Just as Flagler County Resolves Against Fracking, Ratepayers Will Underwrite FPL’s Fracking Bills
FlaglerLive | June 18, 2015
Florida utility regulators gave approval Thursday for the state’s largest power company to further invest ratepayer money in natural-gas production.
But unlike a decision late last year to approve Florida Power & Light’s investment in a controversial Oklahoma fracking operation, future exploratory ventures for natural gas won’t have to earn regulatory approval on a case-by-case basis to determine if the spending is prudent.
That means FPL can invest in fracking ventures at ratepayers’ expense, making it the first utility in the nation–according to an analysis by the Public Service Commission–to spend ratepayers dollars on “non-regulated risk,” the Miami Herald reports.
The state Public Service Commission, however, agreed to revisit the new investment program for FPL in five years to determine if it should continue. Also, the regulators capped the amount that FPL, which serves roughly 4.7 million customers in Florida, can annually invest at $500 million.
The overwhelming majority of Flagler County’s power customers–56,000 of them–are customers of FPL. Just last month, the Flagler County Commission approved a resolution opposing fracking, at least in Florida. The resolution was aimed at potential state legislation that would open the door to fracking in the state. The Palm Coast City Council declined to follow suit. FPL’s investments are expected to be in the Great Plains.
While critics argue the program increases financial risks for customers, Commissioner Julie Brown contended the goal is to provide customers protection, help stabilize rates and encourage innovation.
“I think this type of program is worthy of our consideration,” Brown said. “If there was a time limit or duration on this program, just three to five years, it would allow us an opportunity to gather enough meaningful data to assess if customers are benefiting from the program.”
The Juno Beach-based FPL wanted to be able to invest up to $750 million a year. But the utility considered the regulators’ decision favorable as it can now move forward with the investment program, which it says will save customers money.
“The U.S. natural gas market is growing, it’s fast-paced, and potential partners are unwilling to wait through a lengthy regulatory process before moving forward,” FPL spokesman Mark Bubriski said after the hearing. “We can now seek out potential future projects to benefit our customers.”
PSC staff had recommended a cap of $250 million. The proposed cap would have been more than the $191 million that FPL is paying this year — the money coming through customers’ monthly fuel charges — for a joint venture with Louisiana-based PetroQuest Energy to drill for natural gas from the Woodford Shale in southeastern Oklahoma.
Fracking is a controversial process that involves injecting water, sand and chemicals underground to create fractures in rock formations, which allows the release of natural gas and oil.
PSC staff had also proposed that each proposed investment be reviewed on a case-by-case basis similar to the PetroQuest Energy venture, which is expected at its peak production to generate 2.7 percent of FPL’s overall fuel use.
The Florida Industrial Power Users Group, which represents businesses that use large amounts of electricity, was among those expressing disappointment that the commission didn’t follow recommendations to review each project on a case-by-case basis.
“This puts nearly half of Florida’s businesses and residents, who are FPL’s customers, in the risky natural-gas business in places like Texas and Oklahoma,” said Jon Moyle, an attorney for the Florida Industrial Power Users Group.
Moyle said no decision has been made about a possible challenge to the latest FPL decision. The industrial power-users group and the state Office of Public Counsel, which represents consumers in utility cases, have challenged the PetroQuest Energy deal. The appeal awaits a decision from the Florida Supreme Court.
Florida already depends on natural gas for about 65 percent of its energy. FPL believes fuel savings from future drilling projects will offset production costs.
Bubriski said the company doesn’t have additional investments lined up, as the opportunities, such as the PetroQuest project, quickly arise.
One criteria for any deal is that a “transportation path” for the gas must be readily available, which currently limits future projects to Texas, Louisiana, Oklahoma, Arkansas, Mississippi, Alabama, West Virginia, Ohio, and Pennsylvania, according to PSC records.
–Jim Turner, News Service of Florida, and FlaglerLive