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Essential Energy Insights - October 2021


Utilities mobilize against ballot initiative to deregulate Florida

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An advocacy group in Florida known as Citizens for Energy Choices is circulating a petition that would allow customers to generate and sell their own electricity. Florida Power & Light argues the measure would "prohibit customers from being able to buy power from the existing utilities."
Source: Florida Power & Light Co.

An advocacy group pushing to deregulate Florida's electricity market contends that its proposed initiative gives customers the power they want and deserve to produce or shop for their own generation. The state's investor-owned utilities are balking at the concept, which they argue will raise electricity rates and harm reliability.

Citizens for Energy Choices is circulating a petition that "grants customers of investor-owned utilities the right to choose their electricity provider and to generate and sell electricity." The proposed constitutional amendment would require the Florida Legislature to adopt legislation, effective June 1, 2025, that provides for competitive wholesale and retail markets for electricity generation.

The proposal limits Florida's investor-owned utilities to the "construction, operation, and repair of electrical transmission and distribution systems."

"It allows anyone to buy and sell power," Alex Patton, chairman of the Citizens for Energy Choices political committee, said in a Feb. 5 phone interview. "It basically forces the investor-owned utilities to concentrate on what they do well, which is the transmission lines and the grids."

Utilities, therefore, would have to sell their generation assets.

Patton noted that the initiative is "modeled very closely after what was done in Texas."

The Texas Legislature deregulated the state's wholesale generation market in 1995 and passed Senate Bill 7 in 1999 to open the state to retail competition by 2002.

"So, we are breaking up vertical monopolies into a horizontal delivery system. Just like they did in Texas," Patton said. "What we have found in Texas over the past 20 years is that prices drop, reliability increases and green energy explodes."

Patton noted that Florida consumers are expected to save between $5 billion and $7 billion annually if the state adopts electricity choice.

"When a customer in Texas can go to a website and pick an electrical plan that is comprised of 100% renewable energy for cheaper than anything they can get in Florida, I think that proves that competition and choice works," Patton said.

Florida has a two-step process under which eventually the group needs to get more than 776,000 valid signatures, or 8% of the votes cast in the 2016 general election, for the proposal to be placed on the 2020 ballot.

The first step requires Citizens for Energy Choices to get 10% of those valid signatures to trigger a review by the Florida Supreme Court that ensures the initiative meets state constitutional requirements. This also triggers a financial impact statement from a special legislative committee.

"We are the first in Florida to hit those triggers for the 2020 ballot," Patton said, noting the group is two months ahead of its goal.

"This is an easy sell. Consumers get choice in almost all other areas of their life," he added. "They want it in their electricity providers."

'Failed idea'

Florida's investor-owned utilities have all come out against the concept.

"It's being framed as it's about helping Florida customers, but it's not about that at all," Florida Power & Light Co. President and CEO Eric Silagy said when asked about the initiative on a Jan. 25 earnings call.

The NextEra Energy Inc. subsidiary, known as FPL, has been the most vocal in its opposition to the plan.

"When you look at it, it's really about furthering the business interests of a few folks, including a retail electric provider that's located and based out of Gainesville that markets power currently outside of Florida," Silagy said.

Gainesville, Fla.-headquartered retail and wholesale energy provider Infinite Energy Inc. backed an unsuccessful push for deregulation in 2018 through the state's Constitutional Revision Commission, which meets every 20 years. Other efforts by groups that support deregulation have failed to gain traction in the Florida Legislature.

"Their efforts have been unsuccessful in the past because frankly Florida's regulated electricity market works really well," Silagy said. "When you look at the state, the power prices are among the lowest in the nation with electricity that's among the cleanest and most reliable in the country. So plain and simply, it's a proposal that just it would actually lead to increasing electric rates across the state, reduce reliability ... and I think it's going to compromise the clean energy goals that have been announced."

FPL maintains that unregulated power producers "would have no restrictions on the type of generation that they would build"

"Also, I think it's important to understand on these types of things that consumer protections are removed," Silagy said.

The Florida Public Service Commission would no longer play a role in setting rates and the proposal would "prohibit customers from being able to buy power from the existing utilities."

The FPL head said the utility plans to be "very actively engaged" on the issue.

"We are going to be educating Floridians on the true motives of the special interest groups, and we are going to also spend a lot of time educating folks on the significant negative impacts that this failed idea would have on the state and on their pocketbooks," Silagy said.

Duke Energy Corp. and Emera Inc. subsidiary Tampa Electric Co. also have warned that the proposal would be harmful for the state and its electricity market.

"State regulation and collaborative state energy policy have positioned Florida as a leader in affordable, reliable and clean energy. Deregulating the energy sector would endanger that progress and potentially cost ratepayers billions," Duke Energy Florida LLC spokeswoman Ana Gibbs said in a Feb. 5 email. "Currently, Florida residential average electricity prices remain below the national average. At the same time, Duke Energy Florida has modernized our generation fleet and made significant commitments to renewable energy. A deregulated system eliminates any forum for collaboration and oversight and poses numerous risks to the state and its electricity consumers."

Tampa Electric also said rates are likely to increase under the proposal.

"Deregulated states have some of the highest energy rates in the nation — many at 20% higher than the national average," Tampa Electric spokeswoman Cherie Jacobs said in a Feb. 7 email. "Tampa Electric customers pay rates that are 20 percent below the national average."

By law, Citizens for Energy Choices must have its required signatures by Feb. 1, 2020, for the constitutional amendment to be placed on the ballot for the November 2020 general election.

"We are under no illusions on what a lift this is and how strong [Florida's investor-owned utilities] are going to fight against this," Patton said. "But the bottom line is consumers want choice."