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Fla. investor-owned utilities propose investing $19.4B in grid hardening

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Fla. investor-owned utilities propose investing $19.4B in grid hardening

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Linemen work to restore a distribution pole affected by a fallen tree in Coral Gables, Fla., in 2017.
Source: Florida Power & Light

Florida's four big investor-owned electric utilities proposed plans totaling about $19.4 billion in spending on grid hardening activities as part of a recently enacted state law to encourage more proactive investments in storm protection.

Duke Energy Florida LLC, Florida Power & Light Co., Gulf Power Co. and Tampa Electric Co. on April 10 filed 10-year storm protection plans outlining initiatives to ensure reliable power during hurricanes and other storms and reduce outages in compliance with a 2019 law. The state's Public Service Commission has six months to review the proposals and determine whether the utilities' plans are in the public interest and can be approved.

NextEra Energy Inc. subsidiary FPL proposed spending approximately $10.2 billion on current and new grid projects between 2020 and 2029. Within that budget, FPL estimates it would spend $5.1 billion on undergrounding power lines during the 10-year period and proposes a new program to mitigate storm surge damage at substations.

"Florida remains the most hurricane-prone state in the nation and, with the significant coast-line exposure of FPL's system and the fact that the vast majority of FPL's customers live within 20 miles of the coast, a robust storm protection plan is critical to maintaining and improving grid resiliency and storm restoration," Michael Jarro, vice president of the company's distribution operations, said in the filing.

NextEra's other electric utility, Gulf Power, said its storm protection program would cost $963.9 million over the 10-year period, with $488.8 million going toward a transmission hardening program that includes replacing all wood transmission structures with steel or concrete and implementing flood monitoring at certain substations.

Duke Energy Corp.'s Florida utility estimates its 10-year storm protection plan will cost $6.4 billion to execute. Jay Oliver, general manager of grid strategy and asset management governance at Duke Energy Business Services LLC, said in Duke Energy Florida's filing that the company "will begin a transition to a more holistic system vision for hardening against extreme weather events and enhancing reliability" in 2021, which will include a new initiative to upgrade overhead distribution facilities.

Tampa Electric's grid hardening plan should cost nearly $1.8 billion to carry out through 2029, the Emera Inc. affiliate said in a filing. Undergrounding its distribution lines is estimated to cost about $976.8 million during the 10-year period. In addition to its legacy infrastructure programs, Tampa Electric also plans to pursue additional vegetation management procedures to improve reliability during extreme weather events and a substation hardening program.

As part of the new law, utilities can recoup investments in a separate recovery clause instead of base rates. However, the companies said they will not know what costs they can expect to recover under the new rate mechanism until the PSC addresses petitions they will file during the third quarter of 2020.

FPL and Gulf Power remain under a rate base freeze as part of a PSC-approved settlement agreement and said the investments could be recovered either through the new billing mechanism or base rates. FPL estimates its residential customers would see a rate impact of up to $4.78 per 1,000 kWh between 2020 and 2022, and Gulf Power estimates its residential customers would see a rate impact peaking at $3.17 per 1,000 kWh over the same period. FPL said its commercial customers could see a rate impact of up to $1.54/kW and industrial customers a rate impact of 10 cents/kW during the three-year period. Gulf Power estimates that commercial customers would see a rate impact up to $2.70 per 1,000 kWh and industrial customers of $2.40 per 1,000 kWh.

Duke Energy Florida estimates residential ratepayers would see an increase of 27 cents per 1,000 kWh on bills in 2021 and an increase of $1.22 in 2022. Commercial customers would see a rate increase up to 2.3% and industrial customers 4.2% in 2022.

Tampa Electric said between 2020 and 2023, residential customers using 1,000 kWh would see their bills increase from the storm protection plan, from a 1.5% increase in 2020 to a 4.12% increase in 2023. Commercial customers would also see rate impacts scale up over the same period, depending on usage.

The PSC on April 6 granted Florida Public Utilities Co., a Chesapeake Utilities Corp. company, a one-year delay in filing a storm protection plan. The utility requested the extension on the grounds that its current rebuilding plans and regulatory proceedings "are using the full capacity of FPUC's limited resources" after Hurricane Michael hit the U.S. in 2018.