Florida Power & Light Co. has announced an innovative plan to invest in long-term natural gas supplies, which the company believes will save customers millions of dollars and keep fuel costs lower for years to come. By investing in natural gas production at the source rather than paying full market prices, FPL is projecting customer savings of up to $107 million over the life of the first project.
"With a growing fleet of cleaner, fuel-efficient natural gas-fired power plants and contracts for reliable and diverse gas transportation in place, we believe this to be the next logical step in providing clean electricity for our customers at affordable prices," said Eric Silagy, president and chief executive officer of FPL. "This investment in natural gas production is an important component for delivering lower, more stable natural gas prices for our customers, and we anticipate identifying additional investment opportunities, thereby benefiting our customers even more over the long term. Importantly, customers will realize the greatest amount of savings in the early years when wells typically produce the most natural gas."
FPL is partnering with PetroQuest Energy, Inc., on a new venture to develop up to 38 natural gas production wells in the Woodford Shale region in southeastern Oklahoma. PetroQuest, an independent oil and natural gas company and experienced operator in the region, will oversee and operate those wells. FPL will receive a portion of the natural gas produced from each well for its use. As part of its petition, FPL asked the Florida Public Service Commission (PSC) to approve guidelines for future natural gas production projects to allow the company, and in turn its customers, to take advantage of future beneficial natural gas investment opportunities.
FPL purchases up to 2 billion cubic feet per day of gas for its natural gas-fired power plants at prices that fluctuate based on market conditions. Through an existing PSC-regulated program, FPL can lower price volatility for customers by "hedging" a portion of its fuel in advance to protect against price fluctuations. However, this program benefits customers only through short-term agreements. Investing in gas production at the source will enable FPL to secure gas at a relatively low and stable cost to customers for as long as the wells produce gas, which is typically about 30-plus years.
Over the last five years, FPL has demolished three 1960s-era oil-burning power plants and is replacing them with ultra-modern, fuel-efficient clean energy centers that run on American-produced natural gas. In addition to cutting the carbon dioxide emissions rate in half and reducing other air emissions by more than 90 percent, the new clean energy centers use up to 35 percent less fuel. Since 2001, FPL's investments in the efficiency of its power plants have already saved customers more than $6.5 billion on fossil fuel costs and avoided more than 60 million tons of carbon dioxide emissions. Together, these three plants, net of their costs to build, will save customers an additional $1 billion in fuel charges, helping to keep bills low in the future.