FPL envisions a more resilient and sustainable Florida; files details of proposed 2022-2025 rate plan with Public Service Commission

Rhea-AI Summary

Florida Power & Light Company (FPL) has filed a four-year rate adjustment proposal with the Florida Public Service Commission, beginning in 2022. This plan aims to maintain bills below the national average while investing over $29 billion to enhance reliability and resilience against climate change. Despite a projected average annual increase of 3.4%, typical residential bills are expected to remain approximately 20% lower than national averages through 2025. The merger with Gulf Power is anticipated to save customers over $2.8 billion over the asset lifetime.

Positive

• FPL's proposal ensures that typical residential bills remain well below national averages through 2025.
• Projected savings of approximately $2.8 billion from the Gulf Power merger by enhancing operational efficiency.
• Significant investments of over $29 billion from 2019 through 2022 aimed at improving service reliability and reducing emissions.

Negative

• The proposed base rate adjustments may increase residential bills by about $18 per month over four years.
• Rising costs of materials and services may impact FPL's ability to maintain low rates.

JUNO BEACH, Fla., March 12, 2021 /PRNewswire/ -- Consistent with its preliminary proposal announced in January, Florida Power & Light Company (FPL) today filed a comprehensive four-year request with the Florida Public Service Commission (PSC) for new base rates that would be phased in beginning in 2022.

FPL now serves 5.6 million customer accounts from Miami to Pensacola across more than half of Florida⁽¹⁾, a rapidly growing state on the front lines of climate change and frequently severe weather. Recognizing this, FPL's plan will enable the company to continue building a more resilient and sustainable energy future for everyone – including future generations – while keeping typical customer bills lower than the national average through at least 2025.

"At FPL, we have a passion to deliver America's best energy value and a commitment to do right by our customers, particularly during these challenging times," said Eric Silagy, president and CEO of FPL. "We recognize there is never a good time to request a rate increase, and we remain steadfastly committed to providing customers unparalleled value while building an energy future they can depend on. Due to our consistent and disciplined, long-term investments, we're able to provide service that is cleaner and more reliable than ever before while our residential, commercial and industrial bills have remained among the lowest bills in the state and the nation for over a decade. Our proposed four-year rate plan beginning in 2022 will help us continue delivering unmatched value to customers by ushering in Florida's energy future and keeping bills among the lowest in America."

With rates consistently well below the national average, FPL's typical 1,000-kWh residential and business customer bills are lower today than they were 15 years ago. As FPL's bill has decreased over time, the service it provides customers has consistently and demonstrably improved. FPL's investments to build a stronger, smarter energy grid have resulted in best-in-state reliability every year since 2006, as well as repeated national recognition. As detailed in FPL's annual reliability report recently filed with the PSC, FPL delivered its best-ever overall service reliability in 2020 and continued a trend in which FPL has improved reliability by nearly 40% since 2006.

Aligned with previous multi-year plans approved by the Commission, FPL has designed its new rate plan in a way that provides exceptional customer value while strengthening the company's commitment to disciplined and proven, long-term investments in the infrastructure, innovative technology and clean energy that are foundational for communities to continue to thrive. Even with the plan's proposed base rate increase, FPL's typical residential customer bills are projected to remain well below the national average through 2025. FPL's typical business customer bills are projected to be at or below the national average through 2025.

Delivering service efficiently
FPL ranks best-in-class among all major U.S. utilities based on its low operating and maintenance (O&M) costs per kWh of retail sales. FPL's innovative and relentless day-to-day focus on driving costs out of the business saves customers approximately $2.6 billion annually compared to an average performing utility, which equates to savings of about $24 a month on a typical residential customer's $99 bill – or nearly $300 annually. Never satisfied, FPL continues to find new ways to work more efficiently to save customers money. For example, FPL's 2022 non-fuel O&M, which is reflected in the company's filing, is projected to be lower than FPL's 2018 best-in-class level.

The merger and consolidation of FPL and Gulf Power operations will produce enormous benefits. Productivity improvements at Gulf Power since its acquisition by NextEra Energy, FPL's parent company, are expected to reduce annual O&M expenses in 2022 by $86 million which, on a scale adjusted basis, is the equivalent of saving nearly $1 billion at FPL. FPL also projects long-term combined system benefits of approximately $1.53 billion as a result of power generation upgrades already underway, a new transmission line physically connecting both utility systems and the ability to dispatch from, and plan for, a common fleet of power generation resources. In total, combining the two companies and operating as a single utility system is projected to save customers more than $2.8 billion over the lifetime of the assets.

The company is committed to operating efficiently in order to deliver reliable service while keeping price increases low, even while the costs of other essential products and services have risen dramatically. For example, groceries, medical care, health insurance and housing increased 25%-75% from 2006 to 2020. Meanwhile, FPL's typical customer bill is approximately 10% lower today than it was in 2006.

While FPL's focus on efficiency and productivity has lessened the impact, the costs of many materials and products, such as trucks, wire and employee healthcare, which the company must purchase in order to provide clean, reliable and affordable power, have increased. These increased expenses, together with the increased investment required to serve approximately 500,000 new customers from 2018 through the end of 2025 and to support Florida's growing $1 trillion-plus economy, are driving up the cost to provide service.

Overview of the proposed adjustments to revenue requirements
FPL's proposal includes four adjustments to base revenue requirements that would be phased in during the four-year period, 2022-2025, providing customers continued, longer-term cost certainty. Consistent with our initial estimate in January, the plan includes:

• In 2022, an adjustment to base annual revenue requirements of approximately $1.1 billion.
• In 2023, a subsequent year adjustment to base annual revenue requirements of approximately $607 million.
• In 2024 and 2025, a request for a Solar Base Rate Adjustment (SoBRA) mechanism to recover up to 894 megawatts (MW) of cost-effective solar projects in each year. If the full amount of new solar capacity allowed under the SoBRA proposal was constructed, FPL's preliminary estimate is that it would result in general base rate adjustments of approximately $140 million in 2024 and $140 million in 2025, which would be partially offset by a reduction in fuel costs on the clause portion of customer bills.

Investing in Florida's future
The phased-in rate adjustments are necessary to help pay for the more than $29 billion FPL will have invested from 2019 through 2022 to benefit customers, including improving electric service reliability, reducing emissions and improving generation fuel efficiency, strengthening its electric system to make it more resilient in severe weather and preparing for customer growth. In addition, FPL will continue to make significant investments throughout the base rate proposal timeframe to further improve service for its customers.

• Investments to build a more resilient energy future: FPL continues to build a stronger and smarter energy grid to further improve service reliability for customers, including fewer outages and restoring service faster. This includes:
• Continued deployment of advanced smart grid technology that enables the company to continually monitor and assess the health of its system, predict potential issues before they disrupt service to customers and restore power faster following outages.
• Rebuilding the main 500-kV high-voltage electric transmission line that serves as the backbone of Florida's energy grid.
• Construction of the North Florida Resiliency Connection, a new, storm-hardened, state-of-the-art transmission line that physically connects FPL's energy grid to Northwest Florida.
• Investments to build a more sustainable energy future: FPL is building more fuel-efficient power generation, solar and energy storage facilities that drive down costs over the long term. This includes:
• Solar: FPL's four-year rate plan includes adding more solar to the energy grid through the company's "30-by-30" plan to install 30 million solar panels in Florida by 2030.
• Energy storage: The plan includes building the world's largest integrated solar-powered battery. It also includes an innovative green hydrogen pilot project, a technology that could one day unlock 100% carbon-free electricity that's available 24 hours a day.
• Ultra-efficient natural gas clean energy centers: As FPL deploys leading edge, renewable technology, it's also committed to meeting the 24/7 energy needs of customers today. The future FPL Dania Beach Clean Energy Center – projected to enter service in mid-2022 – will enable FPL to continue meeting customers' growing energy needs while delivering more than $300 million in customer savings over its operational lifetime. Additionally, FPL has modernized its power plant in Northwest Florida, converting it from coal to run entirely on clean natural gas – cutting its carbon dioxide emissions rate by 40%.
• Anticipated growth of new customers: From 2018 through the end of 2025 alone, the anticipated growth of approximately 500,000 new customers will require the addition of new infrastructure and result in higher operating costs.
• Regulatory compliance: FPL will incur costs associated with increased federal and state governmental and regulatory reliability requirements, as well as cybersecurity costs to ensure the company's assets and critical information, including customer account records, are safeguarded.

Information for residential customers
Based on the proposed base rate adjustments and the company's current projections for fuel and other costs, FPL estimates that its typical residential customer bill will grow at an average annual rate of approximately 3.4% from January 2021 through 2025. Even with this growth, FPL estimates that, through 2025, its typical residential bill will remain approximately 20% below the projected national average and the typical 1,000-kWh residential bill in Northwest Florida is projected to decrease by the end of the four-year rate plan.

Combined with current projections for fuel and other costs, FPL's four-year rate plan would phase in increases totaling about $18 a month, or about 60 cents a day, on the typical 1,000-kWh residential customer bill, phased in as follows:

• In 2022, a base rate adjustment, along with projections for fuel and other costs, would add about $10.50 a month or about 35 cents a day on a typical bill.
• In 2023, a subsequent-year base rate adjustment, along with projections for fuel and other costs, would add about $4 a month or about 13 cents a day on a typical bill.
• In 2024, a solar base rate adjustment, combined with projections for fuel and other costs, would add about $2 a month or about 7 cents a day on a typical bill.
• In 2025, a solar base rate adjustment would add $1.50 a month or about 5 cents a day on a typical bill.

Most FPL customers power their homes for just a few dollars a day. FPL's residential customer monthly usage median is approximately 950 kWh, which means that the majority of FPL customer households consume less than the standard 1,000-kWh typical bill benchmark, which is about $99 as of January 2021.

In recognition of the initial difference in the costs of serving the existing FPL and Gulf Power customers, FPL is proposing a transition rider/credit mechanism to address those differences in a reasonable manner for all customers. The transition rider/credit would decline to zero over a five-year period, at which point rates would be fully aligned by Jan. 1, 2027.

To estimate what the proposed rates would mean for their own bills based on individual electricity usage, FPL and Gulf Power residential customers can visit the online calculator at www.FPL.com/answers and www.GulfPower.com/answers. In addition to the calculator, customers can find more information on FPL's four-year base rate proposal.

FPL Bills – 2006, 2021 & 2022-2025
Jan. 2006	$108.61
Jan. 2021	$99.05
Jan. 2022	$109.58
Jan. 2023	$113.49
Jan. 2024	$115.61
Jan. 2025	$117.06
"Jan. 2006" reflects FPL rates in effect during the year 2006. "Jan. 2021" reflects FPL rates for Jan. 2021. "Jan. 2022-2025" reflects the current projection for FPL's typical 1,000-kWh customer bill from 2022-2025, which includes projected base rate adjustments, as well as current projections for fuel and other clauses. All bill totals include the state's standard gross receipts tax, but do not include any local taxes or fees that vary by community. FPL bills do not include the company's Gulf Power region. All rates are subject to change.
Northwest Florida Bills – 2006, 2021 & 2022-2025
Jan. 2006	$92.48
Jan. 2021	$132.41
Jan. 2022	$133.21
Jan. 2023	$132.39
Jan. 2024	$129.79
Jan. 2025	$126.50
"Jan. 2006" reflects Gulf Power rates in effect during the year 2006. "Jan. 2021" reflects Gulf Power rates for Jan. 2021. "Jan. 2022-2025" reflects the current projection for the typical 1,000-kWh customer bill in Northwest Florida from 2022-2025, which includes projected base rate adjustments as well as current projections for fuel and other clauses. All bill totals include the state's standard gross receipts tax but do not include any local taxes or fees that vary by community. Bills also do not include surcharges for hurricanes. All rates are subject to change.

Information for business customers
FPL business customers' typical bills are lower today than they were 15 years ago and are well below the national average. The proposed base rate adjustments vary widely depending on rate class and customer usage. For small and medium businesses, typical bills are projected to grow at an average annual rate of about 3.9% to 4.4% from January 2021 through 2025. Even with the proposed increase, small and medium business customer bills will remain well below the national average through 2025.

Large commercial and industrial customers with more complex rate structures may contact their FPL account managers for information about their proposed rate adjustments.

The estimates above are based on the company's filed proposal and may change. In the coming months, the PSC is expected to conduct an extensive review of the request.

Florida Power & Light Company
Florida Power & Light Company is the largest energy company in the U.S. as measured by retail electricity produced and sold. The company serves more than 5.6 million customer accounts supporting more than 11 million residents across Florida with clean, reliable and affordable electricity. FPL operates one of the cleanest power generation fleets in the U.S and in 2020 won the ReliabilityOne® National Reliability Excellence Award, presented by PA Consulting, for the fifth time in the last six years. The company was recognized in 2020 as one of the most trusted U.S. electric utilities by Escalent for the seventh consecutive year. FPL is a subsidiary of Juno Beach, Florida-based NextEra Energy, Inc. (NYSE: NEE), a clean energy company widely recognized for its efforts in sustainability, ethics and diversity, and has been ranked No. 1 in the electric and gas utilities industry in Fortune's 2021 list of "World's Most Admired Companies." NextEra Energy is also the parent company of NextEra Energy Resources, LLC, which, together with its affiliated entities, is the world's largest generator of renewable energy from the wind and sun and a world leader in battery storage. For more information about NextEra Energy companies, visit these websites: www.NextEraEnergy.com, www.FPL.com, www.NextEraEnergyResources.com.

Cautionary Statements and Risk Factors That May Affect Future Results

This news release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical facts, but instead represent the current expectations of NextEra Energy, Inc. (NextEra Energy) and Florida Power & Light Company (FPL) regarding future operating results and other future events, many of which, by their nature, are inherently uncertain and outside of NextEra Energy's and FPL's control. In some cases, you can identify the forward-looking statements by words or phrases such as "will," "may result," "expect," "anticipate," "believe," "intend," "plan," "seek," "potential," "projection," "forecast," "predict," "goals," "target," "outlook," "should," "would" or similar words or expressions. You should not place undue reliance on these forward-looking statements, which are not a guarantee of future performance. The future results of NextEra Energy and FPL and their business and financial condition are subject to risks and uncertainties that could cause their actual results to differ materially from those expressed or implied in the forward-looking statements, or may require them to limit or eliminate certain operations. These risks and uncertainties include, but are not limited to, those discussed in this news release and the following: effects of extensive regulation of NextEra Energy's and FPL's business operations; inability of NextEra Energy and FPL to recover in a timely manner any significant amount of costs, a return on certain assets or a reasonable return on invested capital through base rates, cost recovery clauses, other regulatory mechanisms or otherwise; impact of political, regulatory and economic factors on regulatory decisions important to NextEra Energy and FPL; disallowance of cost recovery by FPL based on a finding of imprudent use of derivative instruments; effect of any reductions or modifications to, or elimination of, governmental incentives or policies that support utility scale renewable energy projects of NextEra Energy Resources, LLC and its affiliated entities (NextEra Energy Resources) or the imposition of additional tax laws, policies or assessments on renewable energy; impact of new or revised laws, regulations, interpretations or ballot or regulatory initiatives on NextEra Energy and FPL; capital expenditures, increased operating costs and various liabilities attributable to environmental laws, regulations and other standards applicable to NextEra Energy and FPL; effects on NextEra Energy and FPL of federal or state laws or regulations mandating new or additional limits on the production of greenhouse gas emissions; exposure of NextEra Energy and FPL to significant and increasing compliance costs and substantial monetary penalties and other sanctions as a result of extensive federal regulation of their operations and businesses; effect on NextEra Energy and FPL of changes in tax laws, guidance or policies as well as in judgments and estimates used to determine tax-related asset and liability amounts; impact on NextEra Energy and FPL of adverse results of litigation; effect on NextEra Energy and FPL of failure to proceed with projects under development or inability to complete the construction of (or capital improvements to) electric generation, transmission and distribution facilities, gas infrastructure facilities or other facilities on schedule or within budget; impact on development and operating activities of NextEra Energy and FPL resulting from risks related to project siting, financing, construction, permitting, governmental approvals and the negotiation of project development agreements; risks involved in the operation and maintenance of electric generation, transmission and distribution facilities, gas infrastructure facilities, retail gas distribution system in Florida and other facilities; effect on NextEra Energy and FPL of a lack of growth or slower growth in the number of customers or in customer usage; impact on NextEra Energy and FPL of severe weather and other weather conditions; threats of terrorism and catastrophic events that could result from terrorism, cyberattacks or other attempts to disrupt NextEra Energy's and FPL's business or the businesses of third parties; inability to obtain adequate insurance coverage for protection of NextEra Energy and FPL against significant losses and risk that insurance coverage does not provide protection against all significant losses; a prolonged period of low gas and oil prices could impact NextEra Energy Resources' gas infrastructure business and cause NextEra Energy Resources to delay or cancel certain gas infrastructure projects and could result in certain projects becoming impaired; risk to NextEra Energy Resources of increased operating costs resulting from unfavorable supply costs necessary to provide NextEra Energy Resources' full energy and capacity requirement services; inability or failure by NextEra Energy Resources to manage properly or hedge effectively the commodity risk within its portfolio; effect of reductions in the liquidity of energy markets on NextEra Energy's ability to manage operational risks; effectiveness of NextEra Energy's and FPL's risk management tools associated with their hedging and trading procedures to protect against significant losses, including the effect of unforeseen price variances from historical behavior; impact of unavailability or disruption of power transmission or commodity transportation facilities on sale and delivery of power or natural gas by NextEra Energy, including FPL; exposure of NextEra Energy and FPL to credit and performance risk from customers, hedging counterparties and vendors; failure of NextEra Energy or FPL counterparties to perform under derivative contracts or of requirement for NextEra Energy or FPL to post margin cash collateral under derivative contracts; failure or breach of NextEra Energy's or FPL's information technology systems; risks to NextEra Energy and FPL's retail businesses from compromise of sensitive customer data; losses from volatility in the market values of derivative instruments and limited liquidity in OTC markets; impact of negative publicity; inability of FPL to maintain, negotiate or renegotiate acceptable franchise agreements with municipalities and counties in Florida; occurrence of work strikes or stoppages and increasing personnel costs; NextEra Energy's ability to successfully identify, complete and integrate acquisitions, including the effect of increased competition for acquisitions; environmental, health and financial risks associated with NextEra Energy Resources' and FPL's ownership and operation of nuclear generation facilities; liability of NextEra Energy and FPL for significant retrospective assessments and/or retrospective insurance premiums in the event of an incident at certain nuclear generation facilities; increased operating and capital expenditures and/or reduced revenues at nuclear generation facilities of NextEra Energy or FPL resulting from orders or new regulations of the Nuclear Regulatory Commission; inability to operate any of NextEra Energy Resources' or FPL's owned nuclear generation units through the end of their respective operating licenses; effect of disruptions, uncertainty or volatility in the credit and capital markets or actions by third parties in connection with project-specific or other financing arrangements on NextEra Energy's and FPL's ability to fund their liquidity and capital needs and meet their growth objectives; inability of NextEra Energy, FPL and NextEra Energy Capital Holdings, Inc. to maintain their current credit ratings; impairment of NextEra Energy's and FPL's liquidity from inability of credit providers to fund their credit commitments or to maintain their current credit ratings; poor market performance and other economic factors that could affect NextEra Energy's defined benefit pension plan's funded status; poor market performance and other risks to the asset values of NextEra Energy's and FPL's nuclear decommissioning funds; changes in market value and other risks to certain of NextEra Energy's investments; effect of inability of NextEra Energy subsidiaries to pay upstream dividends or repay funds to NextEra Energy or of NextEra Energy's performance under guarantees of subsidiary obligations on NextEra Energy's ability to meet its financial obligations and to pay dividends on its common stock; the fact that the amount and timing of dividends payable on NextEra Energy's common stock, as well as the dividend policy approved by NextEra Energy's board of directors from time to time, and changes to that policy, are within the sole discretion of NextEra Energy's board of directors and, if declared and paid, dividends may be in amounts that are less than might be expected by shareholders; NEP's inability to access sources of capital on commercially reasonable terms could have an effect on its ability to consummate future acquisitions and on the value of NextEra Energy's limited partner interest in NextEra Energy Operating Partners, LP; effects of disruptions, uncertainty or volatility in the credit and capital markets on the market price of NextEra Energy's common stock; and the ultimate severity and duration of public health crises, epidemics and pandemics, including the coronavirus pandemic, and its effects on NextEra Energy's or FPL's businesses. NextEra Energy and FPL discuss these and other risks and uncertainties in their annual report on Form 10-K for the year ended December 31, 2020 and other SEC filings, and this news release should be read in conjunction with such SEC filings. The forward-looking statements made in this news release are made only as of the date of this news release and NextEra Energy and FPL undertake no obligation to update any forward-looking statements.

1. On Jan. 1, 2021, Gulf Power, which serves customers in Northwest Florida, legally combined with FPL. Gulf Power will continue as a separate operating division under the Gulf Power name through 2021.

 

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SOURCE Florida Power & Light Company

FAQ

What is Florida Power & Light's new rate proposal for 2022?

FPL has submitted a four-year rate adjustment proposal to the Florida Public Service Commission, intending to implement phased increases starting in 2022.

How much will FPL's average residential bill increase from 2022 to 2025?

FPL estimates an average increase of approximately $18 per month by 2025.

What are the expected savings from FPL's merger with Gulf Power?

The merger is projected to save customers over $2.8 billion over the lifetime of the assets.

Will FPL's rates remain below the national average?

Yes, despite the proposed rate adjustments, FPL's typical residential bills are projected to stay about 20% below the national average through 2025.

What investments is FPL making to improve service reliability?

FPL plans to invest over $29 billion from 2019 to 2022 to enhance electric service reliability, reduce emissions, and strengthen its infrastructure.