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Florida Utility To Buy Coal Plant For $520m, Then Shut It Down

Florida Power & Light Co. (FPL), the state’s largest utility, is asking the Florida Public Service Commission to let it buy a coal-fired power plant just so it can gradually shut it down in order to save money both for the utility and its customers and help FPL reduce carbon dioxide emissions.

FPL says that under a 1988 contract, it is legally bound to purchase power from the Cedar Bay Generating Plant in North Jacksonville. The utility says its annual fixed payments for the power exceed $120 million a year, with scheduled increases each year until the contract expires in 2024.

Yet if the utility can buy the plant for $520.5 million, the contract would be voided, and FPL can reduce operations there and eventually shut it down altogether to save millions of dollars for the utility. It can then pass $120 million a year in savings to its 4.7 million customers.

Related: Can Utilities Survive 21st Century Energy Market?

What’s more, FPL says, shutting down Cedar Bay would stop the emission of nearly 1 million tons of carbon dioxide into Florida’s atmosphere. That’s the equivalent of reducing gasoline consumption in the state by 100 million gallons or replacing more than 23 million incandescent light bulbs to fluorescent lighting, according to the US Environmental Protection Agency.

FPL also stressed that its planned shutdown of the Cedar Bay coal plant wouldn’t conflict with another major utility in its area, JEA, once known as the Jacksonville Electric Authority. FPL spokeswoman Gerri Boyce pointed out that JEA doesn’t purchase any power from Cedar Bay for its 450,000 electric customers.

As for saving money, FPL told the Public Service Commission that its power generators now use natural gas for the most part, which produces electricity more cleanly than coal and is less expensive. If it’s allowed to buy Cedar Bay, FPL would drastically reduce its capacity to about 5 percent for the next year or so.

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By then, FPL’s proposed natural gas pipeline will start pumping fuel into the state, allowing FPL to shut down Cedar Bay for good. Meanwhile, Sarah Gatewood, a spokeswoman for the utility, said FPL would try to find new jobs for the 50 to 60 employees now working at Cedar Bay.

FPL’s decision was welcomed by at least two environmental groups, the Nature Conservancy and the South Alliance for Clean Energy.

“The Nature Conservancy welcomes FPL’s innovative approach to promote energy solutions that will help reduce emissions in Florida,” Temperince Morgan, executive director of the group’s Florida chapter, said in a statement.

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And the South Alliance for Clean Energy applauded the utility’s plan to shutter “a dirty coal power plant.”

“Coal is the biggest source of carbon pollution,” Susan Glickman, the alliance’s Florida director, said in an e-mail to the Sun-Sentinel of Broward and Palm Beach.

But Glickman said any utility’s emphasis should be on solar energy, not natural gas, which is a fossil fuel, even though it burns cleaner than coal. “To meet our carbon reductions we must diversify Florida’s energy portfolio with cost-effective energy efficiency and renewables like solar.”

By Andy Tully of Oilprice.com

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  • John Scior on March 16 2015 said:
    Someone made a sweetheart deal to buy the electricity in the first place. Why not just wait a few years and wait til the contract expires. The supposed cost savings don't take into account the fact that you have to find a replacement for the lost generating capacity. The company made a bad deal to begin with now they want their customers to buyout the mistake. I'm sure the reduced capacity will lead to higher electrical rates as a supply decrease should elevate prices. Ifyou see a fat cat on the dock of the bay with a mile wide grin, its an FPL employee and or his cousin at Cedar Bay.

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