FPL’s fuel mix is heavily based on natural gas. Source: http://FPL.com

Florida is heavily dependent on natural gas for electricity production. In fact, Florida’s largest utility points out that over 70% of electricity generated in Florida comes from natural gas. While new plants based on this fuel have made electricity cheap today and relatively clean (compared to coal plants being replaced), the risk for Florida is the natural gas prices do not stay at current market prices.

It’s not easy or cheap to convert power plants to other fuels. Florida will remain dependent on natural gas for years to come. So what happens if natural gas prices spike?

In the last several years, natural gas prices have plummeted. Advances in fracking technology and the need for producers to obtain more gas to make investments pay off has increased supply while demand has remained flat. Prices in the U.S. have fallen from over $13/mmBTU to a current price of $2.83/mmBTU, a drop of almost 80%. Worldwide, the price gap has exploded, with natural gas prices over three times higher in Europe and almost five times higher in Japan.

FPL’s base rate for electricity of 1,000kWh is currently $0.05811 with a fuel surcharge of $0.04096. If natural gas prices were to double in the U.S., which is totally plausible, electricity rates could rise by 29% (based on the natural gas fuel mix remaining at 70%)!

It’s time that we take a long, hard look at our energy mix in Florida. While solar energy is many years away from making a sizable dent in the energy mix, that is no reason to wait until a calamity of natural gas price inflation devastates us. Anything we can do now to level the playing field for distributed solar energy production would be a good thing for Florida ratepayers, especially if coupled with a sensible and comprehensive energy plan for the state. Allowing utilities to monopolize solar energy as a source of electricity is not the answer, as demonstrated in countless other states with more progressive and fair energy policies. We need individual and third-party ownership of distributed solar energy to make solar a significant, albeit fractional part of our energy mix.

 

Natural Gas Price History

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