TECO Exec Blueprints FL Electric Competition

Florida is on its way toward a competitive power market, and Tampa-based TECO Energy has some suggestions for a successful transition.

The recent formation of a Florida regional transmission organization (RTO) and heavy merger and acquisition activity in the state are signs that competition has arrived on the scene, said Richard Lehfeldt, TECO Energy's senior vice president last week at a meeting of the Florida 2020 Commission.

As evidence of thriving competition, the executive also pointed toward indicators such as competing proposals from natural gas pipelines to supply the state, and the "fierce competition" for building new power plants to serve growing demand.

"The question before this commission is not whether to embark on a competitive model for the state, but what structural changes are necessary to accommodate the competition that has already arrived," said Lehfeldt.

To accomplish this task, Lehfeldt focused his testimony on the topics of RTO development, generation issues and fiscal concerns.

"The heart of a viable wholesale market is its transmission system," said the executive. "Without an open-access, independent, market responsive transmission system that facilitates the delivery of accurate market signals to market participants, the rest of the structure is virtually irrelevant, and merchant plants will die on the vine." To get past the "natural monopoly" on transmission, a fair system with rules and pricing signals governing its use and an incentive system to help its maintenance an expansion are necessary, he said.

Whereas Lehfeldt believes the Oct. 16 joint-filing for RTO status was important, he forecasts a difficult, yet obtainable road to implementing a PJM-style, fully competitive wholesale market.

Other recommendations include:

State legislation mandating 100% RTO participation once implemented; guaranteeing the state's capacity needs including reserve margins will be met; establishing an environmental ceiling to avoid over-utilization of Florida's natural habitat; moving existing generation out of regulatory scheme to enhance competition; ensuring the state does not suffer from a revenue shortfall through restructuring; and guaranteeing all competitors are treated equally in the new market.

"We applaud the Commission's efforts in moving Florida toward a wholesale competitive market, and we believe that if properly designed, this market structure will comfortably meet the substantial supply and economic needs of Florida's consumers," said Lehfeldt.

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