With an objective to pass on the benefits of lower input costs to its customers, Florida Power & Light Company (“FPL”), an electric utility unit of NextEra Energy Inc. (NEE), has filed an application to Florida Public Service Commission (“PSC”).
If the application is accepted by PSC, residential customers using 1,000 kilowatt/hr (Kwh) will enjoy a benefit of $4.53 per month in 2012 due to an anticipated decline in natural gas prices. However, after considering all other factors in the bill, the net reduction for the average customer would be $1.92 per month in January 2012 from December 2011.
At present the monthly bill of the average FPL residential customer is 20% less than the national average and is also the lowest in the state. We believe the benefits for FPL customers are likely to broaden with the proposed rate reduction.
The downward trend in natural gas prices for 2012 is mainly due to the abundance of supply and new findings of gas reserves of substantial volumes. Utility operators like FPL who have the option of producing power from natural gas stand to benefit from the over-glut in the market and pass on the same to its customers.
We believe generation of power using natural gas is not only allowing FPL to lower the residential bill but also helping the environmental cause. Natural gas for its clean burning nature is increasingly being used by electric generators to abide by the stringent environmental regulation. The Energy Information Administration (EIA) has also substantiated this view, with 80% of all added electricity generation capacity by 2035 expected to come from natural gas-fired generation.
NextEra Energy currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. The company competes with the likes of Progress Energy Inc. (PGN) and Southern Company (SO).
Based in Juno Beach, Florida, NextEra Energy Inc., through its subsidiaries, engages in the generation, transmission, distribution and sale of electric energy in Florida.
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