The Florida Public Service Commission on Monday approved agreements authorizing storm protection plans (SPP) for four investor-owned utilities, clearing the way for billions of dollars in system hardening investments including the continued undergrounding of power lines and other equipment.
While moving distribution assets underground can help make them more resilient to storms and other disasters , experts say it must be done carefully--with an eye towards making equitable investments that have broader grid impacts.
The protection strategies are the result of legislation signed last year by Republican Gov. Ron DeSantis, which required utilities to develop 10-year plans that will be updated regularly. The law allowed for a cost-recovery rider, outside of a utility's base rates, to pay for undergrounding power lines and other system improvements.
Regulators determined the agreements are in the public interest "because the programs continue to strengthen Florida’s grid and improve recovery times from severe weather events,” PSC Chairman Gary Clark said in a statement.
The agreements continue some hardening work that utilities have been doing for more than a decade, since Florida's electric grid was devastated during the 2004-2005 storm season. They also authorize some new work, while ensuring utility plans to underground power lines are completed in a methodical and data-driven way.
While moving power lines underground will help with system resilience, some experts warn that the expensive process addresses only the symptoms of a fragile system — and other types of modernization and distributed investments could provide system value even when the state is not facing hurricanes or other potential disasters.
"The costs of such efforts may be justified in some cases, but in general, undergrounding is an example of a resilience investment that only address the symptoms, not the root cause, of a fragile grid," Mark Dyson, principal at Rocky Mountain Institute (RMI), said in an email.
The agreements authorize SPPs for NextEra Energy subsidiaries Florida Power & Light (FPL) and Gulf Power, Duke Energy Florida, and Tampa Electric Company (TECO). Earlier this year, regulators granted Florida Public Utilities Company a one-year extension to complete its SPP, following system damage from Hurricane Michael in 2018.
Each agreement was reached with Florida's Office of Public Counsel (OPC), and in some cases specific customers.
"We were able to reach agreements with all the utilities," Public Counsel J.R. Kelly said. "Our biggest concern was ensuring there'd be no double recovery of costs through base rates and the storm protection plan cost recovery clause. We were able to resolve those with all the utilities."
In some instances, Kelly said, OPC worked to ensure utilities took a measured and data-driven approach to undergrounding lines. The consumer advocate's office wanted to ensure that equipment placed underground actually needs hardening — and that the work is done equitably across different communities.
The storm protection plan for FPL, the state's largest electric provider, "is a continuation of the existing comprehensive hardening programs that the company has undertaken for nearly 15 years," utility spokesman Bill Orlove said in an email. "These programs have benefited customers by successfully reducing restoration costs and outage times during major storms, as well as improving day-to-day service reliability."
The PSC will hold a hearing in October regarding the SPP cost recovery clause, where FPL will seek to recover $43 million in 2021, Orlove said. The utility anticipates the programs will have no impact on customer bills during the plan’s first year, and "minimal bill increases" in 2021 and 2022, he added.
However, FPL had proposed a significantly-larger program in its SPP. Along with Gulf Power, the two had proposed spending more than $500 million annually to underground power lines. Instead, their undergrounding work will continue as part of pilot programs which have already been approved.
The pilot program will help to determine where larger undergrounding efforts would be most effective and should begin, said Kelly.
FPL plans to have undergrounded 220 to 230 overhead neighborhood power lines under the pilot, Orlove said. And after the pilot is completed, "we estimate that between 300 and 700 neighborhood power lines will be placed underground annually during 2021 to 2024."
Over the next 10 years, Orlove said FPL plans to continue investing about $1 billion annually on storm hardening.
For FPL, Kelly said the decision to maintain undergrounding pilot programs already in place will give time to determine which lines are most in need of undergrounding and to ensure the work is not done primarily in the most affluent communities.
"It takes a lot of analysis to justify where we go first," said the public advocate. "It's going to be a learning process for the next few years. ... FPL will take the information they'll discover from the pilot and determine the most prudent approach."
"At least at the beginning, you need to take it slow and steady," Kelly said. "It would be imprudent to just run and out and underground everything."
Duke Energy's Florida subsidiary plans to invest $6.5 billion over the next 10 years, with about half of that going to feeder and lateral hardening that may include undergrounding some distribution facilities. About $550 million will go towards developing a self-optimizing grid that will enable approximately 80% of the utility's distribution feeders to automatically reroute power around damaged line sections.
TECO's plan calls for spending more than $100 million in most years to underground distribution laterals, totaling about $977 million from 2020 through 2029.
While undergrounding power lines will boost system resilience, there are concerns that the approach is an expensive way to fix a relatively-infrequent problem.
"Undergrounding also does not provide any value to customers on 'blue sky' days where the system is operating normally," RMI's Dyson said. "On the other hand, there are promising examples of utilities investing in projects that prioritize distributed generation, storage, and intelligent grid controls that can mitigate customers' reliance on centralized generators and easily-disrupted power lines."
Those types of projects, said Dyson, can provide economic benefits during normal system operation as well as during natural disasters. For example, he pointed to Holy Cross Energy in Colorado, where the utility is developing community energy projects "to both increase community resilience against wildfire risks, as well as reduce the cooperative's annual power supply costs."
Those projects include supervisory control and data acquisition-controlled smart devices, arc sensing technology and improved vegetation management.