New Florida bill would block utilities from passing on gas exploration costs
- Proposed legislation would prohibit Florida’s electric utilities from making the kind of ratepayer-backed investment in the exploration and production of natural gas that was unanimously approved by the Florida Public Service Commission last month for Florida Power & Light (FPL), the state’s dominant electricity provider.
- HB 399, from State Rep. Dwight Dudley, the ranking Democrat on the Florida House’s Energy and Utilities Subcommittee, was a response to the PSC’s first-ever permitting of a partnership between FPL and PetroQuest Energy in the development of up to 38 natural gas wells in Oklahoma’s Woodford Shale region.
- Florida's Office of Public Counsel (OPC), the ratepayer advocate, appealed the PSC's approval of FPL's gas production investment to the Florida Supreme Court. The OPC expressed concern that other utilities, including Duke Energy Florida and Southern Company subsidiary Gulf Power might make similar requests.
If such investments become common for utilities, it would make significant ratepayer funds subject to the volatility of fossil fuel markets, according to backers of Dudley's bill.
Florida electric utilities are already allowed to hedge a portion of their fuel needs in advance against price fluctuations, but FPL testified to the PSC that the Woodford Shale investment could save its 4.7 million customers $51 million to $107 million over its 30-year life.
FPL’s share of the gas could supply as much as 2.7% of the 2 Bcf it uses daily at cost, providing a hedge against fuel price volatility. FPL has already proposed further investments that would meet 25% of its daily gas needs. It wants the PSC to establish general guidelines for gas exploration and production that would make compliant deals "presumptively eligible" for recovering utility costs through rates.
The Florida Industrial Power Users Group opposed the FPL gas investment and said the PSC overstepped its jurisdiction in permitting it.
Rep. Dudley and his allies appear to be making a point to prioritize utility oversight in this legislative session. Dudley recently introduced another bill to bar advanced cost recovery by Florida's utilities, has pushed to make PSC commissioners elected officials, rather than gubernatorial appointees, and joined in on efforts to boost solar power in the Sunshine State.