A proposed $3.5 billion natural gas pipeline took a leap forward Thursday and by 2017 is expected to be providing fuel to run Florida Power & Light Co.’s plants.
State regulators gave their OK for Florida Power & Light Co. to enter into long-term contracts for natural gas that will be transported through the 591-mile pipeline. It will originate in Choctaw County, Ala., and provide access to onshore supplies of gas extracted from shale.
Florida’s two pipelines — the Florida Gas Transmission pipeline and Gulfstream pipeline — deliver gas primarily from such offshore areas as the Gulf of Mexico.
The Public Service Commission also approved FPL’s request to charge customers for the fuel and transportation costs beginning in 2017.
Florida Public Counsel J.R. Kelly said FPL customers could pay as much as $15 billion for gas transportation costs alone over the 25 to 40 years after the pipeline goes into service. The commission’s vote amounted to a approval of future costs, he said.
“The transportation costs are now fixed. The commission cannot go back and review that,” Kelly said.
Customers will pay for the transportation of the gas and for the gas itself.
The pipeline’s northern 465 miles is a joint venture of Houston-based Spectra Energy subsidiary Sabal Trail Transmission and a newly formed subsidiary of FPL’s parent company, NextEra Energy Inc., called U.S. Southeastern Gas Infrastructure LLC. The southern 126 miles, known as Florida Southeast Connection, is a subsidiary of NextEra.
The pipeline will travel through four Alabama counties, eight Georgia counties and 13 Florida counties. It will end at FPL’s Martin County plant near Indiantown. The new pipeline will connect to FPL’s new plants under construction in Riviera Beach and Hollywood.
Commissioner Eduardo Balbis said the pipeline will help mitigate supply interruptions and price fluctuations. It’s also a plus that the cost is $450 million below that of other options. The project is projected to create more than 6,600 jobs.
Jeff Householder, president of Florida Public Utilities Co., said the additional gas supplies, especially the cheaper shale gas, are needed for the state’s growth and economic development. He expects his company and others will build lateral lines from the pipeline.
FPL has signed agreements with the two entities that will own the new pipeline for an initial 400 million cubic feet per day beginning in 2017 with an option for an additional 200 million cubic feet in 2020 and later.
Florida Gas Transmission’s pipeline has a capacity of 3,100 million cubic feet per day, and Gulfstream’s pipeline has a capacity of 1,300 million cubic feet per day
The project approved Thursday differs from a proposal the PSC rejected in 2009 when FPL sought to build the 280-mile Florida EnergySecure Line itself.
FPL came back to the commission with a proposal that positions it as the largest customer of the pipeline, but not the developer. While the 2009 proposal called for a $1.6 billion pipeline with the costs going into customer’s base rates, Thursday’s approval means that customers will be paying only for what FPL uses to run its power plants.
“Before, customers would have been paying for that pipeline before they got any use out of it, then would have been overpaying for it. This time they will only be paying for what they use when they use it,” said Floyd Self, a Tallahassee lawyer whose practice includes natural gas and electric companies.
The pipeline must be approved by the Federal Energy Regulatory Commission and other federal and state agencies. It would give the state 25 percent more natural gas capacity.
In 2012 natural gas fueled 68 percent of the state’s electric generation and 72 percent of FPL’s, the PSC said.
George Cavros, an attorney for Southern Alliance for Clean Energy, said natural gas is cleaner burning than coal or oil, but FPL should make more effort to reduce demand through energy efficiency programs.