Florida Power & Light Co. (FPL) filed a petition with the Florida Public Service Commission (FPSC) to acquire the 250-MW Cedar Bay Generating Plant, then retire the facility within two to three years.
In 1988, FPL signed a long-term contract to purchase power from the coal-fired power plant, located in Jacksonville, Florida, from direct owner, Cedar Bay Generating Co. The contract was based on power costs in 1988, however, FPL can generate electricity at a much lower cost based on current power costs.
In the petition, FPL seeks to acquire CBAS Power Inc., the indirect owner of the plant, from CBAS Power Holdings, LLC, for a price of $520.5 million.
"Although years ago it made sense to buy this plant's power to serve our customers, times have changed," said Eric Silagy, president and chief executive officer of FPL. "Now we're in a position to take ownership of the facility and effectively buy out an outmoded contract with the goal of ultimately phasing the plant out of service, which will mean reduced carbon emissions and millions of dollars in savings for our customers."
If the acquisition is approved, FPL will terminate the power purchase contract and reduce the plant's operations by 90 percent, eventually phasing the plant out of service. This plan is projected to save FPL customers an estimated $70 million and prevent approximately 1 million tons of carbon dioxide emissions annually.
Under the 1988 agreement, fixed payments - paid for by customers - totals more than $120 million annually with yearly increases until the contract's expiration in 2024. A terminated purchased-power contract, will avoid the fixed payments that customers would otherwise pay for throughout the term of the contract. Compared with the current fixed payments, the net cost is expected to be slightly higher during the first three years, then significantly lower over the remaining life of the contract - producing total projected net savings of approximately $70 million for customers.
FPL is requesting FPSC approval of the purchase by July 31, 2015.
FPL is a subsidiary of NextEra Energy (NYSE: NEE).
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