Court: Merchant power plants do not meet Florida regulations


The Florida Supreme Court has reversed a March 1999 Florida Public Service Commission (FPSC) ruling that would have allowed construction of Florida's first merchant power plant. The court ruled that the facility is not permitted under current state regulations covering the industry. In response, some Florida city officials have launched efforts to persuade state legislators to change the regulations. State legislators may set up a task force to study the deregulation of the industry.


The Florida Supreme Court has reversed a March 1999 Florida Public Service Commission (FPSC) ruling that would have allowed construction of Florida's first merchant power plant. The court ruled that the facility is not permitted under current state regulations covering the industry. In response, some Florida city officials have launched efforts to persuade state legislators to change the regulations. State legislators may set up a task force to study the deregulation of the industry.

Duke Energy North America was to build the 514-Mw combined-cycle plant at New Smyrna Beach, Fla. After the FPSC decided last March to grant Duke's need petition, Florida Power Corp. (FPC), Florida Power & Light (FPL), and TECO Energy Inc. filed an appeal with the Florida Supreme Court.

The Florida Supreme Court opinion states: "A determination of need is presently available only to an applicant that has demonstrated that a utility or utilities serving retail customers has specific committed need for all of the electrical power to be generated by a proposed plant."

Duke Energy said in a statement that officials were surprised and disappointed and maintain that merchant power plants are integral to meeting Florida's growing energy needs. It is evaluating the ruling and its options.

FPC Pres. and CEO Joseph H. Richardson said that Florida utilities are required by the FPSC to build power plants or seek long-term contracts for reliable electricity to meet their expected needs, plus maintain a 20% reserve margin for emergencies or extreme weather conditions. These resources are committed first to Florida customers, whereas a merchant plant is under no such obligation and "could not count on being able to buy from a merchant plant during a time of need."

Panda Energy International Inc., another would-be merchant player in the potentially lucrative Florida energy market, said the ruling may keep the price benefits of merchant power plants from the people of Florida and is against their best interests. Panda last year announced plans to construct two 1,000-Mw merchant power plants in Lake and St. Lucie counties, Florida.

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