The Florida Supreme Court dealt a serious blow to thedevelopment of merchant power in the state in a 6-1 decision issuedThursday, reversing the state Public Service Commission’sauthorization for Duke Energy’s construction of a 514 MW powerplant at New Smyrna Beach.

The court found that applicable state laws were “not intended toauthorize the determination of need for a proposed power plantoutput that is not fully committed to use by Florida customers whopurchase electrical power at retail rates.” The PSC exceeded itsauthority, the court said, in granting a determination of needbased on only 30 MW of the plant’s total output dedicated toin-state use through the New Smyrna Beach municipal utility.

The court ruling effectively blocks a string of about 25merchant power facilities being planned by a number of companies,including Dynegy, Panda and Calpine Corp.

“This decision vindicates our belief that state law nevercontemplated the construction of power plants whose output was notcommitted to meet the needs of the State of Florida,” said PaulEvanson, president of Florida Power & Light, which challengedthe PSC ruling before the court. Joseph H. Richardson, presidentof Florida Power, which also opposed the Duke plant in court, said,”Florida Power is not opposed to merchant plants or to competitionin the power generation market as long as these kinds ofpolicy-making decisions are considered in a comprehensive study ofall the issues. Anything other than this approach is piecemeal andpotentially detrimental to Florida’s electric customers.”

Duke spokesman Bryant Kinney said the company would have tostudy the ruling and its options. “We’re surprised anddisappointed. We were planning to build in Florida to serveFlorida.”

Steve Crain, a vice president for Panda International, whichannounced plans last month for two 1,000 MW power plants in Florida(See Daily GPI, March 13), said the decision “represents a stepback not only for Florida as a state but for every resident’sfuture ability to benefit from lower electric rates.”

“At the same time we …hope that Senate Bill 2020 will moveforward toward a meaningful evaluation of Florida’s electricindustry. We also commend Gov. Jeb Bush’s promise to act, even ifthe legislature doesn’t,” Crain said. Crain’s reference was to apower study bill, which was voted out of a state senate committeeearlier this week after a vigorous battle defeated an amendmentthat would have slowed development of merchant power (see DailyGPI, April 18). The governor has expressed an interest in settingup his own study bill commission to make recommendations to thenext session of the legislature.

Projections the state will need at least an additional 8,000 MWof power in the next 10 years has drawn merchant power producers tothe state. The two Florida utilities, however, say current andplanned repowering and construction projects by in-state utilitiescan meet and exceed the requirements.

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