Florida Power & Light, a subsidiary of NextEra Energy Inc. (NEE), has agreed to freeze base rates for customers through 2012. This was approved by the Florida Office of Public Counsel and the Florida Attorney General on August 20, 2010.
However, the agreement still awaits the approval of the Florida Public Service Commission (PSC). The parties involved have jointly filed the agreement with the PSC. They have also requested the commission to vote on the proposal at the meeting to be held on August 31, 2010.
Florida Power & Light Company is the largest electric utility in Florida and one of the largest and best-performing rate-regulated utilities in the nation servicing nearly 4.5 million customer accounts in eastern and southern Florida .
Currently, the electricity bill of the company’s residential customer is the lowest among all 55 utilities in Florida . As per recent statistics, Florida Power & Light’s bills are 18% lower than the national average, reliability is 46% higher and power generation fleet is 35% cleaner. With this agreement, the company expects base rates to remain flat until 2013.
Apart from freezing rates through 2012, this agreement resolves all outstanding issues related to Florida Power & Light’s recent rate proceedings. Also, the agreement provides for cost recovery for a new combined-cycle natural gas unit at Florida Power & Light’s West County Energy Center limited to the projected fuel savings for customers during the term of the agreement.
Furthermore, the agreement includes provisions for recovering storm damage costs beginning 60 days from the filing of a petition, but capped at $4 for every 1,000 kilowatt hours of electricity used in the first 12 months. However, the company can request for cost recovery above the cap if restoration expenses rise above $800 million, which will be recoverable in subsequent years. Under the agreement, the company’s target midpoint for return on equity (ROE) will remain 10%, below which it can claim relief and above which regulators may seek rate reduction.
Based in Juno Beach, Florida, NextEra Energy Inc., through its subsidiaries, engages in the generation, transmission, distribution and sale of electric energy in Florida . The company has both regulated and non-regulated energy-related products and services, with operations in 28 states and Canada .
NextEra Energy currently retains the recently downgraded Zacks #3 Rank, which translates into a short-term Hold rating. We maintain our long-term Neutral recommendation on the stock.
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