Florida Power & Light Company (FLP) has requested permission from the Florida Public Service Commission (PSC) to acquire Cedar Bay Generating Plant, a facility that has been supplying power to the utility since 1988 under a 36-year power purchase agreement (PPA).
Upon ownership, FLP would immediately reduce the plant's operations by 90 percent and terminate the PPA which is set to expire in 2024, according to a recent statement.
In its filing to the PSC, Florida Power & Light is proposing to pay $520.5 million for the 250-megawatt (MW) coal-fired facility that alternative asset manager The Carlyle Group acquired in December 2012 through its fund Carlyle Power Partners I.
By terminating the PPA ahead of schedule, FPL estimates it would save its customers $70 million.
“Although years ago it made sense to buy this plant's power to serve our customers, times have changed,” FPL president and chief executive Eric Silagy said. “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.”
Under the terms of the agreement, which Silagy called “an outmoded contract,” FPL pays more than $120 million a year for capacity and operation and maintenance of the plant.
From an environmental perspective, the acquisition would allow FPL to immediately slash the plant's output by 90 percent, preventing nearly 1 million tons of carbon dioxide emissions annually. It would eventually decommission the plant permanently two to three years later.
FPL is requesting PSC approval by July 31, 2015. It is not known, however, whether Carlyle would agree to the sale. The Washington DC-based firm declined comment through a spokesperson.
The proposed acquisition is in line with FPL's increasing use of clean energy.
According to the statement, since 2001 the utility has been phasing out less efficient fossil fuel plants and replacing them with high efficiency natural gas energy centers. It 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.
The third-largest electric utility in the US, FPL serves more than 4.7 million customers across nearly half the state of Florida.