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Gulf Power and Florida Power & Light will ask state to approve plan to merge power rates

Jim Little
Pensacola News Journal
Gulf Power line worker, Jeremy Davey, restores power to customers homes and businesses that lost power due to Hurricane Zeta in Pensacola, FL on Oct. 29, 2020

Gulf Power and Florida Power & Light officials are planning to ask state regulators for a new four-year rate plan agreement that ultimately will bring the companies under the same rate structure.

Gulf Power officials said the plan will result in lower bills for its Northwest Florida customers at the end of the four-year plan while other Florida customers will see an increase.

The two companies, Gulf Power and Florida Power & Light, legally became the same company at the start of 2021. Gulf Power was sold to Florida Power & Light's parent company, NextEra Energy, in 2019 for $5.75 billion.

For now, Gulf Power is operating under its name, but it is part of Florida Power & Light.

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The company announced Monday that it would be submitting a new four-year rate plan to the Florida Public Service Commission aimed at raising the company's revenues to pay for more than $29 billion in investments to the power grid during the four-year period.

Eric Silagy, president and CEO of Florida Power & Light, said in the company's announcement that the increase is needed to ensure it can provide service to customers into the future.

"Of course, we’re mindful there’s never a good time to request a rate increase, but we remain steadfastly committed to providing customers unparalleled value for their money while building an energy future they can depend on," Silagy said.

In its announcement Monday, the company noted the typical Gulf Power customer pays $140 a month for electricity while the typical Florida Power & Light customer pays $99 a month.

Florida Power & Light customers will see about a 3.5% increase in rates over four years while Gulf Power customers' bills would be lower than they are today by the end of 2025, company officials said.

The company said it will ask state regulators in March to approve rate increases starting in 2022 through 2025.

Sarah Gatewood, a spokeswoman for Gulf Power, told the News Journal the company would be able to provide more specific information about how customer rates will be affected once the proposal is filed with the state in March.

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"As of Jan. 1, we are a part of Florida Power & Light," Gatewood said. "So part of the goal of this base rate proceeding is to bring our two rates into alignment. So our goal is for Gulf Power customers to be paying the same rate FPL customers pay."

In its announcement, the company said that in 2022, it would ask for rate adjustments to increase its revenue requirements by $1.1 billion. In 2023, it would ask for an increase of $615 million.

In 2024 and 2025, the company plans to ask for a change in its solar base rate adjustment mechanism to fund new solar projects. The company said the adjustment for those two years would equal $140 million in revenue each year, but the cost would be partially offset by a decrease in the fuel cost portion of customers' bills.

Gulf Power linemen make preparations ahead of Hurricane Zeta in Pensacola on Oct. 28, 2020.

"FPL projects typical customer bills will remain well below the national average even with the proposed increase. In fact, adjusted for inflation, FPL's typical bill in January 2022 would be nearly 22% less than it was in 2006," the company said.

The company said the merger between Gulf Power and Florida Power & Light will result in a savings of $82 million a year in operations and maintenance cost. Officials also said projects are underway to add additional cost savings, including the construction of power transmission lines to physically connect Gulf Power's Northwest Florida power grid to Florid Power & Light's power grid, which covers a large part of the east coast of Florida.

Other projects are underway to add more savings to the company, including its initiative to build 30 million solar panels by 2030, a move the company says will lower the costs of power generation during the coming years.

"Even as the price of many goods and services increases year after year — often with little to no warning — the price of electricity from FPL has come down over the last 15 years while service has become significantly cleaner and more reliable," Silagy said. "This does not and cannot happen by accident. Instead, it’s the direct result of smart, long-term investments that reduce costs and improve efficiencies."

Once the company files its rate proposal with the Florida Public Service Commission, its website at GulfPower.com/answers will allow customers to calculate the estimated impact on their bills in 2022 based on their current electricity usage.

Jim Little can be reached at jwlittle@pnj.com and 850-208-9827.