s Martin County plant in Indiantown. Most of the new pipeline would be a joint venture between Spectra Energy of Houston and NextEra Energy, FPL’s Juno Beach-based parent company. They would spend $3 billion on the section between a pipeline hub in Alabama and Osceola County, south of Orlando. A NextEra subsidiary would build the $550 million link from there to the Indiantown plant, from which FPL would distribute the gas.
Finally, FPL and all Florida utilities have become even more dependent on natural gas than they were four years ago. By 2016, FPL will have converted three major generating plants — in Brevard County, Riviera Beach and Broward County — from oil to natural gas. The company projects that roughly two-thirds of its power then will come from natural gas.
Such a change requires more capacity to import the gas, since Florida produces almost none of it. FPL argues that Florida’s two existing natural gas pipelines are at capacity or will be there soon. At the start, FPL would use about half of the longer pipeline’s capacity. Only Texas uses more natural gas to generate electricity than Florida.
Still another reason, one that FPL doesn’t acknowledge, is that the current Public Service Commission has been friendly to the company. In December the PSC agreed to settle a rate case on terms that the company had drawn up, which was an unprecedented move and drew a legal challenge from the Office of Public Counsel, which represents consumers. FPL wants an answer on the pipeline by the end of 2013. Two seats on the five-member commission come open this year, but no new commissioners would take over until 2014.
Florida’s switch to natural gas has brought many benefits. The boom in production, due in large part to the controversial practice of fracking, has driven down prices. Natural gas also burns cleaner than oil and much cleaner than coal, thus reducing emissions of greenhouses gases that cause global warming. The Public Service Commission has been steering FPL and other utilities toward this switch for nearly a decade. Barring a persuasive argument that the pipeline would be a burden to consumers, FPL’s case is stronger than it was four years ago.