A special commission formed by Florida Gov. Jeb Bush isrecommending the state break up its monopoly utilities and pave theway for competition in the power generation market by doing awaywith certain laws and amending others.

Last week, the commission approved a plan that would result in a”systematic transition to a competitive wholesale market, but[would be] designed to avoid the problems experienced inCalifornia.” The plan, which is expected to be submitted to theFlorida legislature next month, recommends the removal of statutorybarriers to entry for merchant power plants and provides atransition to a “level playing field” for all generation assets.

Investor-owned utilities in the state would be required to spindown generation assets at book value to an affiliate. They alsowould be required to buy their power through a competitiveacquisition process, including bilateral agreements, RFPs,short-term spot purchases and a variety of other methods.

Commission members took great pains to point out the differencesbetween what they are proposing and California’s recipe for powerfailure. Unlike California’s utilities, Florida’s utilities willnot be forced to rely only on the spot market for their powerpurchases.

However, Florida does face a potential power shortage.Commission Chairman Walter Revell echoed the concerns of thestate’s governor that Florida faces a significant increase in powerdemand over the next decade or two and needs to remove barriers togeneration plant developers.

To remove the barriers to entry, the plan recommends changes tothe “need determination statute” and the Power Plant Siting Act.Florida’s wholesale power market is basically closed to competitorsbecause its power plant siting laws state that wholesale generationplant developers cannot be “applicants” without a “determination ofneed,” which the Florida Supreme Court interpreted last April asmeaning “fully committed” to serving retail customers in the state.In that case, the state Supreme Court ruled against power plantdeveloper Duke Energy in a New Smyrna Beach project.

Last May, Bush ordered the formation of the Florida Energy 2020Study Commission to determine the power needs of the state over thenext 20 years and provide recommendations to the legislature on howto serve those needs in the most efficient and reliable manner.

The commission’s plan also would involve changes to Chapter 366of the Florida Statutes to allow the utilities to transfer existinggeneration assets out of their rate bases and to allow them to buypower as specified in the plan. Statutory changes also are neededto smooth the way for the formation of GridFlorida, the regionaltransmission organization that is being set up by the state’sutilities next year.

The commission also recommends that ratepayers be protected fromany adverse impacts from restructuring by a three-year rate freeze.

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