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” 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” 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.