FPL customers may face higher costs for natural gas
Florida Power & Light on Tuesday, November 9, sought approval to raise an additional $810 million from customers in 2022 as rising natural gas prices continue to drive up electric utility costs.
The application, submitted to the state’s Public Service Commission, will pay FPL customers’ bills that were already slated to increase next year. The costs of natural gas and other power plant fuels are generally passed on to customers.
FPL, Duke Energy Florida and Tampa Electric Co. have warned. In recent weeks it may have to renew fuel costs for customers due to higher than expected natural gas prices.
In a filing on Tuesday, the FPL, which recently won approval for base rate increases, said it has tried to reduce fuel costs by taking steps such as expanding the use of solar energy and upgrading power plants to make them run more efficiently.
“FPL plans to continue improving these efforts in the coming years, among other things, installing more solar power and more efficient combined cycle generation in the coming years,” the filing said. “In the absence of FPL’s long-term strategic foresight and initiatives, natural gas price increases such as those described here will have a much greater impact on customer bills.”
The administration asked the Public Service Commission to approve the request during its December 7 meeting, which would allow the increases to take effect in January. For resident customers using 1,000 kilowatt-hours of electricity per month — a common industry standard — the demand would translate into paying $6.82, or $6.83 more per month than expected in January, according to the filing.
Natural gas plays an important role in Florida’s utility system, as it was used to produce about two-thirds of the electricity generated in 2019, according to a Public Service Commission report.
Each year, utilities present projected fuel costs that regulators then use to determine how much will be charged to customers the following year. The FPL made such a deposit on September 3, with regulators agreeing to it last week.
But before the approval, FPL — along with Duke and Tampa Electric — already warned that natural gas prices were higher than expected. Tuesday’s filing is what’s known as a “mid-track correction,” and it’s a kind of addition to what was approved last week.
The $810 million requested by FPL represents higher-than-expected gas costs for the later months of this year and 2022. For example, the facility initially projected that natural gas in 2022 would cost an average of $5.03 per million British thermal units, a measurement Price used for natural gas. It now expects an average cost of $5.81, according to the filing.
A report published on the Internet by the US Energy Information Administration indicated the continuing fluctuations in natural gas prices.
“We expect US inventory withdrawals to be similar to the five-year average this winter, and expect that this factor, combined with increased US natural gas exports and relatively flat production through March, will keep US natural gas prices near recent levels before declining. Price pressures are emerging, the report said. “Due to the uncertainty about seasonal demand, we expect natural gas prices to remain volatile over the coming months with winter temperatures to be the main driver of demand and prices.”
Duke and Tampa Electric have not asked to raise additional money from customers next year to cover fuel costs. But both said in the October filings that they were analyzing the case and would report to the Public Service Commission in the coming weeks.