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article imageThe Public, or the Utilities: Florida PSC’s True Customer

When Florida Power & Light announced its selection of Sabal Trail Transmission, LLC. to build a $3 billion, 500-mile natural gas pipeline through three states, it claimed it was making “the best, most economical solution for ensuring Florida’s continued access to the clean, affordable, US-produced fuel.”
The utility giant explained in a July 2013 press release: “FPL’s economic analysis showed that these projects will save FPL customers nearly $600 million compared with the next closest proposal.”
But in 2009, the Florida Public Service Committee (PSC), a five-member body appointed by the governor, confirmed by the the Florida State Senate and tasked with regulating utility companies, rejected FPL’s proposed $1.5 billion natural gas pipeline. PSC said the utility had failed to prove that the 2009 proposal, which cost only half as much as Sabal Trail, was neither the best nor cheapest option.
Additionally, FPL’s claim that its customers would save nearly $600 million is dubious at best, critics say, since that figure refers to the pipeline running at full capacity, which isn’t projected to happen for decades.
In addition to cost considerations, there are serious environmental concerns, both about the pipeline itself and its proposed route, as reflected in a resolution passed by the Hamilton County Board of Commissioners rejecting that route.
Horizontal drilling under the Withlacoochee River and in the fragile karst terrain of northern Florida and southern Georgia presents distinct dangers, as Hamilton County resident Chris Mericle explained.
“The horizontal directional drilling could intersect spring conduits, affect spring well flows, and ultimately river base flow,” said Mericle. “Grouting in this cavernous, fractured terrain will likely be ineffective and could contaminate fresh water resources.”
That contamination would adversely affect the Floridan Aquifer, the sole source of drinking water for people living along the proposed pipeline route. There is also an increased sinkhole risk associated with the pipeline. Extending one of Florida’s existing pipelines would have far less environmental impact on the state’s ecosystems.
Spectra Energy, the parent company of Sabal Trail, has an abysmal environmental and safety record. The company has been fined more than $15 million for scores of pipeline spills, which have caused more than $8 million in property damage, according to Lori McCraney of the Suwannee Alliance for Sustainable Growth.
These environmental and safety concerns have many, from local residents to top Washington officials, asking if Sabal Trail is even necessary. The Environmental Protection Agency recently publicly questioned the necessity of the pipeline. The EPA pointed to potential environmental problems and other recently-opened pipelines supplying Florida with natural gas as reasons why Sabal Trail might not be a good idea.
Some observers, including the EPA, see an ulterior motive in play. As McCraney notes:
FPL recently estimated that in 10 years Florida’s demand for power will increase approximately 13 percent. But the Sabal Trail pipeline would increase current delivery capability by 33 percent. What would FPL do with the remaining 20 percent? Power companies do not buy and store fuels for future use, they use it or sell it for a profit. So, FPL could sell the excess supply to natural gas exporters who are poised to export liquefied natural gas (LNG) to Europe and Asia.
FPL, which currently has no ownership stake in either of the two existing natural gas pipelines running through Florida, would also stand to greatly increase market share — and earnings — by building Sabal Trail. The utility giant would own a portion of everything from the Alabama state line all the way down to the Gold Coast, including 100 percent of the pipeline from Orlando to metro Miami.
The EPA suggests that instead of Sabal Trail, Florida officials might enact better energy conservation measures that would allow utilities like FPL to meet Florida’s growing energy needs without additional pipelines.
Even taking conservation politics out of it, another option to meet greater supply needs would be to expand one of the two existing lines. This option would be cheaper to build, much less disruptive to the environment, and significantly cheaper for consumers for transport costs as it would eliminate the high fixed cost hit that consumers will eat during early years of growth until full capacity is reached.
Incredibly, FPL’s own 10-year projections don’t support a need for a pipeline of Sabal Trail’s size, and Sabal Trail’s own numbers say it would take only half the acreage of that pipeline to produce just as much power via solar energy.cluded
Sabal Trail’s supporters claim that building a new pipeline will create redundancies which will mitigate the risk of natural gas supply disruptions. But the energy consulting firm Sargent & Lundy LLC concluded that such redundancy was unnecessary given pipeline reliability, and that the risk of gas supply disruptions was very low. Even when disruptions do occur, natural gas isn’t electricity, where even relatively minor interruptions can cause blackouts over substantial areas.
Still, greater redundancy could be accomplished better by expanding existing pipelines, but this was prohibited for consideration in this bid drafted by FPL.
But energy companies don’t increase profits through conservation. Instead, they rely upon increased demand, increased prices and passing costs — even for multi-billion dollar boondoggles like nuclear power plants that will never generate a single volt of power — on to their customers.
Duke Energy, which is closing two Florida nuclear power plants, stuck its customers with $3.2 billion in charges to cover its Crystal River and Levy plant closures. Duke shareholders will pay $1 billion. This arrangement was approved by the Florida Public Service Commission ( Florida PSC), a five-member body appointed by the governor, confirmed by the state legislature and tasked with regulating utility companies.
How did Duke Energy get away with what critics call the highway robbery of its customers? Florida PSC asked essentially the same question in a release explaining the settlement to its ratepayers:
“Why do I have to pay for a plant that Duke Energy broke and can’t fix?”
Because, according to Florida PSC, “when an asset is retired, the utility has a right to collect the remaining plant balance from its ratepayers.”
Duke, America’s largest power company, is one of four large corporations dominating Florida’s energy sector. Those four firms have registered, on average, one lobbyist for every two state lawmakers for each legislative session since 2007. Utility companies are also among the most prolific donors to Florida candidates. According to the watchdog group Integrity Florida, electric companies donated more than $18 million to Florida candidates and parties between 2004 and 2012. The Big Four utilities have also spent more than $12 million lobbying state legislators in recent years.
All of that money makes for some pretty cozy relations between the Florida PSC and the utility companies it oversees. So cozy that PSC commissioners and their aides booze and schmooze with utility executives at trade conferences, skirting or even violating laws barring such fraternization. So cozy that Rick Scott, Florida’s Republican governor, appointed a utility executive and pipeline advocate to his transition team.
Scott, it should be noted, reportedly invested several million dollars in natural gas companies through a blind trust managed by a former employee of his own private investment firm.
Neither Scott, nor anyone in the state Cabinet, nor Florida’s US Senators, Marco Rubio and Bill Nelson, have spoken out against Duke Energy for what Tampa Bay Times columnist Robert Trigaux called “one of the biggest ripoffs in the state’s history.” And none of them have challenged the necessity of Sabal Trail.
“The PSC has an incredible staff. So if they can’t identify an alternative then who can?” asked former state senator and PSC chairwoman Nancy Argenziano. “Should it have been done? Absolutely. But they clearly did not have the wherewithal to do it.”
“Its always important when you’re dealing with that amount of money, it’s always a great thing to look at all options,” added Argenziano. “Sometimes there’s a monetary reason, like a political contribution, that sways a decision one way or the other.”
Allegations of “pay to play” are very serious, but Argenziano isn’t the only former Florida PSC commissioner to make such assertions.
“If you look at the contributions given to Governor Scott by FPL and other companies, it makes you think there is some kind of back-room dealing going on,” Nathan Skop, a former PSC commissioner, said.
“Anyone who thinks the PSC commissioners are independent from the money is totally wrong,” Argenziano insisted. “It is so influenced by money. When I was there, a senior staff member said, ‘We know who we work for, we work for FPL,’ and I was flabbergasted that someone on the PSC staff would say something like this.”
Such is the new normal, even before Citizens United and the current wave of pro-corporate legislation coming out of Tallahassee, Washington, and state capitals across the nation.
McCraney urges those affected by Sabal Trail, or any concerned citizen, to contact their “local, state and federal representatives and demand a smarter course to a clean energy future.”
“The voices of citizens, when resound ed together, can have an impact,” McCraney says.
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