Due to the significant power demand growth occurring in Florida and especially in the southern part of the state, Florida Power & Light Co. sounded the alarm last week, noting the need to increase its power supplies by 2007. As an option, it offered up a $600 million expansion of its Turkey Point plant, but it also began a request for proposals Thursday to test the market for cost-effective alternatives.

The self-build option involves adding a new, 1,100 MW natural gas-fired plant capable of serving 230,000 customers to its existing 11,000-acre Turkey Point plant site near Florida City. Using a competitive bidding process under the PSC’s bid rule, FPL is seeking purchased-power proposals from other companies to evaluate against its self-build option in order to arrive at a final selection no later than spring 2004.

“Responding to growth by selecting the best and most cost-effective power resources for customers continues to be a priority for our company,” said FPL President Armando Olivera. “We have recently completed new plants in southwest and northern Florida and are building additional plants in Manatee and Martin counties. Now, our attention must turn to meeting the increased demand for electricity that comes from the significant growth that is occurring in Miami-Dade and southeast Florida.”

FPL’s latest RFP is sure to garner attention after the company decided in July for the second time to self-build after issuing RFPs. Those two conclusions were hotly contested. Supported by an independent analysis, FPL confirmed that self-building generation at its Martin and Manatee plant sites was still the most reliable, cost-effective way to provide future electricity for customers.

In March, Reliant Energy Power Generation accused FPL of violating a state bidding rule last year after FPL issued an RFP that identified additional capacity requirements facing the utility in 2005 and 2006, and subsequently decided to self-build 1,900 MW of incremental generating capacity. Reliant Energy told the PSC in its complaint that FPL provided unrealistic and artificially low estimates of the cost of its self-build options to potential bidders in its RFP package.

Responding to Reliant’s complaint and others, FPL in April informed the PSC that it planned to issue a supplemental request for proposals, asking companies to compete to provide added generating capacity for its Florida customers starting in 2005. After the two RFPs, FPL said it decided to self-build power plants rather than purchase power from others because the self-build option would offer its customers the lowest priced options for new power capacity. FPL said it communicated with a short list of bidders, Florida Power Corp. and El Paso Corp., to find out whether they could be more competitive before making a final decision.

FPL said the most recent RFP is necessary because 45% of the electricity that its customers use in Broward County and 40% in Miami-Dade are imported from FPL plants and other resources outside the region. The company noted that while the system is designed for power plants to deliver electricity to FPL’s large electric grid, it is still important to ensure that the system is “reasonably balanced.” The company added that additional generation in South Florida would begin to restore this imbalance and improve the system’s overall reliability.

If selected as the best and most cost-effective option to meet customers’ electricity needs, FPL’s new Turkey Point unit would be among the cleanest, most environmentally advanced and efficient power plants in the nation. The new unit would join four existing generating units at the site, including two 400 MW oil/gas-fired units and two 700 MW nuclear units. In addition to being easier to construct because of the plant infrastructure already in place, the site is already served by a natural gas pipeline for fuel deliveries and by transmission power lines that deliver electricity to customers, though some upgrades may be needed.

“We believe the Turkey Point option offers customers the opportunity for reliable energy, using a cleaner-burning fuel at a site specifically established for power generating facilities,” Olivera said. “That’s cost conscious and helps conserve Florida’s land resources,”

Combined-cycle generating technology produces electricity from two stages of production instead of one. In the first stage, energy is produced through fuel combustion in a turbine similar to a jet engine. In the second stage, hot exhaust from the turbines is used to make steam. Energy from both stages then drives turbines and electric generators to produce electricity. In all, this method of generating electricity is about 30% more efficient than methods relying on a traditional steam plant.

Olivera said FPL will continue its commitment to conservation programs, noting that its customers have helped defer the need for 10 power plants over the past two decades by adopting cost-effective conservation measures and by participating in voluntary programs where power to certain appliances can be automatically reduced at peak periods in return for a credit or discount on monthly bills. In addition to developing future “green power” options for its customers, the utility also said that for future capacity requirements beyond 2007, it expects to consider projects using other fuels, such as coal, to enhance fuel diversity and system reliability.

Under the RFP, FPL is soliciting proposals for firm capacity and energy to satisfy a need for approximately 1,066 MW starting June 1, 2007. Proposals in response to the RFP are due no later than Oct. 24. The company said it plans to announce a short list of proposals in mid-January with a final selection planned for no later than mid-May 2004.

Potential bidders may obtain further information by visiting FPL’s Web site at https://www.FPL.com/2003rfp, by contacting FPL’s RFP contact person via e-mail at Steven_Scroggs@fpl.com or by calling (305)552-4199.

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