Florida Power & Light on Tuesday sought approval to collect an additional $810 million from customers in 2022 as high natural-gas prices continue to drive up costs for electric utilities.
The request, filed at the state Public Service Commission, would push up FPL customer bills that were already slated to increase next year. Costs for natural gas and other power-plant fuel are generally passed through to customers. With very few exceptions, FPL is the sole electricity provider in Flagler and Palm Coast.
FPL, Duke Energy Florida and Tampa Electric Co. have all warned in recent weeks that they might have to revamp fuel costs for customers because of higher-than-expected natural gas prices.
In Tuesday’s filing, FPL, which recently received approval for base-rate increases, said it has tried to limit fuel costs by taking steps such as expanding the use of solar energy and upgrading power plants to make them operate more efficiently.
“FPL plans to continue to improve these efforts in the coming years by, among other things, installing significantly more solar and more efficient combined cycle generation in the coming years,” the filing said. “In the absence of FPL’s foresight and long-term strategic initiatives, natural gas price increases such as those described herein would have a far greater impact on customer bills.”
The utility asked the Public Service Commission to approve the request during a Dec. 7 meeting, which would allow the increases to take effect in January. For residential customers who use 1,000 kilowatt hours of electricity a month — a common industry benchmark — the request would translate to paying $6.82 or $6.83 a month more than what had been expected in January, according to the filing.
Natural gas plays a critical role in Florida’s utility system, as it was used to produce about two-thirds of the electricity generated in 2019, according to a Public Service Commission report.
Utilities each year file projected fuel costs that regulators then use to determine how much will be charged to customers in the subsequent year. FPL made such a filing Sept. 3, with regulators approving it last week.
But before the approval, FPL — along with Duke and Tampa Electric — had already warned that natural gas prices were higher than expected. The filing Tuesday is what is known as a “mid-course correction,” a sort of add-on to what was approved last week.
The $810 million sought by FPL represents gas costs above projections for the final months of this year and for 2022. For example, the utility had initially projected that natural gas in 2022 would cost an average of $5.03 per million British thermal units, a price measurement used for natural gas. It now projects an average cost of $5.81, according to the filing.
A report posted online by the U.S. Energy Information Administration pointed to continuing volatility in natural-gas prices.
“We forecast that U.S. inventory draws will be similar to the five-year average this winter, and we expect that factor, along with rising U.S. natural gas exports and relatively flat production through March, will keep U.S. natural gas prices near recent levels before downward price pressures emerge,” the report said. “Because of uncertainty around seasonal demand, we expect natural gas prices to remain volatile over the coming months with winter temperatures to be a key driver of demand and prices.”
Duke and Tampa Electric have not requested to collect additional money from customers next year for fuel costs. But both said in October filings that they were analyzing the issue and would report back to the Public Service Commission in the coming weeks.
–Jim Saunders, News Service of Florida
Combat Vet says
Thank sleepy Joe. We were energy. Independent when Trump was at the wheel. How are you feeling now left wing extremists.
That’s because for the last year of his term there was a world wide pandemic and demand dropped substantially.
Now it is up and we are exporting natural gas as well as using more domestically.
Ray W. says
The emergence of the long-anticipated gullible commenter, in this case, Combat Vet. It has been a long time since we were energy independent. We are a net exporter of energy, which includes domestically-produced electricity exported to Canada and Mexico and compressed natural gas.
The United States now produces just over 11 million barrels of crude oil per day. We consume just over 19 million barrels of extracts from crude oil per day, such as gasoline, diesel fuel, kerosene, grease, plastics, etc. We are importing about eight million barrels worth of crude oil and other synthetic products per day. Indeed, in the 70’s, Congress passed a bill proscribing export of American crude oil. It was recently repealed during the Trump administration, so we can now export American crude oil. That happened because recent increases in American crude oil production meant that American refineries could not crack all of the newly-found crude oil (we are not building very many new refineries, though I know of two micro-refineries being built in North Dakota to refine diesel fuel to run all the tractor trailers that are transporting North Dakota crude oil from the wellhead to the rail yards for transport by rail to Nebraska, where it enters the southern leg of the XL pipeline for transport to Houston; there is another pipeline that transports some of the North Dakota crude oil eastward to other refineries).
Here is just a sampling of the facts. During the Obama administration, crude oil production rose to as high as 88% above production levels during the last month of the Bush administration, due to advances in fracking techniques and the introduction of new fracking chemicals that release more crude oil during the fracking process. Natural gas production rose as much as 29% above production levels during the last month of the Bush administration. Obviously, production figures rise and fall depending on prices.
With the significant increase in natural gas production came applications for permits to build natural gas liquifaction facilities in order to export the now much more abundant supplies of domestic natural gas. Cheniere Energy won the initial race, opening its Sabine Pass facility in 2016. Cheniere’s Corpus Christi facility opened later. Both are near completion, at an estimated cost of $30 billion. Cheniere Energy doesn’t spend that kind of money if it doesn’t expect a significant return on its investment. A number of other natural gas liquifaction facilities owned by other companies have since opened and are exporting natural gas all around the world; they, too, invested large sums of money in their projects. Last week, Cheniere Energy announced yet another long-term contract to sell liquified natural gas to a major Chinese energy producer.
Prior to the opening of the Sabine Pass facility, the only liquifaction facility in the United States was in Alaska, at Kenai. It closed long ago due to diminished natural gas production in the Alaskan oil fields. According to the 2020 International Gas Union’ annual summary, an industry publication, the United States went from entirely lacking in export capacity of liquified natural gas to being the third largest exporter of natural gas in the world (I occasionally read the IGU’s annual summaries. I find the summaries more interesting than listening to comments on TV by so-called conservative liars.). All in about four years, much of which started during the Obama administration, which did little to hinder the permitting process (I admit that the Obama administration did not approve permits for all 30 proposed liquifaction facilities, but building 30 such facilities would have been too much too fast, and some of the companies lacked the financial backing to carry out their plans.). Australia’s liquifaction capacity for export is also rapidly growing since vast petroleum reserves were discovered in parts of the Outback.
Unless you increase domestic natural gas production to match the recent dramatic rise in exports, when you export more and more liquified natural gas, natural gas prices will inevitably rise. The Wall Street Journal (not known for a liberal point of view) reported about two weeks ago that investors are pressuring American energy companies to refrain from drilling for more crude oil. With natural gas being a normal by-product of the drilling process, unless American energy companies ramp up their drilling efforts, we will not see much of an increase in domestic natural gas supplies in the near term. The investors want the now-higher prices for crude oil to stay high, to enhance their return on investment.
The investors know crude oil prices will remain high, because OPEC+ (13 OPEC members, plus another 10 energy exporters that do not belong to OPEC, but attend OPEC meetings in Vienna) voted in February to cut crude oil production by six million barrels per day, with the Saudi government voluntarily cutting another million barrels of crude oil production per day. In July, OPEC+ voted to increase production by 400,000 barrels per day each month, which means it will take 15 months for crude oil production to return to January levels. Industry analysts considers OPEC+’s decision as one that will vastly increase each member nation’s treasury, because oil prices have risen from $35 per barrel to around $85 per barrel. No wonder investors are pressuring American energy producers to refrain from drilling for more oil.
If Combat Vet thinks Biden asked OPEC+ to vote to cut crude oil production, then he can blame Biden for gasoline price increases, but the natural gas price increases appear due directly to our nation’s rapidly increasing exporting capacity, which brings large sums of money into the bank accounts of American natural gas producers. It appears to me that Combat Vet is complaining that American natural gas producers and natural gas liquifaction facility owners are making good money from exporting natural gas, and he is blaming Biden for their good fortune.
I heard Biden attempt to explain OPEC+’s reluctance to ramp up crude oil production on his administration’s refusal to engage in direct talks with the Saudi government, so some blame can be attached to Biden for his seeming inability to persuade foreign nations to give up their windfall. If OPEC+ countries are getting $85 dollars per barrel today, why would they want to go back to January’s $35 dollar level just because President Biden asks them to? From their perspective, ramping up production at 400,000 more barrels of crude oil per month allows them to continue to control crude oil prices. If American energy companies ramp up crude oil drilling efforts, what will happen in 15 months when OPEC+ returns to normal production? Do American energy companies want a glut of crude oil at that time after they spent the money to drill for more crude oil?
Here’s some advice for Combat Vet. Crude oil and natural gas are international commodities, not just American commodities. When OPEC+ significantly cuts production, the entire world has to pay more for refined petroleum products. Countries all around the world are building natural gas combined cycle electrical energy generating facilities, because these types of facilities are far cheaper to operate than coal-fired electrical energy generating facilities. Each new facility needs large quantities of natural gas. Now that we have developed the capacity to export more and more natural gas, we will do so, because American energy companies follow the money, something they have always done. Stop thinking of energy as solely a domestic commodity. And start thanking the Obama administration for its long-term foresight.
I have repeatedly commented on OPEC+’s actions since early summer, adding that the gullible would soon be coming out of the woodworks, blaming Biden for actions taken by American energy companies and OPEC+ countries. Since those predictions, Combat Vet is the first gullible commenter. More will be coming. Only time will tell if Combat Vet remains in the ranks of the gullible. Definition – Gullible: easily persuaded to believe something. Synonyms (in part): easily deceived/led, childlike, ignorant, naive’, foolish, … and on and on.
As an aside, during the Obama administration, I once filled my tank with $1.49 regular gas. Only once. We drilled for oil so fast that a glut occurred, causing domestic prices to tumble. That was before Congress repealed the law forbidding export of American-produced crude oil. Since the Nixon administration, when crude oil production peaked, only two presidents have seen increases in crude oil production: Obama and Trump. Obama’s percentage increase was far greater than Trump’s, but only because he started with such a low figure. Each president saw an increase of about 4 million barrels of crude oil production per day. Natural gas production rose, too.
Ray W. says
Concerning the photograph of natural gas flaring from a crude oil wellhead, since Republican dominated states, such as Texas and North Dakota, are loath to regulate American energy companies, it is estimated that about 30% of natural gas extracted from the ground is lost due to flaring or from leakage from inadequately maintained pipelines.
biden and his cronies are a disaster fro america, hey liberals do you like your
fuel bills, do you like your gasoline bills, i could write a book 10 months this
nightmare has been office how him and his communists together are dismantling
america, we are going down a slippery slope from this deminic adminstration, now
he is going after the michigan pipeline he is sick, pslam 2 why do the heathen rage
Ray W. says
Charley is yet another gullible commenter. Welcome to Combat Vet’s club.
H Williams says
Just one of the many failures of the Biden Administration. Inflation another. The border crisis another.
Thank you Ray W, again and again, for all the “FACTUAL” information you post.
Unfortunately, your excellent analysis is lost on many in our community which filled with mindless cult members who can only post the “blame”, “fear” and “hate” BS they find on FOX/Facebook/OANN, etc.
Ray W. says
Thank you, Sherry, for your compliment. I can only hope that the gullible FlaglerLive commenters will begin to look things up for themselves.
Charley has joined the ranks of the gullible alongside Combat Vet.
H. Williams has emerged, blaming Biden for inflation, when everyone who actually studies the issue of our recent bout of inflation knows that the Covid-19 pandemic has significantly altered large segments of our economy, resulting in extraordinary economic actions and reactions taken by Congress and Presidents Trump and Biden that also carry extraordinary risks, ones that we have yet to see fully play out. Unless H. Williams can prove that Biden is responsible for the Covid-19 pandemic, he is just another person wandering through life fooling himself, though I can infer that the wandering makes him feel good. Perhaps that is the best H. Williams can hope for. The only cure for his type of wandering is application of intellectual rigor to his or her thought processes, but that requires repeated acts of personal responsibility.
I agree with Timothy Patrick Welch’s last sentence (see his comment below). The United States has significant reserves of natural gas, which is the least polluting of the carbon-based energy sources we consume. I take the position that renewable energy sources are the only viable future if we are ever to properly address climate change, but I have to pragmatically recognize that two years ago the total energy produced by newly-added renewable sources such as industrial solar facilities and wind farms failed to keep up with rising demand for electricity. In such a scenario, combined-cycle natural gas electrical generating facilities are the best source of additional electricity production to complement the world’s growing renewable energy sources. As I have pointed out before, young professional Chinese, Indian, Malaysian, and Indonesian families that comprise an emerging middle class in each of those populous countries demand climate-controlled homes, just as the emerging American middle class demanded similar homes decades ago. Our economy rapidly grew as America matured into its current energy consuming condition. The idea that young professional Asian middle-class families will not want what my parents wanted is absurd and the emerging middle-class populations in those four countries far surpasses the size of our once-emerging middle class and much of the land mass of those four countries lies in the tropics. Worldwide demand for electricity is going to continue to rapidly grow, whether we like it or not. If the world’s nations cannot quell that type of demand, then the choice, therefore, becomes a choice between coal, diesel fuel or natural gas, unless the world transitions into newer forms of nuclear energy, with its own myriad problems. We are not Norway, blessed with many relatively large rivers and a comparatively small population. Norway decided years ago to engage in a large-scale effort to convert their energy grid to hydropower by building numerous dams. Now, Norway has sufficient excess capacity to export electricity by undersea cable to Denmark, where it links into the European grid. The Norwegian government recently passed a law banning the sale of internal combustion vehicles by 2025. Last year, 54.3% of Norwegian new vehicle buyers went fully electric.
Intrigued by the issue at hand, rising LNG prices, I took the time to look up the most recent figures I could find for global liquified natural gas prices (LNG). In September, 2021, the World LNG Estimated Landed Prices for various countries reflected the following price levels for the internationally recognized standard of one million British Thermal Units (BTU’s) of energy:
Altamira (Mexico): $23.52
Lake Charles (Louisiana): $4.93
Cove Point (Maryland): $5.41
If a British-based energy company were to need a new source of natural gas to power its electrical generating facilities, Cove Point LNG is a really attractive option. We still have a glut of natural gas relative to most of the rest of the world (Russia has huge supplies of natural gas, too), and American natural gas producers are going to sell to American liquifaction companies for export to the rest of the world if that means their making more money. The problem is that just because American liquifaction capacity has skyrocketed, that doesn’t also mean the rest of the world’s necessary infrastructure is in place. Once Cheniere Energy buys domestically-sourced compressed natural gas and liquifies it, it can be loaded onto an ocean-going LNG tanker, but the equipment needed to reverse the process (“regasification”) has to be built in the receiving port. For example, as a hypothetical, if a British company were to build a combined-cycle natural gas turbine electrical generating facility in northern England, it would also need to build a regasification facility in a nearby port to handle the LNG bought from Cheniere Energy and it would need to build a pipeline to carry the compressed natural gas from the port to the new power plant. I know of this because Duke Power recently built two new combined cycle natural gas turbine facilities on the Crystal River site that still houses the now-shuttered nuclear power plant. Duke Power tore down the four on-site coal-fired electricity generating facilities to build the two new natural gas-powered facilities, plus a several hundred-mile-long compressed natural gas pipeline to carry the necessary natural gas from an existing large compressed natural gas pipeline to the site. Two more combined-cycle natural gas turbine facilities are in the permitting process. As many worldwide ports lack land-based regasification facilities, shipbuilders see an opportunity for profit. Thus far, four vessels capable of regasifying LNG have entered the LNG fleet. Using the northern British site as the example, one of the regasifying LNG vessels could be leased for temporary use while a land-based regasifying facility is built. Once the land-based facility opens for use, the vessel can be moved to another port. Russia just finished building 15 ice-breaking LNG vessels to allow for export of natural gas extracted from fields north of the Arctic Circle, allowing for year-round Russian export of LNG to ports around the world. With the opening of the widened and deepened Panama Canal, a new class of super-LNG tankers is entering the fleet. Does anyone reasonably believe that American energy companies are not going to sell LNG to foreign countries if they can earn a greater profit from such sales? Why would anyone believe that there are not going to be increasing demands on our domestic natural gas supplies if more and more of what we produce is going to be exported? There may come a time when we are paying $25 per million BTU’s of natural gas, just like the rest of the world currently pays, but not one penny of the higher prices will be Biden’s fault. After all, natural gas is an international commodity and Chinese, Indian, Malaysian, and Indonesian middle-class families want what they want.
Timothy Patrick Welch says
We in America are so spoiled.
Yep “gas peackers”, come online when profitable to supplement the base load usually carried by nuclear generators. As natural gas prices increase nuclear generators can charge more, but just enough to stay under the cost to operate natural gas generating plants. As such in America most everyone’s electric bill varies with the cost of natural gas.
We are so so so lucky to live in a country with such an abundance of natural resources.
Thank you for your research. It is refreshing to read commentary based on facts and not political prejudices (from either side of the divide). The energy is issue is complex and requires analysis, not expletives.
Yeah yall Repubs, who can’t think for themselves, always blaming bad things on Biden. I’m sure yall blamed him for the insurrection last Jan.