FPL: Fuel hedging strategy pays off for customers, helps keep bills down

Writer Randy Schultz again recycles misleading claims rather than really attempting to understand our company’s practices in his latest wrong criticism of FPL (“With state regulators, FPL does not need to hedge its bets”).
Schultz’s argument is grounded in a misguided belief that this fuel hedging program utilized by Florida utilities produced “losses” for customers because of “bad investments. ” The reality is that power fuel hedging is not such as trading stocks - it’s just like buying insurance.
People buy insurance coverage to cover them in the event that some thing unfortunate occurs in the future. A lot of us carry insurance for years not having filing a claim. Performs this mean that all the insurance premiums all of us paid over the years are “losses? ” Obviously not, however by Schultz’s logic, we ought to all be outraged that we have avoided the unfortunate.
Resources must buy natural gas along with other fuels to generate electricity for his or her customers 365 days a year, yet market fuel prices vary constantly, and utilities do not have control over those cost swings. To reduce the impact of the price volatility, utilities buy a portion of their fuel requirements in advance based on approved hedge guidelines, instead of buying everything at daily market costs.
Fuel hedging provides a level of insurance for customers in the event that marketplace prices spike in the future. Whenever spikes occur, hedging will save money. However , if industry prices drop, hedging leads to costs - analogous in order to premiums for insurance a person didn’t need to use. That is how hedging works.
It is important to recognize that hedging is simply one piece of our a lot broader, strategic approach to advantage our customers by keeping expenses lower and stable on the long term. For example , last year we all made our first investment decision in natural gas production within Oklahoma to secure a small amount of energy for our power plants completely from the source, cutting out the middleman mark-up. Contrary to Schultz’s portrayal, this investment has not “lost money. ” It is made to produce natural gas for our vegetation at low, stable rates for many years, and we continue to task it will produce net cost savings for our customers of almost $50 million.
We additionally operate our system extremely effectively, which saves our clients nearly $2 billion annually compared with an average utility. As well as we’ve been working hard to push our fuel consumption straight down for many years. Since 2001, the actual smart investments we’ve designed to reduce the amount of fuel required to generate power have stored our customers more than $8 billion on fuel fees.
While the prices of many products, including this newspaper, possess risen significantly over the past 10 years, FPL bills have reduced. This year alone we’ve reduced our rates twice, and also the PSC recently approved an additional decrease that will take impact next month. Today, our common customer bill is actually 10% lower than it was back in 2006.
It’s no accident which FPL customers pay regarding 30 percent less than the nationwide average for electric support that’s among the most reliable in the united states. It’s also no incident that FPL is already cleanser today than the target the U. S. EPA’s Thoroughly clean Power Plan has arranged for the state of Sarasota to meet by 2030.
Once we have said before, we are not swayed by short-term considering. We take the long see, and we’re proud our customers continue to benefit.

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