Florida Power RFP Process Meets Stiff Opposition
A new battle in utility deregulation gained momentum last week
when the Electric Power Supply Association (EPSA) published a
letter urging the Florida Public Service Commission (FPSC) to
reject Florida Power Corp.'s petition to forgo competitive bidding
for construction of Hines 2, a second gas-fired generation plant at
its Hines Energy Complex in Polk County, FL.
Attempting to accelerate the construction of the Hines plant,
Florida Power filed a petition in late October to skip the bidding
process, saying the PSC could forgo the requirement for utilities
to solicit bids for new generating capacity if the proposal, like
the one for the Hines 2 plant, would likely "result in lower-cost
supply of electricity, increase the reliable supply of electricity,
or is otherwise in the public interest." Florida Power claimed its
proposal qualified. The new plant will generate 500 MW and, when
combined with the Hines plant that already exists on the site, will
utilize 70-80 MMcf/d of gas depending on weather. Upon completion,
Florida Power expects the site to generate up to 3,000 MW.
The EPSA, which represents developers of independent power
plants and marketers of competitive power, is fighting the
proposal. Mark Stultz, an association spokesman said, "We are not
necessarily opposed to Florida Power building the plant. We just
want to make sure the commission has a chance to evaluate the other
options as well." In the letter to the PSC, they argued that
forgoing the bidding process would not ensure ratepayers the best
possible rates or allow alternative suppliers a chance in a
deregulating industry. "The petition before you from Florida Power
represents, at best, a throw-back to the old ways of doing
business," the letter said.
The Hines site is one of several new gas-fired generation plants
being proposed for the state. A Florida Reliability Coordinating
Council study claims that the state will need over 10,000 MW of
additional power in the next decade. In order to take advantage of
this growth, new deregulation rules in Florida require utilities to
bid on projects with merchant power plants.
The FPSC is scheduled to rule on the petition Dec. 22. Florida
power said that if the filing is rejected, construction of the
plant will be delayed by at least six months.
Meanwhile, Florida Power, along with two other utilities in the
state, Tampa Electric (TECO), and Florida Power & Light, are
opposing Duke Energy's proposal to build a merchant power plant in
New Smyrna Beach, FL, saying the proposal is against the state's
Power Plant Siting Act. Mike Mahoney, a TECO spokesman, contended
if Duke built the proposed $160 million, 500 MW plant, "They
wouldn't be subject to PSC oversight, and there is no obligation
for them to serve emergency orders."
Duke is confident the PSC will rule in its favor. "The state
needs all the electric generation it can get," said Duke Spokesman
Randy Wheeless, "We're going to put up our own money to build the
plant, and our agreement with New Smyrna will allow their residents
a net decline in payments." Duke has agreed to sell the city 30 MW
each year, saving the residents an estimated $3 million.
Hearings concerning the New Smyrna plant began on Wednesday and
lasted until Friday. A decision is not expected until Feb. 2. Duke
said the plant would not be functioning until 2000. John Norris