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PSC: Too much natural gas use

A report from the state board says utilities' plans call for rising use of the resource and warns of volatile pricing.

By LOUIS HAU
Published December 21, 2005

The power-plant construction plans of Florida's major electric utilities will leave them too heavily dependent on natural gas as a fuel source, says a staff report from the Florida Public Service Commission.

The report comes as natural gas prices hover near record highs amid supply concerns because of severe winter weather in parts of the country and production disruptions at Gulf Coast facilities after hurricanes Katrina and Rita.

In its annual review of 10-year site plans, the PSC's Division of Economic Regulation noted the portion of power generation to be fueled by natural gas will surge from 30 percent in 2004 to about 44 percent in 2014. The forecast is down from the 51 percent last year because of plans by some utilities to build coal plants, but the figure remains high.

While natural gas, which burns more cleanly than coal, has historically enjoyed relatively low, stable prices, the PSC report notes "recent trends indicate an entirely different future."

Progress has opened three gas-fired generating units at its Hines Energy Complex in Polk County since 1999 and plans to begin construction on a fourth next year. In 2003, Tampa Electric shut down all six of its coal-fired generating units at its Gannon power station in Tampa and replaced them with two gas-fired units, in accordance with an agreement to settle repeated violations of the federal Clean Air Act.

"If Florida continues down the current path of building natural gas-fired generation, then utility fuel costs will continue to experience volatile swings and increased prices," the PSC report said.

Information from the Associated Press was used in this report. Louis Hau can be reached at hau@sptimes.com or 813 226-3404.

[Last modified December 21, 2005, 00:51:17]