The plant has had under a long-term contract to purchase power since 1988. Upon taking ownership of the Cedar Bay Generating Plant, a 250-megawatt coal-fired facility located in Jacksonville.
FPL plans to immediately terminate the contract and reduce the plant's operations by 90 %, with the intention of eventually phasing the plant out of service. This plan is projected to save FPL customers an estimated US$70 million and prevent nearly 1 million tons of carbon dioxide emissions annually.
FPL proposes to purchase CBAS Power Inc., the indirect owner of the plant, from CBAS Power Holdings, LLC, for a price of US$520.5 million.
Eric Silagy, president and CEO of FPL, stated:
"Although years ago it made sense to buy this plant's power to serve our customers, times have changed. We have invested billions of dollars to improve the efficiency of our system, reduce our fuel consumption, prevent emissions and cut costs for our customers. Now we're in a position to take ownership of the facility and effectively buy out an outmoded contract with the goal of ultimately phasing the plant out of service, which will mean reduced carbon emissions and millions of dollars in savings for our customers. This proposal is another smart step forward in our ongoing effort to serve our customers with affordable clean energy now and in the future."
In 1988, the PSC approved a long-term purchased-power agreement. The contract was based on the cost of power at the time; however, today FPL can generate electricity at a much lower cost. Also, while the Cedar Bay plant is well-run, it nonetheless emits very high rates of CO2 compared with FPL's current generation fleet, which has an overall CO2 emissions rate much lower than the national average.
Under the existing purchased-power agreement, fixed payments for capacity and operating and maintenance total more than $120 million a year currently with annual increases until the contract's expiration in 2024.
The proposed plan is consistent with FPL's ongoing strategy of making smart, innovative investments to deliver affordable clean energy for its customers. Since 2001, FPL's investments in high-efficiency natural gas generation have enabled the company to cut its use of foreign oil by more than 99 percent – from more than 40 million barrels of oil in 2001 to less than 1 million barrels annually today. FPL has been strategically phasing out older, less efficient fossil fuel plants and replacing them with new, high-efficiency natural gas energy centers that use approximately one-third less fuel per megawatt-hour. The company has also invested heavily to increase its use of zero-emissions nuclear and solar energy and recently announced plans to triple its solar capacity by the end of 2016.