With a new federal law providing tax breaks for renewable energy, Florida Power & Light on Friday asked state regulators to approve a plan to pass an estimated $384.1 million in savings to customers over the next three years.
Starting with a $25 million refund to customers in January, the plan would trim rate increases that FPL customers will face in 2023.
It stems from a federal law known as the Inflation Reduction Act that President Joe Biden signed in August. The law extended renewable-energy tax credits, a change that benefited utilities such as FPL, which has moved heavily into solar power.
FPL customers will see higher bills in 2023 because of increased base electric rates and soaring costs of natural gas, which fuels power plants.
“We recognize that all Floridians are continuing to deal with the challenges of record-high inflation and increased costs of everyday goods and services,” FPL Chairman and CEO Eric Silagy said in a prepared statement Friday. “As we continue working to operate even more efficiently to drive costs out of our business, federal tax savings will begin to provide some relief to customers next year as high natural gas prices continue to put upward pressure on bills.”
Because of a merger with the former Gulf Power, FPL has two sets of rates. In 2022, residential customers in areas traditionally served by FPL pay $120.67 a month if they use 1,000-kilowatt hours of electricity — a common industry benchmark. Customers in Northwest Florida areas formerly served by Gulf Power pay $155.61.
Without the federal tax savings, those monthly bills would increase to $130.23 in January for customers in the traditional FPL areas and $160.43 in Northwest Florida. With the savings, the bills would go to $126.65 in January in the traditional FPL areas and $156.85 in Northwest Florida.
Bills would be adjusted again in February, with 1,000-kilowatt hour customers paying $129.59 in traditional areas and $159.81 in Northwest Florida, according to the state Public Service Commission filing. Rates likely will change further in 2023 because of natural gas costs.
Utility bills are made up of a combination of factors, with the two most significant costs involving base rates and fuel. The Public Service Commission last year approved a multi-year settlement that included base-rate increases for FPL.
That settlement also required that rates be adjusted if federal tax laws change. FPL’s proposal Friday would carry out that requirement.
Under the proposal, FPL customers would receive a $25 million refund in January, reflecting the federal law’s effects for the 2022 tax year; according to the proposal, The utility also would begin passing along $69.7 million a year in tax savings. Those savings would be provided in 2023, 2024, and 2025.
In addition, FPL estimated that the law will result in a total of $150 million in savings in 2024 and 2025. Those savings are related to the costs of solar projects included in last year’s base-rate settlement.