Government Energy Policy, Business and Technology

Florida’s growing reliance on natural gas may put ratepayers at risk

Southeast Energy News: Florida law requires utilities to keep electric bills low and to expand clean energy use. Yet Florida’s heavy reliance on natural gas has exposed ratepayers to economic risk and market volatility, according to advocates.

Hedging that risk – essentially betting that long-term contract prices will be cheaper than spot prices in the future — has cost Floridians at least $6.9 billion since 2006, according to analysis by the Sierra Club. The group also notes that investing that money in efficiency or renewables instead would have essentially paid for itself in avoided fuel costs.

Currently, Florida utilities have agreed to a moratorium on new hedging (ending between 2018 and 2021, depending on the utility), but the Public Service Commission may soon reauthorize hedging using a more “risk responsive” model, and contracts previously purchased are still in effect.

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