Hurricane to Cost Gulf Customers, Snuff Out Coal

By Jim Saunders

First there was Michael. Then came Sally.

And that means hundreds of thousands of Northwest Florida residents will continue in the coming years to see extra charges tacked onto their electric bills to pay the costs of restoring power after Hurricane Michael and Hurricane Sally thrashed the region.
Gulf Power late Tuesday filed a proposal at the Florida Public Service Commission that would allow it in March to begin collecting an estimated $206 million from customers because of costs stemming from Hurricane Sally, which caused major damage in mid-September in Pensacola and other western areas of the Panhandle. That extra charge would come on top of the tab Gulf customers are already paying for Hurricane Michael, which devastated Panama City and nearby communities in 2018.
“While not originally forecast to hit our area, Hurricane Sally was a slow-moving storm that brought strong winds, storm surge and flooding, causing significant damage to the energy grid and other critical infrastructure throughout Northwest Florida,” Gulf Power President Marlene Santos said in a prepared statement. “Gulf Power’s team worked around the clock --- alongside our Florida Power & Light family and resources from 24 states --- to get the lights back on for our customers and our communities back up and running safely and as quickly as possible.”

Gulf, which along with FPL is owned by NextEra Energy, also advised the Public Service Commission on Tuesday that damage from Hurricane Sally would speed up an already-planned move to end the use of coal to generate power at the utility’s Plant Crist facility in Escambia County. The move involves shifting to natural gas and, the utility said, would create initial savings that would lead to slight net reductions in electric bills in March, even with the extra charges related to Hurricane Sally.
But Gulf customers will continue to feel the brunt of the hurricane-related costs. Last year, they began paying charges related to Hurricane Michael that translate to $8 a month for residential customers who use 1,000 kilowatt hours of electricity. The proposed Sally-related charges would amount to an additional $3 a month for those customers, according to the proposal filed at the Public Service Commission.

The Hurricane Michael charge is estimated to continue until September 2023. At that point, under the new proposal, the Sally charge would increase to $10 a month for residential customers who use 1,000 kilowatt hours. If the utility did not increase the amount in 2023 to finish recovering the Sally costs, added charges would have to continue until April 2029, the filing said. Bottom line, after the Michael costs end, those residential customers would pay $10 in Sally costs instead of $11 in combined Michael and Sally costs.
Gulf said in the filing that it thinks the proposal to increase Sally costs after the Michael costs are recouped “will strike an appropriate balance between ensuring timely cost recovery and mitigating customer bill impacts.”

Utilities use a 1,000-kilowatt hour residential bill as a benchmark, but actual electricity consumption varies widely. Also, commercial utility bills are determined differently than residential bills.

Gulf and other Florida utilities have long been allowed by the Public Service Commission to add extra charges to bills to recover storm costs. The arrangement has been baked into rate settlements in recent years, including in a 2017 Gulf rate settlement.

It was not immediately clear Wednesday when the commission will take up Gulf’s proposal. But part of the process also is that the utility would have to come back in the future and justify its expenses, with potential adjustments to customer charges through what is known as a “true-up.”

In Tuesday’s filing and a news release, Gulf said it brought in thousands of extra workers to help restore power after Sally, which made landfall Sept. 16 near Gulf Shores Ala., and caused wind damage and massive flooding in parts of Northwest Florida. The filing said the largest chunk of costs, an estimated $131 million, was for contractors and that Gulf had 285,000 customer outages. The utility said, in part, that it had to replace 1,000 poles and 1,200 transformers.

The storm also caused what the utility described as “significant damage” at the Plant Crist power plant, accelerating the shift to end the use of coal at the facility. In a separate filing Tuesday at the Public Service Commission, the utility asked for approval of changes, primarily related to accounting issues, that stem from the move. The filing said the changes would allow a decrease in March of $3.71 on monthly bills for residential customers who use 1,000 kilowatt hours of electricity, effectively offsetting the Sally-related increase.
“Retiring coal at Plant Crist will end our use of coal in Florida and help usher in a new, cleaner energy era for Gulf Power,” Santos said in a statement. “Ending our use of coal delivers benefits for our customers and our communities through lower costs along with cleaner emissions. We look forward to continuing to invest in cleaner energy solutions for Northwest Florida, including more efficient natural gas technology as well as emissions-free solar farms.”

Article reposted with permission from The News Service of Florida.