In an effort to promote sustainable energy choices, the Volusia County Republicans have released a report detailing potential problems that could arise from Florida Power’s proposed merger with Dynegy.
The report, entitled “A Closer Look at the Merger of Florida Power & Dynegy: Potential Impacts on Consumers,” was published in April 2017. In it, the authors look at the potential impacts of the merger on electricity rate hikes, expansion of energy services, and upgrades to the electrical grid.
To read the full report, visit this link https://www.volusia-county.org/wp-content/uploads/2017/04/RC-Report-on-the-Merger-of-Florida-Power-Dynegy-0.pdf.
Raising Electricity Rates
The report states that if Florida Power’s rate increase proposal is approved, it could spark a domino effect of rate hikes across the state, potentially resulting in an increase of up to 70% in electricity rates. The reason behind this is that Florida Power is a subsidiary of an investor-owned electric company, so it will naturally seek to maximize its profits.
The report goes on to say that if this were to occur, customers had better prepare themselves for higher costs. These could potentially result from an increase in the wholesale price of energy or charges for optional services, such as peak demand management and flexible energy usage. Finally, the increase in rates could also cause further strain on the state’s budget. According to the report, in the event of a rate hike, Volusia County could see a 0.8% increase in its annual budget requirement.
More Expansive Energy Services
The report highlights that if the merger is approved, Florida Power will gain the ability to provide more expansive energy services to customers than it could otherwise afford. More expansive services include upgrades to the electrical grid, adding generation capacity, and implementing demand response programs. These are all components of a healthy and reliable energy system.
Upgrading the electrical grid would entail both fixing problems with the existing system as well as adding new power lines, which would allow for the transportation of more electricity. Implementation of demand response programs would allow for wholesale energy buyers to reduce demand during peak periods, thereby lowering prices for everyone.
The report also states that these services could spark a domino effect of additional fees and rate hikes, potentially causing electricity rates to rise again. This is especially concerning because Florida Power will be able to absorb additional costs given its financial situation. Hence, ratepayers would have to fund additional upgrades to the electrical grid, if those were to occur. This would further increase costs for customers, who would then have to consider whether those costs are worth it, given the benefits of a more expanded energy offering.
More Fragile Energy Supply
Another potential consequence outlined in the report is that the merger could lead to an increase in energy supply interruptions or outages. This could potentially occur as a result of increased levels of stress on the power grid, brought about by the addition of new infrastructure and expanded services. The report states that these could lead to increased rates due to the increase in supply demands, as well as decreased reliability due to a decrease in stability on the electricity grid. Finally, it also warns that the stress on the grid could cause further harm to the environment, due to an increase in power plant emissions. This is especially concerning since emissions from power plants are already a cause for concern.
Rerouting And Adding Generators
The report also highlights that if Florida Power were to gain the ability to reroute power lines to improve efficiency and optimize the supply of electricity, this could result in outages for customers. Additionally, it states that if this were to occur, it would likely necessitate the need to add more generation capacity, in order to ensure that power is always available when needed. The report states that adding more generation capacity entails either building new power plants or increasing the power of existing ones. The former is generally more costly and time-consuming. However, according to the report, the latter option could prove more effective and efficient in the long run.
The report also notes that as a result of all of this, the state could see an increase in greenhouse gas emissions, which would then put it at odds with the goals of the federal government’s Clean Power Plan, which sets forth targets for reducing carbon emissions. This is especially concerning since Florida Power is already well on its way to meeting the goals set forth in the Clean Power Plan.
Upgrades To The Grid Require Additional Funding
One of the major concerns surrounding the merger is how it will affect the electric grid and the costs associated with upgrading it. Florida Power will be able to gain access to additional capital, which it will be able to use to fund upgrades to the grid. These include but are not limited to the construction of new power lines, as well as fixing problems with the existing grid, which could cause outages and increased rates.
The main takeaway from this is that if the Florida Power merger is approved, customers should expect to see more costs, especially if they’re interested in sustainability and renewable energy sources. The good news is that the state’s power company, as well as its subsidiary, have both publicly stated that they are committed to keeping rates low and stable.