Released January 20, 2012 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Florida Power & Light Company (FPL) (Juno Beach, Florida), the utility unit of NextEra Energy Incorporated (NYSE:NEE) (Juno Beach), has bet big on natural gas, and so far the plan is working. FPL has committed to spend more than $3 billion to tear down two old, oil-fired generators and replace them with 2,500 megawatts (MW) of new natural-gas, combined-cycle (NGCC) generation capacity. A third project, valued at $1 billion, would add another 1,000-MW NGCC generator, if FPL moves forward with it.
With gas prices touching a recent low of about $2.50 per million British thermal units (MBtu), down about 80% from its mid-2008 high of $12.65 per MMBtu, increased reliance on natural gas will save FPL's customers hundreds of millions of dollars compared to other types of generation.
Last year, FPL demolished its simple-cycle, oil-fired Cape Canaveral generator and starting building a 1,250-MW, NGCC power station on the site of the former plant. Zachry Holdings (San Antonio, Texas) is the engineering and construction firm on that project, which has a total investment value of $1.875 billion. The new generator is scheduled to begin operating in mid-2013.
Also last year, FPL and Zachry tore down another aging, oil-fired generator, Riviera Beach, and started building a 1,250-MW, NGCC on that former plant's footprint. This project, with a total investment value of $1.25 billion, is scheduled to begin operating in early 2014.
The Florida utility is considering a third demolition and construction project at its Port Everglades Power Station in Broward County. This project, with a total investment value of $1 billion, would entail demolishing an old oil-fired generator and replacing it with a 1,250-MW, NGCC unit. If FPL decides to move forward with that project, construction could begin in early 2014 and finish in mid-2016.
With gas prices low and oil prices high, those strategic moves make sense. Oil-fired generation accounted for 15.8% of the utility's generating capacity in 2010, but only high oil prices kept usage of those generators down: oil generated about 4.3% of the utility's electricity in 2010, according to FPL. Both numbers are likely to continue falling over the next few years, as new NGCCs replace old oil-fired generators.
"We have really put a lot of our focus on keeping our bills the lowest in the state," Pam Rauch, FPL vice president of development and external affairs, told The Orlando Sentinel recently. The new NGCCs will save customers hundreds of millions of dollars in fuel and operating costs over their 30-year lifetimes, the utility estimated.
"This important investment will benefit our customers for decades to come with significant improvements in efficiency, environmental performance and reliability," FPL President and CEO Armando J. Olivera said last June in announcing the company's decision to build a new NGCC on the site of its Riviera Beach power plant. "Making smart infrastructure investments on behalf of our customers is part of FPL's commitment to maintaining strong service reliability, generating cleaner power and keeping our customers' bills lower over the long-term."
So far, so good. In a filing with Florida regulators last November, FPL estimated its 2012 fuel costs will fall by $460 million compared to previous estimates. "The prices of fossil fuels on the world markets can be volatile, and fluctuations can make a significant impact on our customers' bills," Olivera said in a statement at the time. "Our investments in recent years to modernize our power plant fleet--phasing out older, oil-fired units with cleaner, more efficient, natural gas-fired generating capacity--are helping protect our customers from higher fuel charges."
The lower fuel costs and higher efficiency of the NGCCs under construction will slash a significant portion off a planned rate case that the utility expects to file in the coming months. Although figures are not yet finalized, this week FPL said it planned to seek a rate increase of $695 million, but that lowered fuel costs would cut several hundred million dollars off its request.
Longer term, the utility is uprating several of its nuclear generators to manage the risks of being so heavily tied to natural-gas prices. FPL spent about $500 million to add about 200 MW of new generation capacity by uprating its St. Lucie Nuclear Power Station. The Unit 1 uprate was completed in mid-2010, while Unit 2's uprate was completed in mid-2011. Looking forward, FPL plans to spend about $2.4 billion to add about 200 MW through uprates at units 3 and 4 of its Turkey Point Nuclear Power Station. The Unit 3 uprate project is scheduled to kick off in early 2012 and be completed by mid-2012. The Unit 4 uprate project is scheduled to kick off in in late 2012 and be finished in early 2013.
The proposed generation capital plans are part of an overall capital budget of about $9 billion for 2011-13, as FPL works to expand, strengthen and improve its electric generation and delivery system.
View Plant Report - 1012760 1500935 1007195 1500318
View Project Report - 5002568 5003192 300044466 5002998 5002999
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
With gas prices touching a recent low of about $2.50 per million British thermal units (MBtu), down about 80% from its mid-2008 high of $12.65 per MMBtu, increased reliance on natural gas will save FPL's customers hundreds of millions of dollars compared to other types of generation.
Last year, FPL demolished its simple-cycle, oil-fired Cape Canaveral generator and starting building a 1,250-MW, NGCC power station on the site of the former plant. Zachry Holdings (San Antonio, Texas) is the engineering and construction firm on that project, which has a total investment value of $1.875 billion. The new generator is scheduled to begin operating in mid-2013.
Also last year, FPL and Zachry tore down another aging, oil-fired generator, Riviera Beach, and started building a 1,250-MW, NGCC on that former plant's footprint. This project, with a total investment value of $1.25 billion, is scheduled to begin operating in early 2014.
The Florida utility is considering a third demolition and construction project at its Port Everglades Power Station in Broward County. This project, with a total investment value of $1 billion, would entail demolishing an old oil-fired generator and replacing it with a 1,250-MW, NGCC unit. If FPL decides to move forward with that project, construction could begin in early 2014 and finish in mid-2016.
With gas prices low and oil prices high, those strategic moves make sense. Oil-fired generation accounted for 15.8% of the utility's generating capacity in 2010, but only high oil prices kept usage of those generators down: oil generated about 4.3% of the utility's electricity in 2010, according to FPL. Both numbers are likely to continue falling over the next few years, as new NGCCs replace old oil-fired generators.
"We have really put a lot of our focus on keeping our bills the lowest in the state," Pam Rauch, FPL vice president of development and external affairs, told The Orlando Sentinel recently. The new NGCCs will save customers hundreds of millions of dollars in fuel and operating costs over their 30-year lifetimes, the utility estimated.
"This important investment will benefit our customers for decades to come with significant improvements in efficiency, environmental performance and reliability," FPL President and CEO Armando J. Olivera said last June in announcing the company's decision to build a new NGCC on the site of its Riviera Beach power plant. "Making smart infrastructure investments on behalf of our customers is part of FPL's commitment to maintaining strong service reliability, generating cleaner power and keeping our customers' bills lower over the long-term."
So far, so good. In a filing with Florida regulators last November, FPL estimated its 2012 fuel costs will fall by $460 million compared to previous estimates. "The prices of fossil fuels on the world markets can be volatile, and fluctuations can make a significant impact on our customers' bills," Olivera said in a statement at the time. "Our investments in recent years to modernize our power plant fleet--phasing out older, oil-fired units with cleaner, more efficient, natural gas-fired generating capacity--are helping protect our customers from higher fuel charges."
The lower fuel costs and higher efficiency of the NGCCs under construction will slash a significant portion off a planned rate case that the utility expects to file in the coming months. Although figures are not yet finalized, this week FPL said it planned to seek a rate increase of $695 million, but that lowered fuel costs would cut several hundred million dollars off its request.
Longer term, the utility is uprating several of its nuclear generators to manage the risks of being so heavily tied to natural-gas prices. FPL spent about $500 million to add about 200 MW of new generation capacity by uprating its St. Lucie Nuclear Power Station. The Unit 1 uprate was completed in mid-2010, while Unit 2's uprate was completed in mid-2011. Looking forward, FPL plans to spend about $2.4 billion to add about 200 MW through uprates at units 3 and 4 of its Turkey Point Nuclear Power Station. The Unit 3 uprate project is scheduled to kick off in early 2012 and be completed by mid-2012. The Unit 4 uprate project is scheduled to kick off in in late 2012 and be finished in early 2013.
The proposed generation capital plans are part of an overall capital budget of about $9 billion for 2011-13, as FPL works to expand, strengthen and improve its electric generation and delivery system.
View Plant Report - 1012760 1500935 1007195 1500318
View Project Report - 5002568 5003192 300044466 5002998 5002999
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
