FPL halts projected capital expenditures in Florida—s energy infrastructure

TALLAHASSEE, FLA. — The Florida Public Service Commission (PSC) reduced Florida Power & Light Company’s (FPL) revenue request from more than $1 billion to $75.5 million. The Commissioners also denied FPL’s request for a base rate increase in 2011. Citing these decisions as further evidence of a deteriorating regulatory and business environment, FPL suspended activities on projects representing approximately $10 billion of investment over the next five years in Florida’s energy infrastructure.

The suspended projects, which according to FPL, would have created an estimated 20,000 direct and indirect construction and related jobs over the next five years, include the following:

• development of two new nuclear reactors at Turkey Point beyond what is required to receive a license from the Nuclear Regulatory Commission;
• modernization of the Riviera Beach and Cape Canaveral plants;
• the proposed Florida EnergySecure natural gas pipeline; and,
• numerous discretionary infrastructure projects targeting improvements in efficiency and reliability within FPL’s power generation, transmission, and distribution units.

FPL indicated that it will also assess the cost structure of its ongoing operations and review other capital investments for appropriate reductions. The company expects to make further decisions on all of these matters no later than the end of the second quarter.

The project suspensions came immediately following the Commission’s adjustments to FPL’s expenses, including depreciation, and salaries and benefits. The Commission also reduced FPL’s return on equity from the requested 12.5 percent to 10 percent.

FPL’s Group Chairman and CEO Lew Hay argued that the company’s “past investments have provided FPL customers with bills that are 10 percent lower than the national average and the lowest of the state’s 54 utilities, reliability that is 47 percent better than the national average, and a power generation fleet that is among the cleanest and most efficient in the country.”

Historically, FPL has been one of Florida’s largest sources of capital investment, generating tens of thousands of jobs and hundreds of millions of dollars in tax revenues tied to its annual investments in the state’s electrical infrastructure.
FPL’s last general base rate increase was granted in 1985. The new FPL base rates for all customer classes will be addressed at a Special Agenda Conference set for Friday, Jan. 29. Commission staff is scheduled to file its FPL rate recommendation on Jan. 22.