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Electric bills expected to drop: Good news in a tough economy

By Staff | Aug 26, 2009

A lot has changed in the last quarter century. In 1985, a gallon of gas was $1.24, a movie ticket was $3.55, and the base rate on a Florida Power & Light electric bill was $48.02. Today, a gallon of gas is $2.63, a movie ticket is more than $7, and the base rate on a typical FPL bill has changed, too. But instead of doubling in price, it has actually fallen, and by December of this year will be $42.

That’s just one illustration of the commitment FPL has made to keeping electricity affordable. Here’s another: FPL has the lowest customer bill of all 54 utilities in the state, according to the Florida Municipal Electric Association. Our typical 1,000 kilowatt-hour monthly bill is $28.50 below the state average, saving customers more than $340 a year.

Even as our bills are low, our service reliability is high. FPL delivered overall reliability last year that was 41 percent better than the national average. And the electricity those wires carry is clean. More than 70 percent of the power we produce comes from natural gas and nuclear, giving us one of the lowest emissions rates of any utility in the nation.

On Aug. 20, FPL informed the Public Service Commission (PSC) that we expect the typical customer bill to decline significantly in January of next year. Based on our current forecasts, the total reduction is expected to be about $9 a month. That would bring the typical residential bill to about $100, well below the current Florida average of $136. Most business-customer bills will go down as well.

The reduction in the typical residential bill will occur despite the base rate increase we are requesting from the PSC. Every customer’s bill has two main parts, the fuel charge and the base rate. If the fuel charge goes down by more than the base rate goes up, the overall result is a lower bill. That’s what is happening with FPL’s bills. Thanks to the investments FPL has made in improving its fuel efficiency as well as lower fuel prices, savings on fuel will more than offset any increase in base rates.

In fact, since 2002, FPL’s customers have saved an estimated $3 billion in fuel costs as a result of our investments in making our fossil fuel fleet the most efficient among large-scale utilities nationwide. And by 2014, our ongoing investments will yield an approximately 20 percent improvement in the efficiency of our fossil fleet, saving customers an additional $1 billion a year compared to 2002.

We need to continue to invest to make the electrical infrastructure stronger, smarter, cleaner, more efficient and less reliant on any single source of fuel. Each of these is important to customers and to the Florida economy.

FPL’s investments will strengthen the electrical system against storms, empower customers with more information about their energy usage, improve the efficiency of our power plants, and further reduce emissions from one of the cleanest generation fleets in the nation. We’re investing in all of these improvements now, and our proposal will ensure we can continue to do so in the future.

While lower fuel costs will result in significant reductions in the typical customer bill next year, it is more difficult to make longer-term fuel projections. Beyond 2010, it is precisely because pass-through fuel charges could go up again that we are seeking rate adjustments that will allow us to continue investing to achieve greater fuel efficiency. Nobody wants to be stuck driving a gas guzzler if pump prices go back to $4.50. And because there is the risk of natural gas prices rising again, we want our power plants to be as efficient as a fuel-sipping hybrid vehicle.

We’re pleased that FPL’s base rates are lower than they were almost a quarter century ago. We’ve heard the argument that FPL’s base rates only appear low because certain costs that used to be part of the base rate have been moved to other parts of the bill. That’s not true. Even counting these costs, FPL’s non-fuel portion of the bill is still lower today than it was nearly a quarter century ago. And thanks to our investments in fuel efficiency as well as lower fuel prices, the total bill next January for a typical customer will be going down by about $9 a month, or approximately $100 a year.

In a tough economy, that’s good news.

(Armando J. Olivera is president and CEO of Florida Power & Light Company, the largest electric utility in Florida with 4.5 million customers and nearly 11,000 employees.)