An attempt to slow development of merchant power plants inFlorida has been derailed, at least temporarily, but independentpower in the sunshine state still faces some governmental hurdles.

A Florida senate committee last week passed a bill setting up astudy of the state’s future power needs and potential deregulationwithout a controversial rider that would have restrictedconstruction of merchant power plants.The amendment would haverequired merchant plants to comply with the same rules as Florida’sregulated utilities, including dedicating power to Floridaresidents first and showing the need for the plant by having10-year contracts for the bulk of the power. The amendment wassubmitted by state Sen. Buddy Dyer, D-Orlando, and then withdrawnafter a heated committee debate.

The battle pitted the regulated investor-owned utility (IOU)interests, including Florida Power & Light and Florida Power,against out-of-state merchant plant builders such as Duke Energy.Duke is in the forefront of the battle to bring merchant power tothe state with construction of a 500 MW, $160 million facility nearNew Smyrna Beach. (See Daily GPI, March 1). The plant has beenapproved by the Florida Public Service Commission (PSC), but thecase has been appealed to the state supreme court with one factionclaiming the PSC does not have the authority to certificate amerchant power producer. Waiting in line behind Duke are between20-25 announced merchant power projects. Three of those, besidesDuke, actually have filed for construction with the PSC.

The outside generators have been defending their proposals witha government study that shows the need for between 8,000 and 10,000MW of new power capacity in the state in the next 10 years. AnFP&L spokesman said, however, that the study was taken directlyfrom reports to the PSC by the state’s IOUs on their generationbuilding plans. The report listed “every plant addition theutilities are planning to meet power needs.”

The IOUs believe merchant power operators should be required tocontract their power to regulated utilities, which are dedicated toserving Florida residents first and which must return any profitsthey make selling excess power into the wholesale market toratepayers.

A spokesman for the PSC said the commission currently isstudying measures that would provide incentives by allowingregulated utilities to retain some of the profits gained by sellinginto the wholesale market. Part of the Commission’s rationale forapproving the Duke plant was the fact that electric power pricesfor Florida residents generally average a few cents a kilowatt-hourmore than prices paid in surrounding states.

While some landowners are opposing the merchant power plants, atleast one group of residents apparently favors the projects.Friends of the Manatees, Florida’s underwater elephants that livein spring-fed lakes in the northwestern part of the peninsula, aresupporting construction of a nearby plant because the manatees willappreciate the warm water emanating from the plant.

The Florida Supreme Court currently holds the key to the futureof merchant power in the state. If the court does back the PSC onthe Duke plant, it still must be approved by the five-member statesiting council made up of members of Gov. Jeb Bush’s cabinet.

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