FMPA Implementing Strategies To Mitigate Rising Fuel Costs For Florida Public Power

June 27, 2022

by Paul Ciampoli
APPA News Director
June 27, 2022

The Florida Municipal Power Agency (FMPA) is taking a number of steps to mitigate rising fuel costs, including selling excess power generation to other cities, prepaying for natural gas at discounted prices, operating highly available and efficient units, and refinancing debt, said Navid Nowakhtar, Resource and Strategic Planning Manager at FMPA, in a recent presentation.

He made his remarks during a June 7 presentation to the Fort Pierce Utilities Authority (FPUA) Board. FPUA is a member of FMPA, a wholesale power agency owned by 31 municipal electric utilities in Florida.

In his presentation, Nowakhtar detailed the drivers behind some of the energy price increases seen in the U.S., including higher natural gas prices.

He noted that in Florida, 80% of “our electric generation is from natural gas – that’s our primary fuel source.”

Across the U.S., “historically, we would have had coal resources pick up some of the slack as gas prices rose, but as a result of retirements and additional infrastructure challenges related to coal generation and transport with coal, we don’t have that substitute effect any longer to the extent we had it in prior periods,” Nowakhtar said.

He said the demand for natural gas has increased, while production remains flat, and noted that natural gas inventories remain low.

“As we look at these price challenges, one of the opportunities” potentially in play “is to look at fixed-price natural gas,” Nowakhtar said. “Certainly, not over the course of this coming summer — gas prices already are well above the norm.”

At a later point in his presentation, he noted FMPA is doing several things to help mitigate the impact of high fuel costs on customers.

Nowakhtar noted that FMPA’s efforts have saved more than $32 million since fiscal 2021.

Those savings are as follows, FMPA noted:

  • Third-party energy/capacity sales: $12.2 million savings
  • High generation availability: $8 million savings
  • Prepaid natural gas and other gas transactions: $8.1 million savings
  • Debt refinancing: $4 million savings

He also noted that “if you look at where Fort Pierce’s rates are today through the end of last year, they’re actually lower than they were in 2008.” Residential rates are down about 23%, while U.S. rates have gone up about 22%.

He said FMPA has “done a lot of work to try to keep our costs as low as we can to you.”

Nowakhtar also pointed out that FMPA is continuing to pursue low-cost solar. “We’re in the process right now of the procurement efforts for phase three of our solar project. We already have two sites totaling 149 megawatts” that are online.

In 2022, FMPA’s percentage of solar energy stood at 2%, but that is projected to grow to 7% of its generation mix by 2027.

He said there are seven to 10 FMPA communities “or more” that could be interested in the third phase of the solar project, which will involve as much as two to three sites of additional solar.

In a recent letter to leaders of the U.S. Senate Energy and Natural Resources Committee, FMPA’s General Manager and CEO Jacob Williams said Florida is uniquely impacted by the 150% cost increase for natural gas, given the state’s dependence on natural gas for electricity generation.

He noted in the May 2 letter that residential bills in Florida were already 15-30% higher. “This is especially challenging for us since our power consumption is 25% higher than the national average and income is 10% lower than the national average. In addition, Florida residents consume half of the electricity generated in Florida, the largest share of any state in the U.S. And the skyrocketing energy prices in the U.S. very well may get worse,” Williams wrote in his letter to Sen. Joe Manchin, D-W.Va., Chairman of the committee, and Sen. John Barrasso, R-Wyo., and ranking member on the committee.