Gulf Power announces rate reduction

May 31 - Northwest Florida Daily News

Gulf Power on Wednesday announced a $58.5 million rate decrease, the largest cut in the more than 85-year history of the company.

Gulf Power has sent a request to lower its rate to the Florida Public Services Commission, which is expected to vote on the decrease at its meeting June 19. If approved, the new rate will take effect July 1 and result in a 7.8 percent reduction.

That cut would save nearly $10 a month for every 1,000 kilowatt hours of electricity used.

"We've seen declining natural gas prices along with increasing coal prices," said Bentina Terry, Gulf Power's vice president of corporate services and external affairs. "In response (to) this, we've aggressively sought out opportunities to provide electricity that is generated by natural gas. By adding more gas to our mix, and with gas prices down, we want to pass those savings along to our customers, especially as we're coming on the hot summer months."

Gulf Power hosted a news conference Wednesday in Pensacola to announce the reduction. Under the new rate, 1,000 kilowatt hours of electricity would cost $116.61, the lowest the rate has been since 2008.

In the past, Gulf Power's fuel mix was about 65 percent coal and 35 percent natural gas. In the past five years, Terry said the cost of natural gas has dropped from about $10 per million BTUs to about $2 per million BTUs.

With the lower price, Gulf Power is maxing out its capacity to convert natural gas to electricity. One of the units at the James F. Crist Generating Plant in Pensacola, traditionally a coal plant, has been converted to burn natural gas.

Terry said Gulf Power is exploring future conversions at the plant.

Gulf Power's current fuel mix is 69 percent natural gas, 30 percent coal and about 1 percent methane.

"The decrease is the result of our ongoing strategy to make natural gas a bigger part of our fuel mix to give us more options so we can buy the lowest cost fuel available to make electricity," Terry said. "Right now, natural gas is much cheaper than coal.

"Our ongoing strategy to diversify our fuel sources allows us to pass these savings on to our customers," she added. "It's getting hot. We all had a hot weekend, and to be able to do this before we get into the hot summer months is a good thing."

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