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Florida Power RFP Process Meets Stiff Opposition

December 7, 1998
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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 &amp 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

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