FPL plans to purchase, decommission power plant

March 9, 2015 | By Jaclyn Brandt

Florida Power & Light (FPL) has decided to purchase a power plant with which it has had a long-term power puchase agreement (PPA) for 27 years.

Cedar Bay Generating Plant. Credit: Florida Department of Environmental Protection

According to FPL, they have filed a petition with the Florida Public Service Commission (PSC) for approval to acquire the Cedar Bay Generating Plant in Jacksonville, Fla. FPL entered into the contract to purchase the plant -- a 250-megawatt (MW) coal-fired facility -- in 1988. If the acquisition is approved, FPL plans to terminate the contract and reduce the operations of the plant by 90 percent, with a plan to close the plant completely -- within two to three years. According to FPL, their plan will save 1 million tons of carbon dioxide emissions each year -- as well as an estimated $70 million for FPL customers.

"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," said Eric Silagy, president and CEO of FPL. "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."

FPL began on this journey back in 1988 when they entered into a long-term power purchase agreement (PPA) with Cedar Bay Generating Company, the direct owner of the plant. According to FPL, "The contract was based on the cost of power at the time; however, today FPL can generate electricity at a much lower cost."

FPL determined that the amounts of CO2 that the power plant emits are much higher than that of FPL's other plants. Due to FPL and Cedar Bay Generating Company's current PPA, FPL is paying a fixed payment of more than $120 million each year -- for capacity, operating and maintenance costs. If the contract were to continue, that cost would rise each year until 2024 when it is set to expire. Those rates are paid for by FPL customers.

FPL is looking forward to a natural gas pipeline entering commercial operation in 2017, which they believe can replace the Cedar Bay plant's reliability.

"It's this kind of forward-thinking that not only identifies solutions that are truly a win-win, but also contribute to our parent company's recognition as one of the world's most admired companies and among the top 10 in the world for innovativeness and community responsibility," Silagy added.

If the PSC approves the deal, it would mean that FPL would purchase CBAS Power Inc., the indirect owner of the plant, for $520.5 million from CBAS Power Holdings. They are asking for PSC to approve the deal by July 31, 2015.

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