TALLAHASSEE, Fla. – State regulators Thursday approved a settlement that will clear the way for Florida Power & Light to buy -- and ultimately shut down -- a coal-fired power plant in Jacksonville.
A three-member panel of the Florida Public Service Commission signed off on the $520.5 million deal, little more than a month after FPL and the state Office of Public Counsel reached a settlement agreement. The Office of Public Counsel is an agency that represents consumers in utility cases.
The unusual deal stems from a long-term contract that FPL signed in 1988 to buy power from the Cedar Bay power plant near the St. Johns River. The utility argues that it can now generate electricity at a lower cost than what the contract requires it to pay.
As a result, FPL plans to buy the 250-megawatt plant from CBAS Power Holdings LLC, end the contract to purchase electricity and shut down the facility. The utility argues that the moves will lead to $70 million in future savings for customers.
FPL attorney John Butler told regulators Thursday that the utility didn't have to pursue the deal but is trying to reduce costs for customers.
"We really wanted to do the deal and save customers money,'' Butler said.
But the Florida Industrial Power Users Group, which represents large electricity users, argued that FPL agreed to pay too much for the plant. Jon Moyle, an attorney for the group, questioned whether FPL negotiated hard enough for a lower price.
"It (the $520.5 million cost) is too much,'' Moyle said. "The ratepayers should not be saddled with this inflated price."
The Public Service Commission panel approved the settlement without debate.
FPL announced the proposed deal in March, and the $520.5 million cost did not change in the settlement with the Office of Public Counsel. But the settlement involves issues such as how costs will be recovered from customers and a requirement for FPL to increase from $20 million to $40 million an environmental liability-insurance policy.
Without the deal, FPL's contract to buy power from the coal-fired plant would continue until December 2024, according to a document filed with the Public Service Commission earlier this year. After taking ownership, FPL anticipates closing the plant at the end of 2016, Butler said during a commission hearing last month.
Butler said Thursday that the deal is in the "public interest." He also disputed Moyle's contention that the utility is paying too much.
"Unlike FIPUG, FPL was actually at the table negotiating this deal, and I can assure you that (an inflated price) is not the case,'' Butler said.
Moyle acknowledged not being at the negotiating table but didn't back away from his argument.
"We don't think it is a good deal for our members and for the ratepayers at large,'' he said.