Florida Power & Light Co. customers have paid $4.2 billion too much for natural gas in the last 13 years because the utility buys most of the fuel through hedging, rather than on the open market.
Associate Public Counsel Erik Sayler told the Florida Public Service Commission Thursday that the hedging losses, which have cost customers of the state’s four investor-owned utilities $6.1 billion since 2002, should be specifically addressed. Hedging allows Juno Beach-based FPL and other utilities to lock in the price of natural gas in long-term contracts, but prices on the open market would have been a better deal.
But the five-member commission sided with FPL attorney John Butler, who said there was no need to make hedging a specific issue in fuel cost hearings scheduled for November. The purpose of hedging is to reduce price volatility, not to save customers money, he said.
“The question is, what do they have to hide? What is it the commission and FPL want to hide? Why would they not embrace these issues to be decided totally in the sunshine so the public can see exactly what the futures are,” Florida Public Counsel J.R. Kelly said following Thursday’s decision.
Sayler urged the commission to “stop the bleeding” and end the utilities “zombie-like hedging programs.”
Commissioner Lisa Edgar said she was insulted by Sayler’s characterization of the hedging programs the commission has approved. “This may be a first….we have actually heard the term ‘zombie-like’ as a descriptor of these proceedings. I am not sure I appreciate it, quite frankly,” Edgar said.
Sayler said that customers of FPL, Duke Energy, Gulf Power and TECO deserve to have the magnitude of the utilities gains or losses discussed in the sunshine. Collectively, the electricity providers have more than 7.5 million customer accounts.
This year the losses are projected at $632 million for all four, and $382 million for FPL.
FPL’s $191 million Woodford Shale project, a natural gas drilling venture in Oklahoma touted as a way to save customers approximately $107 million over the next 50 years, is expected to lose $5.8 million this year, FPL said in a report it filed with the commission.
The 50-year savings for customers have been cut to $49.2 million.
FPL is the only electric utility in the U.S. directly involved in drilling for natural gas. In June the PSC gave FPL the go-ahead to invest as much as $500 million a year in drilling operations.
FPL spokeswoman Sarah Gatewood said the percentage of gas FPL buys through hedging is confidential, but it spends more than $3 billion a year on natural gas to run its power plants. The cost is passed through directly to customers.
Gatewood said it would be too risky for FPL to buy all it natural gas on the open market, but customers have saved money when market prices are low.
This article was written by Susan Salisbury from The Palm Beach Post and was legally licensed through the NewsCred publisher network.