As Floridians struggle to pay the soaring cost of gasoline and home insurance, energy legislation that could cause a significant increase in Florida’s electricity rates is breezing through the Legislature with little scrutiny.
House and Senate energy bills backed by Gov. Charlie Crist are packed with incentives – grants, rebates and tax credits – to promote the use and development of renewable energy.
Both bills, however, call for state regulators to require electric utilities to produce a certain percentage of their power from renewable energy sources. The standard touted by Crist and others is 20 percent over a number of years yet to be determined, an ambitious threshold that would lead to higher electric bills because renewable power is generally more costly than power made from coal and natural gas.
“We’re talking about rates going through the roof,” said Sen. Mike Fasano, R-New Port Richey, the only lawmaker to vote against the governor’s energy package thus far. “My constituents cannot afford a dramatic increase in their electric bills. This bill, the way it was written, would do that.”
A 20 percent mandate for renewable power, Fasano said, would keep Florida’s Public Service Commission from meeting its obligation to approve fair and reasonable rates for consumers.
“I would want a much lower percentage, and I would want the Legislature to approve it or disapprove it,” Fasano said.
Costs Rise Anyway, Senator Says
The Senate Energy bill’s author, Sen. Burt Saunders of Naples, acknowledged that electric bills would rise if the state requires that a certain percentage of power come from renewable sources. Costs will rise, however, with or without a renewable mandate, as prices for oil, natural gas and coal continue to increase, said Saunders, a Republican.
“Doing nothing is not an alternative because we’re going to have those rate impacts anyway,” he said.
Saunders said it’s important that state regulators establish a standard that fosters the use of renewable energy without imposing big rate increases on consumers. At least 20 other states have set mandatory standards for renewable power. California utilities must generate 20 percent of their power from renewable sources by 2010. Utilities in New Mexico have until 2020 to meet the same standard.
The question is what level is best for Florida.
“Maybe 20 percent is too high,” Saunders said. “We’re going to do everything we can to avoid even a modest increase, much less a large increase.
“We may have to provide the utilities a little more flexibility in how they get to whatever standard we ultimately impose, but I think it’s important that we do have the standard.”
A committee report prepared by legislative staff said higher electric bills would be certain if the state establishes a standard for renewable power. The size of the increase, though, is hard to predict because there are too many variables to project, the report stated.
According to industry estimates, the cost of generating electricity from a coal plant is about 4 cents a kilowatt-hour, 7 cents from a natural gas plant and 0.4 cents from a nuclear plant. The cost of generating electricity from a solar plant is about 10 cents a kilowatt-hour and 8 cents from a biomass plant that burns wood or plants. Wind power, though, is competitive with coal- and- gas-fired power, costing 4 cents to 6 cents a kilowatt-hour.
Goal Too High, Utilities Fear
Tampa Electric, which provides electricity to nearly 670,000 customers and uses renewable energy sources to produce 2.5 percent of its power, said although it supports the increased use of renewable power, a mandate to produce a certain percentage would lead to increases in monthly electric bills.
“The most affordable fuels will be taken off the table for future use and replaced with more expensive technologies,” said company spokeswoman Laura Duda. “There will be rate pressure.”
Cherie Jacobs, a spokeswoman for Progress Energy Florida, said requiring utilities to produce a certain amount of power from renewable sources is not the best way to reduce emissions of carbon dioxide, a greenhouse gas linked to global warming, in Florida. The St. Petersburg-based utility said about 4 percent of its power is renewable.
“Florida has very limited renewable resources compared to other states,” Jacobs said. “The 20 percent standard the governor has suggested is very aggressive. In order to reach that, the state absolutely has to embrace nuclear power.”
Florida now produces about 2 percent of its power from renewable sources. More than a third of the state’s power is made from natural gas, 24 percent is generated from coal and 13 percent from nuclear plants.
Although renewable power is more expensive, requiring a certain amount will kick-start a market for renewable power and lower costs as technologies improve, said Susan Glickman, southern regional director for the Climate Group, a nonprofit organization committed to building a market for renewable energy.
“You’re setting a target the utilities have to meet,” Glickman said. “The reason you do that is to cause the cost of renewable energy to come down.”
Melisssa Meehan of the Southern Alliance for Clean Energy said a strong mandate for renewable power is essential to lowering the cost and curbing climate change.
“We want to make sure that we get a good number for the state of Florida and that we set a goal high enough to challenge the industry,” Meehan said.
The renewable plan is part of a package of environmental initiatives announced by Crist last year with California Gov. Arnold Schwarzenegger.
By Russell Ray
The Tampa Tribune
8 April 2008
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