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Florida Power Allowed to Tap Ratepayer Funds For Shale Venture

Florida Power & Light Co. (FP&L) can dip its gas procurement toe into the southeastern Oklahoma shale gas patch, and the state's power consumers will pay its way, the Florida Public Service Commission (PSC) said Thursday.

The PSC approved the utility's request to recover the costs of its planned shale gas investment through its fuel recovery clause.

In June FPL filed a plan with the PSC to invest in gas supply at the wellhead, arguing that by cutting out the gas market it could save as much as $107 million over the life of its first such upstream arrangement (see Daily GPI, June 25). FPL requested an increase in its rate base of up to $750 million per year in order to pay for the exploration and production costs and has also sought guidelines from the PSC for future similar upstream arrangements.

Industrial power consumers and the state's Office of Public Counsel, which represents consumer interests, opposed the FP&L proposal (see Daily GPI, Dec. 3). The Sierra Club of Florida also was opposed.

According to the PSC, FP&L plans to invest $191 million in an Oklahoma joint venture with PetroQuest Energy Inc. Net savings for customers are projected to be about $52 million.

FPL testified in a hearing earlier this month that the natural gas production investment is expected to secure gas at a relatively stable cost to customers for as long as the wells produce gas, which is typically about 30-plus years. PetroQuest, responsible for well administration and operation, is based in Louisiana, and operates there as well as in Oklahoma, Texas and other areas along the Gulf Coast.

Regulators said they would review in March FP&L's request for guidelines for future similar upstream deals.

Recovery amounts associated with the project for 2015 will be considered and trued-up during the PSC's annual cost recovery clause hearings in fall 2015.

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