Dive Brief:
- Duke Energy Florida has asked the Florida Public Service Commission for permission to build a 1,640 megawatt natural gas plant and some peaking units at its Crystal River Energy Complex.
- The move would add a total of 2,200 megawatts to its Florida capacity by 2018 to meet its expected 1.4% customer growth between 2014 and 2023 despite the shuttering of an out-of-date nuclear facility and the EPA regulations-driven closure of two coal units.
Dive Insight:
NRG Florida and EFS Shady Hills want the PSC to deny Duke’s request so it will purchase power from their Florida facilities. Calpine Construction Finance Co. is pushing the PSC to have Duke buy its 550 megawatt combined cycle Osprey natural gas plant which, Calpine argues, is a more efficient, lower emissions choice than the peaker plants and would save Duke $130 million. Calpine built the Osprey plant when Florida growth promised high returns for merchant plants but declining demand has compromised its profitability.
Duke told the PSC new transmission would be needed to deliver the Osprey plant’s generation to the load served by the Crystal River plants and the ten year old facility is less efficient than new peakers, making Osprey the more expensive choice. The challengers say Duke only wants to build its own plant to rate base the costs, benefiting shareholders at the expense of customers.
The higher the cost of a new plant, the more regulators allow a utility to add to customers’ rates to pay it off, but the regulators’ responsibility is to keep rates as low as possible, so the eventual bill increase is a compromise.
The Florida PSC can’t tell Duke to choose the alternatives but it can block the new build.
